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The Effective Executive

    The Effective Executive: The Definitive Guide to Getting the Right Things Done
    by Peter F. Drucker

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    Book Summary

    Ch: Introduction

    What made executives effective is that they followed the same eight practices: 

    1. They asked, “What needs to be done?”
    2. They asked, “What is right for the enterprise?”
    3. They developed action plans.
    4. They took responsibility for decisions.
    5. They took responsibility for communicating.
    6. They were focused on opportunities rather than problems.
    7. They ran productive meetings. 
    8. They thought and said “we” rather than “I.”

    1. Get the Knowledge You Need 

    The first practice is to ask what needs to be done. Note that the question is not “What do I want to do?” Asking what has to be done, and taking the question seriously, is crucial for managerial success.

    2. What is right for the enterprise?

    Effective executives’ second practice—fully as important as the first—is to ask, “Is this the right thing for the enterprise?”

    3. Write an Action Plan

    The action plan is a statement of intentions rather than a commitment. It must not become a straitjacket. It should be revised often, because every success creates new opportunities. So does every failure.

    Without an action plan, the executive becomes a prisoner of events. And without check-ins to reexamine the plan as events unfold, the executive has no way of knowing which events really matter and which are only noise.

    When they translate plans into action, executives need to pay particular attention to decision-making, communication, opportunities (as opposed to problems), and meetings.

    4. Take responsibility for decisions

    It’s just as important to review decisions periodically—at a time that’s been agreed on in advance—as it is to make them carefully in the first place.

    Such a review is especially important for the most crucial and most difficult of all decisions, the ones about hiring or promoting people. Studies of decisions about people show that only one third of such choices turn out to be truly successful. One third are likely to be draws—neither successes nor outright failures. And one third are failures, pure and simple. Effective executives know this and check up (six to nine months later) on the results of their people decisions. 

    If they find that a decision has not had the desired results, they don’t conclude that the person has not performed. They conclude, instead, that they themselves made a mistake. In a well-managed enterprise, it is understood that people who fail in a new job, especially after a promotion, may not be the ones to blame.

    Decisions are made at every level of the organization, beginning with individual professional contributors and frontline supervisors. These apparently low-level decisions are extremely important in a knowledge-based organization.

    5. Take responsibility for communicating

    Specifically, this means that they share their plans with and ask for comments from all their colleagues—superiors, subordinates, and peers. At the same time, they let each person know what information they’ll need to get the job done. The information flow from subordinate to boss is usually what gets the most attention. But executives need to pay equal attention to peers’ and superiors’ information needs.

    6. Focus on opportunities 

    Good executives focus on opportunities rather than problems. Problems have to be taken care of, of course; they must not be swept under the rug. But problem solving, however necessary, does not produce results. It prevents damage. Exploiting opportunities produces results. 

    Above all, effective executives treat change as an opportunity rather than a threat. They systematically look at changes, inside and outside the corporation, and ask, “How can we exploit this change as an opportunity for our enterprise?”

    Unless there is a true catastrophe, problems are not discussed in management meetings until opportunities have been analyzed and properly dealt with.

    Effective executives put their best people on opportunities rather than on problems.

    7. Make meetings productive

    Making a meeting productive takes a good deal of self-discipline. It requires that executives determine what kind of meeting is appropriate and then stick to that format.

    8. Think and Say “We”

    They think of the needs and the opportunities of the organization before they think of their own needs and opportunities.

    Ch 1: Effectiveness Can Be Learned

    Intelligence, imagination, and knowledge are essential resources, but only effectiveness converts them into results. By themselves, they only set limits to what can be attained.

    Organization size: The fewer people, the smaller, the less activity inside, the more nearly perfect is the organization in terms of its only reason for existence: the service to the environment. An organization, a social artifact, is very different from a biological organism. Yet it stands under the law that governs the structure and size of animals and plants: The surface goes up with the square of the radius, but the mass grows with the cube. The larger the animal becomes, the more resources have to be devoted to the mass and to the internal tasks, to circulation and information, to the nervous system, and so on.

    Measurement: One can, however, by and large quantify only what goes on inside an organization—costs and production figures, patient statistics in the hospital, or training reports. The relevant outside events are rarely available in quantifiable form until it is much too late to do anything about them.

    • The truly important events on the outside are not the trends. They are changes in the trends. These determine ultimately success or failure of an organization and its efforts. Such changes, however, have to be perceived; they cannot be counted, defined, or classified.

    The experience of the human race indicates strongly that the only person in abundant supply is the universal incompetent. We will therefore have to staff our organizations with people who at best excel in one of these abilities.

    Effectiveness is a habit; that is, a complex of practices. And practices can always be learned. These are essentially five such practices—five such habits of the mind that have to be acquired to be an effective executive: 

    1. Effective executives know where their time goes. They work systematically at managing the little of their time that can be brought under their control. 
    2. Effective executives focus on outward contribution. They gear their efforts to results rather than to work. They start out with the question, “What results are expected of me?” rather than with the work to be done, let alone with its techniques and tools. 
    3. Effective executives build on strengths—their own strengths, the strengths of their superiors, colleagues, and subordinates; and on the strengths in the situation, that is, on what they can do. They do not build on weakness. They do not start out with the things they cannot do.
    4. Effective executives concentrate on the few major areas where superior performance will produce outstanding results. They force themselves to set priorities and stay with their priority decisions. They know that they have no choice but to do first things first—and second things not at all. The alternative is to get nothing done. 
    5. Effective executives, finally, make effective decisions. They know that this is, above all, a matter of system—of the right steps in the right sequence. They know that an effective decision is always a judgment based on “dissenting opinions” rather than on “consensus on the facts.” And they know that to make many decisions fast means to make the wrong decisions. What is needed are few, but fundamental, decisions. What is needed is the right strategy rather than razzle-dazzle tactics.

    Ch 2: Know Thy Time

    Optimizing your time is a three-step process:

    1. recording time
    2. managing time, and
    3. consolidating time.

    Wherever knowledge workers perform well in large organizations, senior executives take time out, on a regular schedule, to sit down with them, sometimes all the way down to green juniors, and ask: “What should we at the head of this organization know about your work? What do you want to tell me regarding this organization? Where do you see opportunities we do not exploit? Where do you see dangers to which we are still blind? And, all together, what do you want to know from me about the organization?”

    Fast personnel decisions are likely to be wrong decisions. Alfred P. Sloan, Jr., former head of General Motors, the world’s largest manufacturing company, was reported never to make a personnel decision the first time it came up. He made a tentative judgment, and even that took several hours as a rule. Then, a few days or weeks later, he tackled the question again, as if he had never worked on it before. Only when he came up with the same name two or three times in a row was he willing to go ahead.

    Time Diagnosis

    1. First one tries to identify and eliminate the things that need not be done at all, the things that are purely waste of time without any results whatever. To find these time-wastes, one asks of all activities in the time records: “What would happen if this were not done at all?”
    2. The next question is: “Which of the activities on my time log could be done by somebody else just as well, if not better?”
    3. A common cause of time-waste is largely under the executive’s control and can be eliminated by him. That is the time of others he himself wastes. “What do I do that wastes your time without contributing to your effectiveness?” To ask this question, and to ask it without being afraid of the truth, is a mark of the effective executive.

    Pruning the Time-Wasters

    1. The first task here is to identify the time-wasters which follow from lack of system or foresight. The symptom to look for is the recurrent “crisis,” the crisis that comes back year after year. A crisis that recurs a second time is a crisis that must not occur again.
      • The definition of a “routine” is that it makes unskilled people without judgment capable of doing what it took near-genius to do before; for a routine puts down in systematic, step-by-step form what a very able man learned in surmounting yesterday’s crisis.
      • A well-managed organization is a “dull” organization. The “dramatic” things in such an organization are basic decisions that make the future, rather than heroics in mopping up yesterday.
    2. Time-wastes often result from overstaffing.
    3. Another common time-waster is malorganization. Its symptom is an excess of meetings. If executives in an organization spend more than a fairly small part of their time in meeting, it is a sure sign of malorganization. Too many meetings signify that work that should be in one job or in one component is spread over several jobs or several components. They signify that responsibility is diffused and that information is not addressed to the people who need it.
    4. The last major time-waster is malfunction in information.

    Consolidating “Discretionary Time”

    Senior executives rarely have as much as one quarter of their time truly at their disposal and available for the important matters, the matters that contribute, the matters they are being paid for.

    The higher up an executive, the larger will be the proportion of time that is not under his control and yet not spent on contribution. The larger the organization, the more time will be needed just to keep the organization together and running, rather than to make it function and produce.

    Effective executives start out by estimating how much discretionary time they can realistically call their own. Then they set aside continuous time in the appropriate amount.

    Ch 3: What Can I Contribute?

    The man who focuses on efforts and who stresses his downward authority is a subordinate no matter how exalted his title and rank. But the man who focuses on contribution and who takes responsibility for results, no matter how junior, is in the most literal sense of the phrase, “top management.” He holds himself accountable for the performance of the whole.

    Every organization needs performance in three major areas:

    • It needs direct results;
    • building of values and their reaffirmation; and
    • building and developing people for tomorrow.

    The most common cause of executive failure is inability or unwillingness to change with the demands of a new position. The executive who keeps on doing what he has done successfully before he moved is almost bound to fail.

    The Right Human Relations

    The focus on contribution by itself supplies the four basic requirements of effective human relations:

    • communications
    • teamwork
    • self-development
    • development of others

    The harder the superior tries to say something to his subordinate, the more likely is it that the subordinate will mishear. He will hear what he expects to hear rather than what is being said.

    They will tend to ask their men: “What are the contributions for which this organization and I, your superior, should hold you accountable? What should we expect of you? What is the best utilization of your knowledge and your ability?” And then communication becomes possible, becomes indeed easy.

    Ch 4: Making Strength Productive

    The effective executive makes strength productive. He knows that one cannot build on weakness. To achieve results, one has to use all the available strengths—the strengths of associates, the strengths of the superior, and one’s own strengths. These strengths are the true opportunities. To make strength productive is the unique purpose of organization. It cannot, of course, overcome the weaknesses with which each of us is abundantly endowed. But it can make them irrelevant. Its task is to use the strength of each man as a building block for joint performance.

    Staffing from Strength

    There is no such thing as a “good man.” Good for what? is the question. The executive who is concerned with what a man cannot do rather than with what he can do, and who therefore tries to avoid weakness rather than make strength effective is a weak man himself.

    Effective executives know that their subordinates are paid to perform and not to please their superiors. They know that it does not matter how many tantrums a prima donna throws as long as she brings in the customers. The opera manager is paid after all for putting up with the prima donna’s tantrums if that is her way to achieve excellence in performance.

    Human excellence can only be achieved in one area, or at the most in very few.

    How then do effective executives staff for strength without stumbling into the opposite trap of building jobs to suit personality? By and large they follow four rules:

    1. Job design: They do not start out with the assumption that jobs are created by nature or by God. They know that they have been designed by highly fallible men. And they are therefore forever on guard against the “impossible” job, the job that simply is not for normal human beings. The effective executive therefore first makes sure that the job is well designed. And if experience tells him otherwise, he does not hunt for genius to do the impossible. He redesigns the job. He knows that the test of organization is not genius. It is its capacity to make common people achieve uncommon performance.
    2. Challenging: The second rule for staffing from strength is to make each job demanding and big. It should have challenge to bring out whatever strength a man may have. It should have scope so that any strength that is relevant to the task can produce significant results. 
      • Executives everywhere complain that many young men with fire in their bellies turn so soon into burned-out sticks. They have only themselves to blame: They quenched the fire by making the young man’s job too small. 
    3. Focus on strength: Effective executives know that they have to start with what a man can do rather than with what a job requires.
      • As everyone has heard, there is “lifetime employment” in Japan. Once a man is on the payroll, he will advance in his category—as a worker, a white-collar employee, or a professional and executive employee—according to his age and length of service, with his salary doubling about once every fifteen years. He cannot leave, neither can he be fired. Only at the top and after age forty-five is there differentiation, with a very small group selected by ability and merit into the senior executive positions. Precisely because they cannot move people, Japanese executives always look for the man in the group who can do the job. They always look for strength.
      • For a superior to focus on weakness, as our appraisals require him to do, destroys the integrity of his relationship with his subordinates.
      • Effective executives, therefore, usually work out their own radically different form. It starts out with a statement of the major contributions expected from a man in his past and present positions and a record of his performance against these goals. Then it asks four questions:
        • “What has he [or she] done well?”
        • “What, therefore, is he likely to be able to do well?”
        • “What does he have to learn or to acquire to be able to get the full benefit from his strength?”
        • “If I had a son or daughter, would I be willing to have him or her work under this person?” i. “If yes, why?” ii. “If no, why?”
      • This appraisal actually takes a much more critical look at a man than the usual procedure does. But it focuses on strengths. It begins with what a man can do. Weaknesses are seen as limitations to the full use of his strengths and to his own achievement, effectiveness, and accomplishment.
    4. Ignore weaknesses: The effective executive knows that to get strength one has to put up with weaknesses.
      • Altogether it must be an unbreakable rule to promote the man who by the test of performance is best qualified for the job to be filled. All arguments to the contrary—“He is indispensable” . . . “He won’t be acceptable to the people there” . . . “He is too young” . . . or “We never put a man in there without field experience”—should be given short shrift. Not only does the job deserve the best man. The man of proven performance has earned the opportunity. Staffing the opportunities instead of the problems not only creates the most effective organization, it also creates enthusiasm and dedication.
      • Marshall was only concerned with weaknesses when they limited the full development of a man’s strength. These he tried to overcome through work and career opportunities.
      • Marshall always appointed the best-qualified man no matter how badly he was needed where he was. “We owe this move to the job . . . we owe it to the man and we owe it to the troops,” was his reply when someone—usually someone high up—pleaded with him not to pull out an “indispensable” man.

    Staffing for strength is thus essential to the executive’s own effectiveness and to that of his organization but equally to individual and society in a world of knowledge work.

    All in all, the effective executive tries to be himself; he does not pretend to be someone else. He looks at his own performance and at his own results and tries to discern a pattern.

    Prioritize opportunities: In every area of effectiveness within an organization, one feeds the opportunities and starves the problems. Nowhere is this more important than in respect to people. The effective executive looks upon people including himself as an opportunity. He knows that only strength produces results. Weakness only produces headaches—and the absence of weakness produces nothing.

    In human affairs, the distance between the leaders and the average is a constant. If leadership performance is high, the average will go up. The effective executive knows that it is easier to raise the performance of one leader than it is to raise the performance of a whole mass. He therefore makes sure that he puts into the leadership position, into the standard-setting, the performance-making position, the man who has the strength to do the outstanding, the pace-setting job.

    Ch 5: First Things First

    The way to apply productively mankind’s great range is to bring to bear a large number of individual capabilities on one task. It is concentration in which all faculties are focused on one achievement.

    Effective executives know that they have to get many things done—and done effectively. Therefore, they concentrate—their own time and energy as well as that of their organization—on doing one thing at a time, and on doing first things first.

    Sloughing Off Yesterday

    • Effective executives periodically review their work programs—and those of their associates—and ask: “If we did not already do this, would we go into it now?” And unless the answer is an unconditional “Yes,” they drop the activity or curtail it sharply.
    • Executives, whether they like it or not, are forever bailing out the past. This is inevitable. Today is always the result of actions and decisions taken yesterday.
    • This means that every executive forever has to spend time, energy, and ingenuity on patching up or bailing out the actions and decisions of yesterday, whether his own or those of his predecessors. In fact this always takes up more hours of his day than any other task.
    • The executive who wants to be effective and who wants his organization to be effective polices all programs, all activities, all tasks. He always asks: “Is this still worth doing?” And if it isn’t, he gets rid of it so as to be able to concentrate on the few tasks that, if done with excellence, will really make a difference in the results of his own job and in the performance of his organization.
    • One hires new people to expand on already established and smoothly running activity. But one starts something new with people of tested and proven strength, that is, with veterans. Every new task is such a gamble—even if other people have done the same job many times before—that an experienced and effective executive will not, if humanly possible, add to it the additional gamble of hiring an outsider to take charge.
    • Putting all programs and activities regularly on trial for their lives and getting rid of those that cannot prove their productivity work wonders in stimulating creativity even in the most hidebound bureaucracy.

    Priorities and Posteriorities

    A decision has to be made as to which tasks deserve priority and which are of less importance. The only question is which will make the decision—the executive or the pressures.

    No task is completed until it has become part of organizational action and behavior. This almost always means that no task is completed unless other people have taken it on as their own, have accepted new ways of doing old things or the necessity for doing something new, and have otherwise made the executive’s “completed” project their own daily routine.

    Pressures prevent progress: Another predictable result of leaving control of priorities to the pressures is that the work of top management does not get done at all. That is always postponable work, for it does not try to solve yesterday’s crises but to make a different tomorrow. And the pressures always favor yesterday. In particular, a top group which lets itself be controlled by the pressures will slight the one job no one else can do. It will not pay attention to the outside of the organization. It will therefore lose touch with the only reality, the only area in which there are results. For the pressures always favor what goes on inside. They always favor what has happened over the future, the crisis over the opportunity, the immediate and visible over the real, and the urgent over the relevant.

    Embrace making people unhappy: Setting a posteriority is also unpleasant. Every posteriority is somebody else’s top priority. It is much easier to draw up a nice list of top priorities and then to hedge by trying to do “just a little bit” of everything else as well. This makes everybody happy. The only drawback is, of course, that nothing whatever gets done.

    Courage: Courage rather than analysis dictates the truly important rules for identifying priorities:

    • Pick the future as against the past;
    • Focus on opportunity rather than on problem;
    • Choose your own direction—rather than climb on the bandwagon; and
    • Aim high, aim for something that will make a difference, rather than for something that is “safe” and easy to do.

    In fact accomplishing one’s priority tasks always changes the priorities and posteriorities themselves. The effective executive does not, in other words, truly commit himself beyond the one task he concentrates on right now. Then he reviews the situation and picks the next one task that now comes first.

    Ch 6: The Elements of Decision-Making

    1. Generic or Exception: The first question the effective decision-maker asks is: “Is this a generic situation or an exception?” “Is this something that underlies a great many occurrences? Or is the occurrence a unique event that needs to be dealt with as such?”
      • Strictly speaking, one might distinguish between four, rather than between two, different types of occurrences. 
        • There is first the truly generic of which the individual occurrence is only a symptom.
        • Then there is the problem which, while a unique event for the individual institution, is actually generic.
        • Next there is the truly exceptional, the truly unique event.
        • And this, the early manifestation of a new generic problem, is the fourth and last category of events with which the decision process deals.
      • All events but the truly unique require a generic solution. They require a rule, a policy, a principle.
      • Truly unique events, however, must be treated individually. One cannot develop rules for the exceptional.
      • Otherwise, it achieved practically nothing. The main reason was surely what its members called “pragmatism”; that is, its refusal to develop rules and principles, and its insistence on treating everything “on its merits.”
      • The effective decision-maker, therefore, always assumes initially that the problem is generic.
      • He always assumes that the event that clamors for his attention is in reality a symptom. He looks for the true problem. He is not content with doctoring the symptom alone.
      • And if the event is truly unique, the experienced decision-maker suspects that this heralds a new underlying problem and that what appears as unique will turn out to have been simply the first manifestation of a new generic situation.
    2. Boundary conditions: The second major element in the decision process is clear specifications as to what the decision has to accomplish. What are the objectives the decision has to reach? What are the minimum goals it has to attain? What are the conditions it has to satisfy? In science these are known as “boundary conditions.” A decision, to be effective, needs to satisfy the boundary conditions. It needs to be adequate to its purpose.
    3. Right vs acceptable: One has to start out with what is right rather than what is acceptable (let alone who is right) precisely because one always has to compromise in the end. But if one does not know what is right to satisfy the specifications and boundary conditions, one cannot distinguish between the right compromise and the wrong compromise—and will end up by making the wrong compromise.
      • It is fruitless and a waste of time to worry about what is acceptable and what one had better not say so as not to evoke resistance. The things one worries about never happen. And objections and difficulties no one thought about suddenly turn out to be almost insurmountable obstacles. One gains nothing in other words by starting out with the question: “What is acceptable?” And in the process of answering it, one gives away the important things, as a rule, and loses any chance to come up with an effective, let alone with the right, answer.
    4. Convert to action: Converting the decision into action is the fourth major element in the decision process. While thinking through the boundary conditions is the most difficult step in decision-making, converting the decision into effective action is usually the most time-consuming one. Yet a decision will not become effective unless the action commitments have been built into the decision from the start. 
      • In fact, no decision has been made unless carrying it out in specific steps has become someone’s work assignment and responsibility. Until then, there are only good intentions.
      • Converting a decision into action requires answering several distinct questions: Who has to know of this decision? What action has to be taken? Who is to take it? And what does the action have to be so that the people who have to do it can do it? The first and the last of these are too often overlooked—with dire results.
      • The action must also be appropriate to the capacities of the people who have to carry it out.
      • All this becomes doubly important when people have to change behavior, habits, or attitudes if a decision is to become effective action. Here one has to make sure not only that responsibility for the action is clearly assigned and that the people responsible are capable of doing the needful. One has to make sure that their measurements, their standards for accomplishment, and their incentives are changed simultaneously. Otherwise, the people will get caught in a paralyzing internal emotional conflict.
    5. Feedback: Finally, a feedback has to be built into the decision to provide a continuous testing, against actual events, of the expectations that underlie the decision.
      • One needs organized information for the feedback. One needs reports and figures. But unless one builds one’s feedback around direct exposure to reality—unless one disciplines oneself to go out and look—one condemns oneself to a sterile dogmatism and with it to ineffectiveness.

    Ch 7: Effective Decisions

    The only rigorous method, the only one that enables us to test an opinion against reality, is based on the clear recognition that opinions come first—and that this is the way it should be. Then no one can fail to see that we start out with untested hypotheses—in decision-making as in science the only starting point. We know what to do with hypotheses—one does not argue them; one tests them.

    Effective executives therefore insist on alternatives of measurement—so that they can choose the one appropriate one.

    Decisions need disagreements: The first rule in decision-making is that one does not make a decision unless there is disagreement. The only way to break out of the prison of special pleading and preconceived notions is to make sure of argued, documented, thought-through disagreements. 

    Keep alternatives ready: Second, disagreement alone can provide alternatives to a decision. And a decision without an alternative is a desperate gambler’s throw, no matter how carefully thought through it might be. There is always a high possibility that the decision will prove wrong—either because it was wrong to begin with or because a change in circumstances makes it wrong. If one has thought through alternatives during the decision-making process, one has something to fall back on, something that has already been thought through, that has been studied, that is understood. Without such an alternative, one is likely to flounder dismally when reality proves a decision to be inoperative.

    Degenerating situation: One has to make a decision when a condition is likely to degenerate if nothing is done.

    Opportunity requires action: This also applies with respect to opportunity. If the opportunity is important and is likely to vanish unless one acts with dispatch, one acts—and one makes a radical change.

    No decision required: If the answer to the question “What will happen if we do nothing?” is “It will take care of itself,” one does not interfere. Nor does one interfere if the condition, while annoying, is of no importance and unlikely to make any difference anyhow.

    No half-action: Similarly, the effective decision-maker either acts or he doesn’t act. He does not take half-action. This is the one thing that is always wrong.

    Act with courage: It becomes clear that a decision requires courage as much as it requires judgment. There is no inherent reason why medicines should taste horrible—but effective ones usually do. Similarly, there is no inherent reason why decisions should be distasteful—but most effective ones are.

    Executives are not paid for doing things they like to do. They are paid for getting the right things done—most of all in their specific task, the making of effective decisions.