The Effective Executive by Peter F. Drucker


🚀 The Book in 3 Sentences

  1. Effectiveness is "doing the right things well" whereas efficiency is the ability to accomplish something without wasted time, effort, or money - as a leader you want to focus on being effective.
  2. The Effective Executive knows (and analyzes) where his/her time is being spent, focuses on making strengths (their own as well as their organization's) productive, and knows how to frame and evaluate decision-making opportunities.
  3. The elements of an effective decision process are: 1) Ensuring the problem is generic (and not a symptom or one-off occurrence, 2) Defining the "boundary constraints" (i.e., what the answer has to satisfy), 3) Not making a decision until there is disagreement, 4) Converting the decision into rational action

🎨 Impressions

It took me the better part of 2 months of off and on reading to get through this book. I felt like the book had good takeaways as I read it (although nothing revolutionary) and I continued to learn throughout.

That being said, I was never really hooked by anything in the book and it read a bit more like a textbook than an engaging piece of nonfiction. Some parts, specifically Drucker's computer reflections at the end, felt outdated for today's executive.

Overall, if I was still in the corporate world and aiming to move up the proverbial organizational ladder, I think this book would have been 5x more relevant, but for entrepreneurs I found it a bit lacking in real-world applicability.

How I Discovered It

I discovered this book as it was rated highly by Nat Eliason.

Who Should Read It?

Any executive (or aspiring executive) in a large organization should read this book. The ideas in this book have been around for the better part of 50 years and still apply to most large complex organizations.

☘️ How the Book Changed Me

How my life / behavior / thoughts / ideas have changed as a result of reading the book.

  • Focus on Opportunities Rather Than Problems: As an executive or manager your tendency may be to fire-fight the hairiest problems facing your organization, but Drucker argues that you are better positioned if you focus your mental energy on the opportunities instead. Opportunities can push your organization to new heights whereas solving problems maintains the status quo.
  • Be Ruthless on How You Spend Your Time: Effective executives know exactly where their time is spent and they ensure that their time is spent on high-leverage activities instead of meetings.
  • Effectiveness is a skill that can be learned: Just like any other skill, effectiveness is something that can be learned through experience. But you need to be cognizant of evaluating your own effectiveness and incorporating feedback into the process. Process before outcomes.
  • Focus on Contribution: Similar to knowing where your time is spent as an executive, you should be ruthlessly focused on ensuring your time is spent on activities that contribute to your highest priorities. When you focus on contribution rather than bureaucracy you become more effective.
  • Encourage opinions and dissent to make effective decisions: Making effective decisions is one of the highest leverage activities for an executive. Effective executives encourage dissent within the organization and important decisions should never be made until there is some disagreement with the path forward.

✍️ My Top 3 Quotes

  • "Time is the scarcest resource, and unless it is managed, nothing else can be managed. The analysis of one’s time, moreover, is the one easily accessible and yet systematic way to analyze one’s work and to think through what really matters in it."
  • "The effective executive focuses on contribution. He looks up from his work and outward toward goals. He asks: 'What can I contribute that will significantly affect the performance and the results of the institution I serve?'"
  • "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."

📒 Summary, Highlights, and Notes

Kindle Highlights

First, create unbroken blocks for individual think time, preferably during the most lucid time of day; these pockets of quietude might be only ninety minutes, but even the busiest executive must do them with regularity. Second, create chunks of deliberately unstructured time for people and the inevitable stuff that comes up. Third, engage in meetings that matter, making particular use of carefully constructed standing meetings that can be the heartbeat of dialogue, debate, and decision; and use some of your think time to prepare and follow up.

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The accomplishments of a single right person in a key seat dwarf the combined accomplishment of dividing the seat among multiple B-players. Get better people, give them really big things to do, enlarge their responsibilities, and let them work.

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What made them all effective is that they followed the same eight practices: • They asked, “What needs to be done?” • They asked, “What is right for the enterprise?” • They developed action plans. • They took responsibility for decisions. • They took responsibility for communicating. • They were focused on opportunities rather than problems. • They ran productive meetings. • They thought and said “we” rather than “I.”

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I have never encountered an executive who remains effective while tackling more than two tasks at a time.

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He asked himself which of the two or three tasks at the top of the list he himself was best suited to undertake. Then he concentrated on that task; the others he delegated.

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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.

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In addition, the action plan needs to create a system for checking the results against the expectations.

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Napoleon allegedly said that no successful battle ever followed its plan. Yet Napoleon also planned every one of his battles, far more meticulously than any earlier general had done. 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.

SA Note: The basis behind CoLo's strategic planning service

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A decision has not been made until people know: • the name of the person accountable for carrying it out; • the deadline; • the names of the people who will be affected by the decision and therefore have to know about, understand, and approve it—or at least not be strongly opposed to it; and • the names of the people who have to be informed of the decision, even if they are not directly affected by it.

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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.

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Executives also owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs. It may not be the employees’ fault that they are underperforming, but even so, they have to be removed. People who have failed in a new job should be given the choice to go back to a job at their former level and salary. This option is rarely exercised; such people, as a rule, leave voluntarily, at least when their employers are U.S. firms. But the very existence of the option can have a powerful effect, encouraging people to leave safe, comfortable jobs and take risky new assignments.

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organizations are held together by information rather than by ownership or command.

SA Note: This is great marketing copy for CoLo's process optimization service and for having organizational knowledge bases and SOPs in general

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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.

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

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The key to running an effective meeting is to decide in advance what kind of meeting it will be.

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It’s also necessary to terminate the meeting as soon as its specific purpose has been accomplished. Good executives don’t raise another matter for discussion. They sum up and adjourn.

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Good follow-up is just as important as the meeting itself.

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Listen first, speak last.

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Intelligence, imagination, and knowledge are essential resources, but only effectiveness converts them into results.

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Knowledge work is not defined by quantity. Neither is knowledge work defined by its costs. Knowledge work is defined by its results.

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The executive’s time tends to belong to everybody else.

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What the executive needs are criteria which enable him to work on the truly important, that is, on contributions and results, even though the criteria are not found in the flow of events.

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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.

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Executives of necessity live and work within an organization. Unless they make conscious efforts to perceive the outside, the inside may blind them to the true reality.

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Effectiveness is crucial to me in two ways. First, a consultant who by definition has no authority other than that of knowledge must himself be effective—or else he is nothing. Second, the most effective consultant depends on people within the client organization to get anything done. Their effectiveness therefore determines in the last analysis whether a consultant contributes and achieves results, or whether he is pure “cost center” or at best a court jester.

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Effectiveness, in other words, is a habit; that is, a complex of practices. And practices can always be learned.

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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.

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Nothing else, perhaps, distinguishes effective executives as much as their tender loving care of time.

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To be effective, every knowledge worker, and especially every executive, therefore needs to be able to dispose of time in fairly large chunks. To have small dribs and drabs of time at his disposal will not be sufficient even if the total is an impressive number of hours.

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Among the effective executives I have had occasion to observe, there have been people who make decisions fast, and people who make them rather slowly. But without exception, they make personnel decisions slowly and they make them several times before they really commit themselves.

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“What would happen if this were not done at all?” And if the answer is, “Nothing would happen,” then obviously the conclusion is to stop doing it.

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“Which of the activities on my time log could be done by somebody else just as well, if not better?”

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“What do I do that wastes your time without contributing to your effectiveness?”

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One should only have on a team the knowledges and skills that are needed day in and day out for the bulk of the work.

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An organization in which everybody meets all the time is an organization in which no one gets anything done.

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As a rule, meetings should never be allowed to become the main demand on an executive’s time.

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One of the most effective executives in Professor Sune Carlson’s study, mentioned above, spent ninety minutes each morning before going to work in a study without a telephone at home. Even if this means working very early so as to get to the office on time, it is preferable to the most popular way of getting to the important work: taking it home in the evening and spending three hours after dinner on it. By that time, most executives are too tired to do a good job. Certainly those of middle age or older are better off going to bed earlier and getting up earlier. And the reason why working home nights is so popular is actually its worst feature: It enables an executive to avoid tackling his time and its management during the day.

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Time is the scarcest resource, and unless it is managed, nothing else can be managed. The analysis of one’s time, moreover, is the one easily accessible and yet systematic way to analyze one’s work and to think through what really matters in it.

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THE EFFECTIVE EXECUTIVE FOCUSES ON contribution. He looks up from his work and outward toward goals. He asks: “What can I contribute that will significantly affect the performance and the results of the institution I serve?” His stress is on responsibility.

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For 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.

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If a man wants to be an executive—that is, if he wants to be considered responsible for his contribution—he has to concern himself with the usability of his “product”—that is, his knowledge.

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Effective executives find themselves asking other people in the organization, their superiors, their subordinates, but above all, their colleagues in other areas: “What contribution from me do you require to make your contribution to the organization? When do you need this, how do you need it, and in what form?”

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executives who take responsibility for contribution in their own work will as a rule demand that their subordinates take responsibility too. 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.

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The focus on contribution leads to communications sideways and thereby makes teamwork possible. The question, “Who has to use my output for it to become effective?” immediately shows up the importance of people who are not in line of authority, either upward or downward, from and to the individual executive.

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The more we automate information-handling, the more we will have to create opportunities for effective communication.

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The effective man always states at the outset of a meeting the specific purpose and contribution it is to achieve. He makes sure that the meeting addresses itself to this purpose. He does not allow a meeting called to inform to degenerate into a “bull session” in which everyone has bright ideas. But a meeting called by him to stimulate thinking and ideas also does not become simply a presentation on the part of one of the members, but is run to challenge and stimulate everybody in the room. He always, at the end of his meetings, goes back to the opening statement and relates the final conclusions to the original intent.

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The effective executive fills positions and promotes on the basis of what a man can do. He does not make staffing decisions to minimize weaknesses but to maximize strength.

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There is no prouder boast, but also no better prescription, for executive effectiveness than the words Andrew Carnegie, the father of the U.S. steel industry, chose for his own tombstone: “Here lies a man who knew how to bring into his service men better than he was himself.”

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Effective executives know that their subordinates are paid to perform and not to please their superiors.

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But there is a subtler reason for insistence on impersonal, objective jobs. It is the only way to provide the organization with the human diversity it needs. It is the only way to tolerate—indeed to encourage—differences in temperament and personality in an organization. To tolerate diversity, relationships must be task-focused rather than personality-focused. Achievement must be measured against objective criteria of contribution and performance.

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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.

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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.

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Effective executives know that they have to start with what a man can do rather than with what a job requires.

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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: a. “What has he [or she] done well?” b. “What, therefore, is he likely to be able to do well?” c. “What does he have to learn or to acquire to be able to get the full benefit from his strength?” d. “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?”

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By themselves, character and integrity do not accomplish anything. But their absence faults everything else.

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it is the duty of the executive to remove ruthlessly anyone—and especially any manager—who consistently fails to perform with high distinction.

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Finally Marshall knew—and everyone can learn it from him—that every people-decision is a gamble. By basing it on what a man can do, it becomes at least a rational gamble.

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making strength productive is as much an attitude as it is a practice. But it can be improved with practice. If one disciplines oneself to ask about one’s associates—subordinates as well as superiors—“What can this man do?” rather than “What can he not do?” one soon will acquire the attitude of looking for strength and of using strength. And eventually one will learn to ask this question of oneself.

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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.

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The assumption should rather be that all programs outlive their usefulness fast and should be scrapped unless proven productive and necessary.

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Above all, the effective executive will slough off an old activity before he starts on a new one. This is necessary in order to keep organizational “weight control.”

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The job is, however, not to set priorities. That is easy. Everybody can do it. The reason why so few executives concentrate is the difficulty of setting “posteriorities”—that is, deciding what tasks not to tackle—and of sticking to the decision.

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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.

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Even today few businessmen understand that research, to be productive, has to be the “disorganizer,” the creator of a different future and the enemy of today.

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The Elements of the Decision Process The truly important features of the decisions Vail and Sloan made are neither their novelty nor their controversial nature. They are: 1. The clear realization that the problem was generic and could only be solved through a decision which established a rule, a principle; 2. The definition of the specifications which the answer to the problem had to satisfy, that is, of the “boundary conditions”; 3. The thinking through what is “right,” that is, the solution which will fully satisfy the specifications before attention is given to the compromises, adaptations, and concessions needed to make the decision acceptable; 4. The building into the decision of the action to carry it out; 5. The “feedback” which tests the validity and effectiveness of the decision against the actual course of events.

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The more concisely and clearly boundary conditions are stated, the greater the likelihood that the decision will indeed be an effective one and will accomplish what it set out to do.

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“What is the minimum needed to resolve this problem?” is the form in which the boundary conditions are usually probed.

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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?

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It is that military organizations learned long ago that futility is the lot of most orders and organized the feedback to check on the execution of the order. They learned long ago that to go oneself and look is the only reliable feedback.

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And no one has ever failed to find the facts he is looking for. The good statistician knows this and distrusts all figures—he either knows the fellow who found them or he does not know him; in either case he is suspicious.

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The effective executive encourages opinions. But he insists that the people who voice them also think through what it is that the “experiment”—that is, the testing of the opinion against reality—would have to show. The effective executive, therefore, asks: “What do we have to know to test the validity of this hypothesis?” “What would the facts have to be to make this opinion tenable?”

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Perhaps the crucial question here is: “What is the criterion of relevance?”

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The first rule in decision-making is that one does not make a decision unless there is disagreement.

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Above all, disagreement is needed to stimulate the imagination.

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Act if on balance the benefits greatly outweigh cost and risk; and • Act or do not act; but do not “hedge” or compromise.

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1. The first step toward effectiveness is a procedure: recording where the time goes.

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2. The next step, however, in which the executive is asked to focus his vision on contribution advances from the procedural to the conceptual, from mechanics to analysis, and from efficiencies to concern with results.

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3. Making strengths productive is fundamentally an attitude expressed in behavior.

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4. Chapter 5, “First Things First,” serves as antiphon to the earlier chapter, “Know Thy Time.” These two chapters might be called the twin pillars between which executive effectiveness is suspended and on which it rests.

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5. The effective decision, which the final chapters discuss, is concerned with rational action.

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