The Effective Executive by Peter Drucker

Summary and high yield notes

Rating: 7/10

Date finished: September 29, 2020

3️⃣The book in three sentences

1. One of the weaknesses of young, highly educated people today—whether in business, medicine, or government—is that they are satisfied to be versed in one narrow specialty and affect a contempt for the other areas.

   If one cannot increase the supply of a resource, one must increase its yield. And effectiveness is the one tool to make the resources of ability and knowledge yield more and better results.

2. If one cannot increase the supply of a resource, one must increase its yield. And effectiveness is the one tool to make the resources of ability and knowledge yield more and better results.

3. If there is any one "secret" of effectiveness, it is concentration. Effective executives do first things first and they do one thing at a time.

💡Thoughts

I read this book in 2020(when I was 18!). But I didn't find it particularly interesting at the time. I gave it a rating at the time. But when I checked my notes on it nearly three years later (2023), I was amazed at how good the book is. I would have given it a higher rating if I had read it two years later, but I will keep the rating to preserve its originality.

Highly recommend.

☀️Summary + high yield notes

Effective executive's practices

1. They ask what needs to be done; not 'what do I want to do?'

2. The second practice is to ask ' is this the right thing for the enterprise?' They do not ask if it's right for the owners, the stock price, the employees, or the executives. This is important for executives in family owned or family run businesses.

3. Write an action plan.  Knowledge is useless to executives until it has been translated into deeds. 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.

4. Act ;Take responsibility for decisions. 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.

5. Take responsibility for communicating.  Effective executives make sure that both their action plans and their information needs are understood. Specifically, this means that they share their plans with and ask for comments from all their colleagues—superiors, subordinates, and peers.

6. Focus on opportunities. Good executives focus on opportunities rather than problems. Effective executives treat change as an opportunity rather than a threat.

7. Make meetings productive.

8. Don't think or say "I." Think and say "we."

📔Effectiveness can be learned

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

“The motivation of the knowledge worker depends on his being effective, on his being able to achieve. If effectiveness is lacking in his work, his commitment to work and to contribution will soon wither, and he will become a time-server going through the motions from 9 to 5.”

“Every knowledge worker in modern organization is an "executive" if, by virtue of his position or knowledge, he is responsible for a contribution that materially affects the capacity of the organization to perform and to obtain results.”

“Knowledge work is not defined by quantity. Neither is knowledge work defined by its costs. Knowledge work is defined by its results. And for these, the size of the group and the magnitude of the managerial job are not even symptoms.”

“The most subordinate manager, we now know, may do the same kind of work as the president of the company or the administrator of the government agency; that is, plan, organize, integrate, motivate, and measure. His compass may be quite limited, but within his sphere, he is an executive.”

“The realities of the executive's situation both demand effectiveness from him and make effectiveness exceedingly difficult to achieve. Indeed, unless executives work at becoming effective, the realities of their situation will push them into futility.”

“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 classifications still produce the expected figures—as they did for Edsel. But the figures no longer correspond to actual behavior.”

“The computer is a logic machine, and that is its strength— but also its limitation. The important events on the outside cannot be reported in the kind of form a computer (or any other logic system) could possibly handle. Man, however, while not particularly logical is perceptive—and that is his strength.”

“The computer only makes visible a condition that existed before it. 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.”

“One of the weaknesses of young, highly educated people today—whether in business, medicine, or government—is that they are satisfied to be versed in one narrow specialty and affect a contempt for the other areas.”

“If one cannot increase the supply of a resource, one must increase its yield. And effectiveness is the one tool to make the resources of ability and knowledge yield more and better results.”

“Effectiveness thus deserves high priority because of the needs of organization. It deserves even greater priority as the tool of the executive and as his access to achievement and performance.”

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

Practices one learns by practicing and practicing and practicing again.

There is, in other words, no reason why anyone with normal endowment should not acquire competence in any practice. Mastery might well elude him; for this one might need special talents. But what is needed in effectiveness is competence. What is needed are "the scales."

Five habits 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 die 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."

⌛Know thy time

Effective executives, in my observation, do not start with their tasks. They start with their time. And they do not start out with planning. They start by finding out where their time actually goes. Then they attempt to manage their time and to cut back unproductive demands on their time. Finally they consolidate their "discretionary" time into the largest possible continuing units.

This three-step process:

• recording time,

• managing time, and

• consolidating time

is the foundation of executive effectiveness.

The supply of time is totally inelastic. No matter how high the demand, the supply will not go up. There is no price for it  and no marginal utility curve for it. Moreover, time is totally perishable and cannot be stored. Yesterday's time is gone for ever and will never come back. Time is, therefore, always in exceedingly short supply.

Time is totally irreplaceable. Within limits we can substitute one resource for another, copper for aluminum, for instance. We can substitute capital for human labor. We can use more knowledge or more brawn. But there is no substitute for time.

Everything requires time. It is the one truly universal condition. All work takes place in time and uses up time. Yet most people take for granted this unique, irreplaceable, and necessary resource. Nothing else, perhaps, distinguishes effective executives as much as their tender loving care of time.

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.

Mixing personal relations and work relations is time-consuming. If hurried, it turns into friction. Yet any organization rests on this mixture. The more people are together, the more time will their sheer interaction take, the less time will be available to them for work, accomplishment, and results.

People-decisions are time-consuming, for the simple reason that the Lord did not create people as "resources" for organization. They do not come in the proper size and shape for the tasks that have to be done in organization—and they cannot be machined down or recast for these tasks. People are always "almost fits" at best. To get the work done with people (and no other resource is available) therefore requires lots of time, thought, and judgment.

Many executives know all about these unproductive and unnecessary time demands; yet they are afraid to prune them. They are afraid to cut out something important by mistake. But this mistake, if made, can be speedily corrected. If one prunes too harshly, one usually finds out fast enough.

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.

"If it takes two ditch-diggers two days to dig a ditch, how long would it take four ditch-diggers?" In first grade, the correct answer is, of course, "one day." In the kind of work, however, with which executives are concerned, the right answer is probably "four days" if not "forever."

Another common time-waster is malorganization. Its symptom is an excess of meetings.

Every meeting generates a host of little follow-up meetings—some formal, some informal, but both stretching out for hours. Meetings, therefore, need to be purposefully directed. An undirected meeting is not just a nuisance; it is a danger. But above all, meetings have to be the exception rather than the rule. An organization in which everybody meets all the time is an organization in which no one gets "anything done.

Wherever a time log shows the fatty degeneration of meetings—whenever, for instance, people in an organization find themselves in meetings a quarter of their time or more—there is time-wasting malorganization.

The executive who records and analyzes his time and then attempts to manage it can determine how much he has for his important tasks. How much time is there that is "discretionary," that is, available for the big tasks that will really make a contribution?

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. And if they find later that other matters encroach on this reserve, they scrutinize their record again and get rid of some more time demands from less than fully productive activities. They know that, as has been said before, one rarely over prunes.

👋What can I contribute?

"What can I contribute that will significantly affect the performance and the results of the institution I serve?"

 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.

To ask, "What can I contribute?" is to look for the unused potential in the job. And what is considered excellent performance in a good many positions is often but a pale shadow of the job's full potential of contribution.

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?"

Executives in an organization do not have good human relations because they have a "talent for people." They have good human relations because they focus on contribution in their own work and in their relationships with others. As a result, their relationships are productive—and this is the only valid definition of "good human relations."

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

• communications;

• teamwork;

• self-development; and,

• development of others.

💪Making strength productive

Effective executives never ask "How does he get along with me?" Their question is "What does he contribute?" Their question is never "What can a man not do?" Their question is always "What can he do uncommonly well?" In staffing they look for excellence in one major area, and not for performance that gets by all around.

One implication is that the men who build first-class executive teams are not usually close to their immediate colleagues and subordinates. Picking people for what they can do rather than on personal likes or dislikes, they seek performance, not conformance. To insure this outcome, they keep a distance between themselves and their close colleagues.

Any job that has defeated two or three men in succession, even though each had performed well in his previous assignments, must be assumed unfit for human beings. It must be redesigned.

The young knowledge worker should, therefore, ask himself early: "Am I in the right work and in the right place for my strengths to tell?" But he cannot ask this question, let alone answer it, if the beginning job is too small, too easy, and designed to offset his lack of experience rather than to bring out what he can do.

Effective executives know that they have to start with what a man can do rather than with what a job requires. This, however, means that they do their thinking about people long before the decision on filling a job has to be made, and independently of it.

That so few executives use the official appraisal is thus hardly surprising. It is the wrong tool, in the wrong situation, for the wrong purpose.

The effective executive knows that to get strength one has to put up with weaknesses. The effective executive will therefore ask: "Does this man have strength in one major area? And is this strength relevant to the task? If he achieves excellence in this one area, will it make a significant difference?" And if the answer is "yes," he will go ahead and appoint the man.

The effective executive, therefore, asks: "What can my boss do really well?" "What has he done really well?" "What does he need to know to use his strength?" "What does he need to get from me to perform?" He does not worry too much over what the boss cannot do.

🥇First things first

If there is any one "secret" of effectiveness, it is concentration. Effective executives do first things first and they do one thing at a time.

We rightly consider keeping many balls in the air a circus stunt. Yet even the juggler does it only for ten minutes or so. If he were to try doing it longer, he would soon drop all the balls.

This is the "secret" of those people who "do so many things" and apparently so many difficult things. They do only one at a time. As a result, they need much less time in the end than the rest of us.

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.

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.

🤔The elements of decision making

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?" The generic always has to be answered through a rule, a principle. The exceptional can only be handled as such and as it comes.

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.

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.

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.

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.

Effective decisions

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

The surgeon who only takes out half the tonsils or half the appendix risks as much infection or shock as if he did the whole job. And he has not cured the condition, has indeed made it worse. He either operates or he doesn't. 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, and the one sure way not to satisfy the minimum specifications, the minimum boundary conditions

💡Conclusion: Effectiveness can be learned

Steps to effectiveness

1. Record where time goes.

2. Focus your vision on contribution.

3. Make strengths productive.

4. Concentrate.

5. Take rational action.

Executive effectiveness is our one best hope to make modern society productive economically and viable socially.