The first principle is that the effective executive (by which he means not only a CEO but anyone who is responsible for making decisions that in some way affect the organization) must manage his time. The purpose of the executive is to note outside trends and adapt his company to them, but unavoidably he will spend most of his time on internal matters. The only way to spend less time on internal (and unimportant to his task) matters is to record what time is spent doing things and ruthless prune away any tasks that cannot be done by someone else. Next, make sure that you have large chunks of time (not necessarily large quantities) to work on the important things and that you are uninterrupted during that time. One executive, for instance, scheduled 1.5 hour meetings because that was his attention span—he could get something accomplished but he didn’t waste time after his attention wandered.
The second principle is asking “what can I contribute?”. The purpose of everyone in the organization is to contribute something and the effective executive needs to ask what his contribution should be. What can he do to change the company in a way that will make it more successful? “Increase profits” does not qualify although focusing on efficient manufacturing, or low rates of return, or identifying talented managers might. Merely playing the job of CEO, expecting wield power and authority are ego boosters, not effectiveness.
The third principle is to use the peoples’ strengths and not worry about their weaknesses. Drucker observes that an organization can be more effective than one person because each person contributes their strength but does not contribute their weaknesses. So therefore, hire for strengths. Do not worry about a person’s weaknesses (unless it prevents them from using their strengths) as they are largely irrelevant. We all have our weaknesses and people with great strengths tend to have great weaknesses. Hiring for lack of weakness results in hiring mediocrity and does not take advantage of one of the main purposes of an organization.
The fourth principle is the process of decision making. The executive does not need to make many decisions, but he needs to make them at a high level. It is the executive’s job to determine whether a problem is a unique situation or a manifestation of a general trend. If it is the latter, and it is in more cases than we think, the executive must determine a principle for solving it. Drucker observed that too many decisions are made on the assumption that the problem is unique when it is really not. Drucker also argues that correct decisions cannot be made unless there are a multiplicity of viewpoints, for only then can one option be compared with the others and the correct option for the organization’s boundary conditions (i.e. requirements) be selected.
Drucker maintains a very clear understanding of the concepts of effectiveness and presents these to the reader with concise writing and pointed examples. The book, in fact, follows the outline of a good speech to the letter, except that the discussion of the material has more depth than the length of an oration will permit. The clarity of thought presented in The Effective Executive will, without doubt, impart much of Drucker’s concepts to the reader.
The book is clear, concise, with good examples. Each point is reinforced several times and expanded to convey a better idea of the area the topic covers. Although the book may possibly be boring for someone who has already understood the concepts, as Drucker points out, very few executives have learned the secret of being effective, so the first-time reader is almost certain to gain very key insights. And it is the insights that are important to the book—these are true insights, the sort that are easily put and yet perfectly applicable.
- Effectiveness must be learned (effective executives have little in common except these principles)
- Effectiveness requires time management
- No one really knows where their time goes (especially if they think they do) unless they write it down
- Identifying time wasters
- Eliminate activites that do not produce any results whatsoever (i.e. time-wasters)
- “The next question is ‘Which of the activities on my time log could not be done by somebody else just as well, if not better?’”
- Eliminate the time that you waste yourself. (This is best done by asking someone else)
- Fixing time-wasters
- Look for the “recurrent crisis”. “A crisis that recurs a second time is a crisis that must not occur again. ... A recurrent crisis should always have been foreseen. It can therefore either be prevented or reduced to a routine which clerks can manage. The definition of ‘routine’ is that it makes unskilled people without judgement capable of doing what it took a near-genius to be before; for a routine puts down in systematic, step-by-step form what a very able man learned in surmounting yesterday’s crisis. ... The recurrent crisis is simply a symptom of slovenliness and laziness.” (pp. 41-2)
- A well managed plant is boring; an exciting plant is poorly managed.
- Overstaffing. “If the senior people in the group—and
of course the manager in particular—spend more than a small fraction of
their time, maybe one tenth, on ‘problems of human relations,’ ... then
the work force is amost certainly too large.” (pg. 43)
- “Another common time-waster is malorganization. It’s symptom is an excess of meetings.” (p. 44)
- “The last major time waster is malfunction in information"—either information that is not updated fast enough or in the wrong form.
- Consolidate time
- We need a fairly large quantum to think about things, and if you need to deal with people, it takes a reasonably large quantum for them to think that they had meaningful interaction with you.
- Make sure you aren’t disturbed during your time.
- Set deadlines based on the judgement of available discretionary time.
- Ask “what can I contribute?”
- “The focus on contribution turns the executive’s attention away from his own speciality, his own narrow skills, his own department, and toward the performance of the whole. It turns his attention to the outside, the only place where there are results. ... 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.” (pp. 53-4)
- To produce contribution, need to have
- communication: generally the subordinate should tell the superior what he thinks his contribution should be (otherwise he will probably mis-hear it), although the superior may correct it.
- “The focus on contribution leads to communications sideways and thereby makes teamwork possible.”
- development: both by self and of others. But either way people grow to what is demanded of them.
- Build on strength’s don’t worry about weaknesses
- Organizations are created to utilize strength; weaknesses are irrelevent unless they inhibit exercising your strengths. So don’t fill jobs to minimize weakness but to maximize strengths.
- Do not assume “that jobs are created by nature or men”. Lookout for the impossible job—the one that requires multiple temperaments or requires unusual strenghts in multiple areas (unlikely to occur in one person). “The rule is simple: 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.” (p. 79)
- “Make each job demanding an 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.” (p. 80)
- “Start with what a man can do rather than what a job requires.’ (p. 83) This requires appraisals, but it should not be the negative sort that are prevalent. Instead:
- “What has he 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?” Why or why not? (p. 86)
- “To get strength one must put up with weakness.” (p. 87)
- Make your bosses strength’s productive. “There is nothing quite as conducive to success as a successful and rapidly promoted superior.” (p. 93)
- “One does not make the strengths of the boss productive by toadying to him. One does it by starting out with what is right and presenting it in a form which is accessible to the superior.” (p. 93)
- “‘What can my boss do really well?’ ‘What does he need to know to use his strength?’ ‘What does he need to get from me to perform?’ [The effective executive] does not worry too much over what the boss cannot do.” (p. 94)
- Do what needs done first.
- “Effective executives do not make a great many decisions. They concentrate on the important ones. They try to think through what is strategic and generic, rather than ‘solve problems.’” (p. 113)
- Deterimine if the problem is generic
- It might generic to the organization, generic in general but unique to the organization (e.g. a merger offer), generic but not yet categorized, or truly unique. It is best if the initial assumption is that the problem is generic.
- If it is, define “specifications which the answer to the problem had to satisfy” (i.e. boundary conditions)
- “The thinking through of 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.”
- “The building into the decision of the action to carry it out.”
- “The ‘feedback’ which tests the validity and effectiveness of the decision against the actual course of events.”
- Is the decision really necessary? What will happen if nothing is done?
- “Decisions of the kind the executive has to make are not made well by acclamation. ... The first rule in decision-making is that one does not make a decision unless there is disagreement.” (p. 148)