The Effective Executive – Peter F. Drucker

Book: The Effective Executive

Book Synopsis – The measure of the executive, Peter F. Drucker reminds us, is the ability to “get the right things done.” This usually involves doing what other people have overlooked as well as avoiding what is unproductive. Intelligence, imagination, and knowledge may all be wasted in an executive job without the acquired habits of mind that mold them into results. Drucker identifies five practices essential to business effectiveness that can, and must, be learned:

• Managing time
• Choosing what to contribute to the organization
• Knowing where and how to mobilize strength for best effect
• Setting the right priorities
• Knitting all of them together with effective decision-making

Ranging widely through the annals of business and government, Peter F. Drucker demonstrates the distinctive skill of the executive and offers fresh insights into old and seemingly obvious business situations. (Amazon)

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Notes:

Introduction: What Makes an Effective Executive

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

Get the Knowledge You Need

1. What needs to be done

The first practice is asking what needs to be done. It is NOT asking “What do I want to do? Don’t run with what you want to do but really figure out what NEEDS to be a priority.

When you ask what needs to be done, there are always many things that need to be done but effective executives usually pick ONE top priority. A tiny fraction of executives pick two things but it’s rare. Effective executives will figure out the top priority and get that done. Once that is done they DO NOT move on to priority two. They reevaluate and do priority one again (it might be the priority that was in second place but not always).

Jack Welch, previous CEO to GM, would choose a new priority every five years. He would then pick the top two to three tasks that he would do best and delegate the rest.

2. 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 especially true for family owned or family run businesses. Employees shouldn’t be given positions because of nepotism but based on meritocracy. They only get the position IF they their skills justify it and they are better than non-family members.

If you don’t ask this question, “What is the right thing for the enterprise?” then you’re sure to make the wrong decision but it doesn’t prevent you from making mistakes.

3. Write an Action Plan

Executives are doers; they execute. But before they do that they need to plan. He thinks about:

• Defines results – “What contributions should the enterprise expect from me over the next 18 months to two years? What results will I commit to? With what deadlines?
• Probable restraints – “Is this course of action ethical? Is it acceptable within the organization? Is it legal? Is it compatible with the mission, values, and policies of the organization?”
• Future revisions – The action plan should be revised often. Successes and failures change the situation so you need to revise around them. Things change and so should your action plan.
• Check-in points – Usually two check-in points. Halfway and right before the beginning of the next action plan.
• Time management – The action plan has to become a basis for the executive’s time management.

Act

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

4. They took 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
• The names of the people who have to be informed of the decision, even if they are not directly affected by it

It’s important to review decisions as well periodically at a predetermined time. This allows poor decisions to be corrected before it does real damage. The review can cover anything from the results to the assumptions underlying the decision. This is especially true for hiring decisions.

A systematic decision review for self-development. By checking results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information.

5. Take responsibility for communicating

Effective executives (EE’s) make sure that both their actions plans and their information needs are understood. They share their plans with and ask for comments from all their colleagues — superiors, subordinates, and peers. Information needs to flow from subordinates to superiors and also from executives to peers and superiors. Executives need to identify information they need and ask for it until you get it.

6. Focus on opportunities

Good executives focus on opportunities because they move the needle forward for an organization. Problems are necessary to deal with because they prevent damage but opportunities produce a results.

EE’s scan these seven situations for opportunities:

• An unexpected success or failure in their own enterprise, in a competing enterprise, or in the industry
• A gap between what is and what could be in a market, process, product, or service
• Innovation in a process, product, or service, whether inside or outside the enterprise or industry
• Changes in industry structure and market strucutre
• Demographics
• Changes in mind-set, values, perception, mood, or meaning
• New knowledge or a new technology

Opportunities should be the primary focus and problems secondary unless they are catastrophic.

Match your best talent with the best opportunities.

7. Make meetings productive

The key to running an effective meeting is to decide in advance what kind of meeting it will be. Different kinds fo meetings require different forms of preparation and different results.

• A meeting to prepare a statement, and announcement, or a press release – One member has to prepare a draft beforehand. At the meeting’s end, a preappointed member has to take responsibility for disseminating the final text.
• A meeting to make an announcement — for example an organization change – The meeting should be confined to the announcement and a discussion about it.
• A meeting in which one member reports – Nothing but the report should be discussed.
• A meeting in which several or all members report – Either there should be no discussion at all or the discussion should be limited to questions for clarification. Alternatively, for each report there could be a short discussion in which all participants may ask questions. If this is the format, the reports should be distributed to all participants well before the meeting. Presentation time for each person should be limited. I.e. 15 minutes a person
• A meeting to inform the convening executive – The executive should listen and ask questions. He or she should sum uip but not make a presentation.

Terminate meetings as soon as they accomplish their purpose. Don’t bring up other topics. Sum up and adjourn.

Meeting format by Alfred Sloan (Headed GM from 1920’s to 1950’s):

• Announce meetings format
• Then listen
• Only speak to clarify confusing points
• Sum up meeting
• Leave
• Write short memo addressed to one attendee of the meting.
• In memo, summarize discussion, its conclusions, and spell out work assignment decided up in the meeting. Include a decision to hold another meting on the subject or to study an issue.
• Specify deadline
• Specify executive who is accountable for the assignment
• Send copy of the memo to everyone present at the meeting.

8. Think and say “We”

EE’s think of the needs and the opportunities of the organization before they think of their own needs and opportunities.

Listen first, speak last.

Chapter 1 – Effectiveness Can Be Learned

WHY WE NEED EFFECTIVE EXECUTIVES

WHO IS AN EXECUTIVE?

EXECUTIVE REALITIES

1. The executive’s time tends to belong to everybody else
2. Executives are forced to keep on “operating” unless they take positive action to change the reality in which they live and work
3. The third reality pushing the executive toward ineffectiveness is that he is within an organization
4. The executive is within an organization

THE PROMISE OF EFFECTIVENESS

BUT CAN EFFECTIVENESS BE LEARNED?

Chapter 2 – Know Thy Time

Chapter 3 – What Can I Contribute?

Chapter 4 – Making Strength Productive

Chapter 5 – First Things First

Chapter 6 – The Elements of Decision-making

Chapter 7 – Effective Decisions

Conclusion: Effectiveness Must Be Learned