The Effective Executive" (1966) was the first book to define who an executive is and to explain the practices of effective executives. Today there are several in this genre. But this book was the first, as is the case with many of Drucker's masterpieces.
Drucker starts the book by stating that this book is about managing oneself and that executives who do not manage themselves cannot possibly expect to manage other people.
Efficiency vs. Effectiveness:
"Efficiency is doing things right; effectiveness is doing the right things."
For manual work, efficiency was enough. In today world, the center of gravity has shifted from the manual worker to the "knowledge worker" (a term Drucker coined in the 60s). For knowledge work, effectiveness is more important than efficiency.
Who is an executive?
Executive = a knowledge worker who is ... responsible for contributions (decisions, actions) ... that have significant impact on ... performance and results of the whole organization (derived from pages 5 through 9).
1. Manage time
2. Focus on contributions and results
3. Build on strengths
4. Set the right priorities
5. Make effective decisions
1. Manage time:
"Time is the scarcest resource, and unless it is managed, nothing else can be managed" (page 51).
Chapter 2, Know Thy Time, starts with a three-step process - recording, managing and consolidating time. Drucker then states the factors that make time a unique resource - the supply of time is inelastic, time is perishable and cannot be stored, time is irreplaceable (i.e. has no substitute), all work takes place in and uses up time.
Drucker then explains time-diagnosis with questions for the executive:
a. What would happen if this were not done at all?
b. Which activities could be done by somebody else just as well, if not better?
c. (ask others) What do I do that wastes your time without contributing to your effectiveness?
Drucker then explains the identification of time wasters caused by - lack of system, overstaffing, bad organization structure, malfunction in information. If you have spent time in meetings, you will surely be able to relate these concepts to your work. This chapter changed my perception of time as a resource.
2. Focus on contributions and results:
In chapter 3, What Can I Contribute?, Drucker stresses the importance of focusing outward, on contributions and results; as opposed to downward, on efforts. He proceeds to discussing the four basic requirements of effective human relations:
d. Development of others
3. Build on strengths:
"In every area of effectiveness within an organization, one feeds the opportunities and starves the problems" (page 98).
In chapter 4, Making Strengths Productive, Drucker explains that effective executives build on strengths and make weaknesses irrelevant. Decades after this book was written, researchers from Gallup arrived at the same result, published in the bestseller "First Break All the Rules"; confirming that Drucker was right all along.
Drucker proceeds to outline four rules for staffing from strength:
a. Make sure the job is well designed
b. Make the job challenging to bring out strengths
c. Have an appraisal policy to measure performance
d. Put up with weaknesses - the exception is a weakness in character and integrity, which causes disqualification.
4. Set the right priorities:
Chapter 4, First Things First, deals with concentration. Drucker explains that effective executives set the right priorities and stick to them. They concentrate on the areas where superior performance will produce outstanding results. They also set posteriorities - tasks not to tackle. In the section "sloughing off yesterday", Drucker states that effective executives ask "If we did not already do this, would we go into it now?" If the answer is no, the activity is dropped or curtailed. This concept is explained in more detail in Drucker's book titled "Managing For Results" (1964) as purposeful abandonment in chapter 9. America's best known CEO, GE's Jack Welsh, followed this practice when he got rid of GE businesses that could not be number one or two in their industries.
5. Make effective decisions:
"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 intensions" (page 136).
In chapter 6, The Elements of Decision Making, Drucker explains his five step decision process:
a. Determine whether the problem is generic or unique
b. Specify the objectives of the decision and the conditions it needs to satisfy
c. Determine the right solution that will satisfy the specifications and conditions
d. Convert the decision into action
e. Build a feedback process to compare results with expectations
In chapter 7, Effective Decisions, Drucker states that a decision is a judgment, a choice between alternatives. He explains the importance of creating disagreement, rather than consensus. Drucker explains that disagreement provides alternatives and stimulates imagination.
"The first rule in decision making is that one does not make a decision unless there is disagreement" (page 148).
In the conclusion, Drucker states that effectiveness can and must be learned and that executive effectiveness is the best hope to make modern society productive economically and viable socially.
If you are an executive, you must read this book.