Go to the Amazon page for details and reviews.
What I thought of the book?
I’ve often felt swamped by the sheer amount of things that life throws at me. With so many things coming at you and all screaming that they are urgent and important it is easy to be overwhelmed. This book has helped me understand the difference between being effective (doing the right things) versus being efficient (doing things right). I still regularly come back to it as reference.
The most practical takeaway I got from this is the practice of time logging which Drucker describes in Chapter 2 – Know Thy Time so keep an eye on that.
Happy reading 📚
Summary Book Notes 👇
Foreword by Jim Collins
Ten Lessons I Learned from Peter Drucker
#1: First, manage thyself.
#2: Do what you’re made for.
#3: Work how you work best (and let others do the same).
#4: Count your time, and make it count.
#5: Prepare better meetings.
#6: Don’t make a hundred decisions when one will do.
#7: Find your one big distinctive impact.
#8: Stop what you would not start.
#9: Run lean.
#10: Be useful.
Management books usually deal with managing other people. The subject of this book is managing oneself for effectiveness.
To be reasonably effective it is not enough for the individual to be intelligent, to work hard, or to be knowledgeable. Effectiveness is something separate, something different.
In forty-five years of work as a consultant with a large number of executives in a wide variety of organizations—large and small; businesses, government agencies, labor unions, hospitals, universities, community services; American, European, Latin American, and Japanese—I have not come across a single “natural”: an executive who was born effective.
All the effective ones have had to learn to be effective. And all of them then had to practice effectiveness until it became habit.
Society has become a society of organizations in all developed countries. Now the effectiveness of the individual depends increasingly on his or her ability to be effective in an organization, to be effective as an executive.
Introduction – What Makes an Effective Executive?
An effective executive does not need to be a leader in the sense that the term is now most commonly used. Harry Truman did not have one ounce of charisma, for example, yet he was among the most effective chief executives in U.S. history.
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.”
Chapter 1 – Effectiveness Can Be Learned
Intelligence, imagination, and knowledge are essential resources, but only effectiveness converts them into results. By themselves, they only set limits to what can be attained. People are not born with effectiveness. It is a trait to be learned.
The difference between manual workers and “knowledge workers” – Effectiveness is the specific technology of the knowledge worker within an organization. Until recently, there was no more than a handful of these around. This is because in the past organizations were made up predominantly of manual workers post the Industrial Revolution. Thus we are still not good at measuring their work.
It is easy to measure the work of manual workers – For manual work, we need only efficiency; that is, the ability to do things right rather than the ability to get the right things done. The manual worker can always be judged in terms of the quantity and quality of a definable and discrete output, such as a pair of shoes. We have learned how to measure efficiency and how to define quality in manual work during the last hundred years—to the point where we have been able to multiply the output of the individual worker tremendously.
The shift to a predominant proportion of manual workers – Only a small fraction of the knowledge workers of earlier days were part of an organization. Most of them worked by themselves as professionals, at best with a clerk. Their effectiveness or lack of effectiveness concerned only themselves and affected only themselves. Today, however, the large knowledge organization is the central reality. Modern society is a society of large organized institutions. In every one of them, including the armed services, the center of gravity has shifted to the knowledge worker, the man who puts to work what he has between his ears rather than the brawn of his muscles or the skill of his hands. Increasingly, the majority of people who have been schooled to use knowledge, theory, and concept rather than physical force or manual skill work in an organization and are effective insofar as they can make a contribution to the organization.
It is harder to measure the work of knowledge workers – The imposing system of measurements and tests which we have developed for manual work—from industrial engineering to quality control—is not applicable to knowledge work. Working on the right things is what makes knowledge work effective. This is not capable of being measured by any of the yardsticks for manual work. The knowledge worker cannot be supervised closely or in detail. He can only be helped.
One can indeed never be sure what the knowledge worker thinks—and yet thinking is his specific work; it is his “doing.
The knowledge worker is the one “factor of production” through which the highly developed societies and economies of today—the United States, Western Europe, Japan, and also increasingly, the Soviet Union—become and remain competitive.
If effectiveness can be learned, however, the questions arise: What does it consist in? What does one have to learn? Of what kind is the learning? Is it a knowledge—and knowledge one learns in systematic form and through concepts? Is it a skill which one learns as an apprentice? Or is it a practice which one learns through doing the same elementary things over and over again? I have been asking these questions for a good many years.
These are essentially five practices—five habits of the mind that have to be acquired to be an effective executive:
- Effective executives know where their time goes.
- Effective executives focus on outward contribution.
- 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. – Contrast this with what many people tend to do. Focusing on problems and things they cannot do which is always the wrong starting point.
- 80-20 Rule – Effective executives concentrate on the few major areas where superior performance will produce outstanding results.
- 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.
These are the elements of executive effectiveness—and these are the subjects of this book.
Chapter 2 – 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.
Time is the most valuable resource – Effective executives know that time is the limiting factor. The output limits of any process are set by the scarcest resource. In the process we call “accomplishment,” this is time. Time is also a unique resource. Of the other major resources, money is actually quite plentiful. We long ago should have learned that it is the demand for capital, rather than the supply thereof, which sets the limit to economic growth and activity. People—the third limiting resource—one can hire, though one can rarely hire enough good people. But one cannot rent, hire, buy, or otherwise obtain more time. 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 forever and will never come back. Time is, therefore, always in exceedingly short supply.
Despite this, most people take time for granted – 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. Man is ill-equipped to manage his time.
We humans have a terrible sense of time – Though man, like all living beings, has a “biological clock”—as anyone discovers who crosses the Atlantic by jet—he lacks a reliable time sense, as psychological experiments have shown. People kept in a room in which they cannot see light and darkness outside rapidly lose all sense of time. Even in total darkness, most people retain their sense of space. But even with the lights on, a few hours in a sealed room make most people incapable of estimating how much time has elapsed. They are as likely to underrate grossly the time spent in the room as to overrate it grossly.
Example by Drucker to prove this point – I sometimes ask executives who pride themselves on their memory to put down their guess as to how they spend their own time. Then I lock these guesses away for a few weeks or months. In the meantime, the executives run an actual time record on themselves. There is never much resemblance between the way these men thought they used their time and their actual records.
The effective executive therefore knows that to manage his time, he first has to know where it actually goes.
The Time Demands on the Executive -There are constant pressures toward unproductive and wasteful time-use. Any executive, whether he is a manager or not, has to spend a great deal of his time on things that do not contribute at all. Much is inevitably wasted. The higher up in the organization he is, the more demands on his time will the organization make. Examples:
- The duty of ceremony such as dinners and other “official” functions.
- Similar time-wasters abound in the life of every executive. When a company’s best customer calls up, the sales manager cannot say “I am busy.” He has to listen, even though all the customer wants to talk about may be a bridge game the preceding Saturday or the chances of his daughter’s getting into the right college.
- The hospital administrator has to attend the meetings of every one of his staff committees, or else the physicians, the nurses, the technicians, and so on feel that they are being slighted.
- The government administrator had better pay attention when a congressman calls and wants some information he could, in less time, get out of the telephone book or the World Almanac.
- And so it goes all day long.
The need to block out uninterrupted chunks of time – In every executive job, a large part of the time must therefore be wasted on things which, though they apparently have to be done, contribute nothing or little. Yet most of the tasks of the executive require, for minimum effectiveness, a fairly large quantum of time. To spend in one stretch less than this minimum is sheer waste. One accomplishes nothing and has to begin all over again. To write a report may, for instance, require six or eight hours, at least for the first draft. It is pointless to give seven hours to the task by spending fifteen minutes twice a day for three weeks.
Time diagnosis and time “pruning”
- Keep a time log – The first step toward executive effectiveness is therefore to record actual time-use.
- Brutally cut the unessential out – Eliminate the things that need not be done at all, the things that are purely waste of time without any results whatever. To find these time-wastes, one asks of all activities in the time records: “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. It is amazing how many things busy people are doing that never will be missed. Learn to say NO.
- Ask yourself – “Which of the activities on my time log could be done by somebody else just as well, if not better?” – then delegate!
- Be careful of too many meetings – As a rule, meetings should never be allowed to become the main demand on an executive’s time. Too many meetings always bespeak poor structure of jobs and the wrong organizational components. Too many meetings signify that work that should be in one job or in one component is spread over several jobs or several components.
- The last major time-waster is malfunction in information.
Chapter 3 – What Can I Contribute?
Focus on this question – 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? The focus on contribution is the key to effectiveness.
Do not fall into the “efforts” trap – The great majority of executives tend to focus downward. They are occupied with efforts rather than with results. They worry over what the organization and their superiors “owe” them and should do for them. And they are conscious above all of the authority they “should have.” As a result, they render themselves ineffectual. 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.
The effective executive thinks holistically – The focus on contribution turns the executive’s attention away from his own specialty, 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. He is likely to have to think through what relationships his skills, his specialty, his function, or his department have to the entire organization and its purpose. He therefore will also come to think in terms of the customer, the client, or the patient, who is the ultimate reason for whatever the organization produces, whether it be economic goods, governmental policies, or health services. As a result, what he does and how he does it will be materially different.
The three types of contribution – 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. If deprived of performance in any one of these areas, it will decay and die. All three therefore have to be built into the contribution of every executive.
(1) The direct results – The direct results of an organization are clearly visible, as a rule. In a business, they are economic results such as sales and profits. In a hospital, they are patient care, and so on. But even direct results are not totally unambiguous, as the example of the Agency vice-president in the bank illustrates. And when there is confusion as to what they should be, there are no results.
(2) Commitment to values and their affirmation – Direct results always come first. In the care and feeding of an organization, they play the role calories play in the nutrition of the human body. But any organization also needs a commitment to values and their constant reaffirmation, as a human body needs vitamins and minerals. There has to be something “this organization stands for,” or else it degenerates into disorganization, confusion, and paralysis. Value commitments, like results, are not unambiguous.
(3) Building and developing people for tomorrow – Finally, organization is, to a large extent, a means of overcoming the limitations mortality sets to what any one man can contribute. An organization that is not capable of perpetuating itself has failed. An organization therefore has to provide today the men who can run it tomorrow. It has to renew its human capital. It should steadily upgrade its human resources. The next generation should take for granted what the hard work and dedication of this generation has accomplished. They should then, standing on the shoulders of their predecessors, establish a new “high” as the baseline for the generation after them. An organization which just perpetuates today’s level of vision, excellence, and accomplishment has lost the capacity to adapt. And since the one and only thing certain in human affairs is change, it will not be capable of survival in a changed tomorrow.
Chapter 4 – Making Strength Productive
The effective executive makes strength productive. He knows that one cannot build on weakness. To achieve results, one has to use all the available strengths—the strengths of associates, the strengths of the superior, and one’s own strengths. These strengths are the true opportunities. To make strength productive is the unique purpose of organization. It cannot, of course, overcome the weaknesses with which each of us is abundantly endowed. But it can make them irrelevant.
Staffing from Strength – The area in which the executive first encounters the challenge of strength is in staffing. 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.
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.
This does not mean you are blind to weaknesses – Effective executives are not blind to weakness. The executive who understands that it is his job to enable John Jones to do his tax accounting has no illusions about Jones’s ability to get along with people. He would never appoint Jones a manager. But there are others who get along with people. First-rate tax accountants are a good deal rarer. Therefore, what this man—and many others like him—can do is pertinent in an organization. What he cannot do is a limitation and nothing else.
Jobs have to be objective; that is, determined by task rather than by personality. Structuring jobs to fit personality is almost certain to lead to favoritism and conformity. And no organization can afford either. It needs equity and impersonal fairness in its personnel decisions. Or else it will either lose its good people or destroy their incentive.
How then do effective executives staff for strength without stumbling into the opposite trap of building jobs to suit personality? There are 4 rules:
- Make sure the job is well designed and for “normal humans” – They do not start out with the assumption that jobs are created by nature or by God. They know that they have been designed by highly fallible men. And they are therefore forever on guard against the “impossible” job, the job that simply is not for normal human beings. 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. He knows that the test of organization is not genius. It is its capacity to make common people achieve uncommon performance.
- 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. It should have scope so that any strength that is relevant to the task can produce significant results.
- Effective executives know that they have to start with what a man can do rather than with what a job requires. Japanese companies do this very well.
- The effective executive knows that to get strength one has to put up with weaknesses. The key consideration is to ask “what can this man do?” rather than “what this man cannot do?”
How Do I Manage My Boss? – Above all, the effective executive tries to make fully productive the strengths of his own superior. I have yet to find a manager, whether in business, in government, or in any other institution, who did not say: “I have no great trouble managing my subordinates. But how do I manage my boss?” It is actually remarkably easy—but only effective executives know that. The secret is that effective executives make the strengths of the boss productive. 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.
The myth of outshining your boss – This should be elementary prudence. Contrary to popular legend, subordinates do not, as a rule, rise to position and prominence over the prostrate bodies of incompetent bosses. If their boss is not promoted, they will tend to be bottled up behind him. And if their boss is relieved for incompetence or failure, the successor is rarely the bright, young man next in line. He usually is brought in from the outside and brings with him his own bright, young men. Conversely, there is nothing quite as conducive to success as a successful and rapidly promoted superior.
Chapter 5 – 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. In fact, this idea is so powerful Gary Keller and Jay Papasan wrote an entire book on this, called The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results.
There is always more to do than there is time, therefore one must prioritize – The need to concentrate is grounded both in the nature of the executive job and in the nature of man. Several reasons for this should already be apparent: There are always more important contributions to be made than there is time available to make them. Any analysis of executive contributions comes up with an embarrassing richness of important tasks; any analysis of executives’ time discloses an embarrassing scarcity of time available for the work that really contributes.
Define “posteriorities” not just priorities – Ultimately, the effective executive must set a large number of posteriorities—tasks one chooses not to tackle—so as to focus with exquisite clarity on a small number of priorities.
Dare to say “no” – The more an executive focuses on upward contribution, the more will he require fairly big continuous chunks of time. The more he switches from being busy to achieving results, the more will he shift to sustained efforts—efforts which require a fairly big quantum of time to bear fruit. Yet to get even that half-day or those two weeks of really productive time requires self-discipline and an iron determination to say “No.”
Focus on one thing – Concentration is dictated also by the fact that most of us find it hard enough to do well even one thing at a time, let alone two. Mankind is indeed capable of doing an amazingly wide diversity of things; humanity is a “multipurpose tool.” But the way to apply productively mankind’s great range is to bring to bear a large number of individual capabilities on one task. It is concentration in which all faculties are focused on one achievement.
People think multi-tasking helps you get things done faster. Counter-intuitively, in most cases focusing on one thing is actually faster. Concentration is necessary precisely because the executive faces so many tasks clamoring to be done. For doing one thing at a time means doing it fast. The more one can concentrate time, effort, and resources, the greater the number and diversity of tasks one can actually perform. 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. (research today has shown there are costs to such context switching)
Ironically, the people who get nothing done often work a great deal harder.
Do not fall for sunk cost fallacy – be willing to ruthlessly drop things – The first rule for the concentration of executive efforts is to slough off the past that has ceased to be productive. Effective executives periodically review their work programs—and those of their associates—and ask: “If we did not already do this, would we go into it now?” And unless the answer is an unconditional “Yes,” they drop the activity or curtail it sharply.
Concentration—that is, the courage to impose on time and events his own decision as to what really matters and comes first—is the executive’s only hope of becoming the master of time and events instead of their whipping boy.
Chapter 6 – The Elements of Decision-Making
Decision-making is only one of the tasks of an executive. It usually takes but a small fraction of his time. But to make decisions is the specific executive task. Decision-making therefore deserves special treatment in a discussion of the effective executive. Only executives make decisions. Indeed, to be expected—by virtue of position or knowledge—to make decisions that have significant impact on the entire organization, its performance, and results defines the executive. Effective executives, therefore, make effective decisions.
Unless a decision has “degenerated into work” it is not a decision; it is at best a good intention. This means that, while the effective decision itself is based on the highest level of conceptual understanding, the action to carry it out should be as close as possible to the working level and as simple as possible.
The 5 Elements of the Effective Decision Process
- 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 (Ray Dalio refers to these as “another one of those” and talks a lot about this in his book Principles)? 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.
- The second major element in the decision process is clear specifications as to what the decision has to accomplish. 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. 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.
- 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.
- A decision must be converted into action or it is merely an intention – 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. In fact, 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 intentions.
- 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. Decisions are made by men. Men are fallible; at their best their works do not last long. Even the best decision has a high probability of being wrong. Even the most effective one eventually becomes obsolete.
These are the elements of the decision process. But what about the decision itself?
Chapter 7 – Effective Decisions
A decision is a judgment. It is a choice between alternatives (i.e. there is opportunity cost and trade-off). It is rarely a choice between right and wrong. It is at best a choice between “almost right” and “probably wrong”—but much more often a choice between two courses of action neither of which is probably more nearly right than the other.
Most books on decision-making tell the reader: “First find the facts.” But executives who make effective decisions know that one does not start with facts. One starts with opinions. These are, of course, nothing but untested hypotheses and, as such, worthless unless tested against reality. To determine what is a fact requires first a decision on the criteria of relevance, especially on the appropriate measurement. This is the hinge of the effective decision, and usually its most controversial aspect.
Similar concept to Ray Dalio’s concept of an “idea meritocracy” in Principles – Finally, the effective decision does not, as so many texts on decision-making proclaim, flow from a consensus on the facts. The understanding that underlies the right decision grows out of the clash and conflict of divergent opinions and out of the serious consideration of competing alternatives. In Ray Dalio’s Bridgewater Associates, differences of opinions aren’t frowned upon but highly encouraged. Being “radically open-minded” is a key ingredient to building an “idea meritocracy.”
Relevance – To get the facts first is impossible. There are no facts unless one has a criterion of relevance. Events by themselves are not facts. In physics the taste of a substance is not a fact. Nor, until fairly recently, was its color. In cooking, the taste is a fact of supreme importance, and in painting, the color matters. Physics, cooking, and painting consider different things as relevant and therefore consider different things to be facts.
The danger of starting with a preconceived opinion first – People inevitably start out with an opinion; to ask them to search for the facts first is even undesirable. They will simply do what everyone is far too prone to do anyhow: look for the facts that fit the conclusion they have already reached. 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.
Recognize your opinion is just that, an opinion or a hypothesis to be tested against facts – The only rigorous method, the only one that enables us to test an opinion against reality, is based on the clear recognition that opinions come first—and that this is the way it should be. Then no one can fail to see that we start out with untested hypotheses—in decision-making as in science the only starting point. We know what to do with hypotheses—one does not argue them; one tests them. One finds out which hypotheses are tenable, and therefore worthy of serious consideration, and which are eliminated by the first test against observable experience. 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.
Conclusion: Effectiveness Must Be Learned
This book rests on two premises:
- The executive’s job is to be effective; and
- Effectiveness can be learned.
The executive is paid for being effective. He owes effectiveness to the organization for which he works. What then does the executive have to learn and have to do to deserve being an executive? In trying to answer this question, this book has, on the whole, taken organizational performance and executive performance to be goals in and by themselves.
Effectiveness can be learned is the second premise. The book has therefore tried to present the various dimensions of executive performance in such sequence as to stimulate readers to learn for themselves how to become effective executives. This is not a textbook, of course—if only because effectiveness, while capable of being learned, surely cannot be taught. Effectiveness is, after all, not a “subject,” but a self-discipline. But throughout this book, and implicit in its structure and in the way it treats its subject matter, is always the question: “What makes for effectiveness in an organization and in any of the major areas of an executive’s day and work?” Only rarely is the question asked: “Why should there be effectiveness?” The goal of effectiveness is taken for granted.
The Effective Executive is, in short, Drucker’s gift to you so that you can learn to be yourself, to aim beyond yourself, and to work with courage.
Now don’t tell me you had a wonderful time reading this book. Tell me instead:
What will you do on Monday that’s different?