Effective Executive - Peter Drucker

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One Sentence Summary: A classic book that should be read by all professionals regardless of their title and hopefully it'll result in the reduction of those who strive for mediocrity in individual and organizational performance. 

Favourite Chapter: Chapter 4

Below are notes I've taken while reading the book. This is not a comprehensive summary but thoughts and ideas I've found valuable. I recommend reading these notes after you've read the book first to compare our thoughts. I can't stop you if you don't want to so I guess you can use the below as an idea of what you may get out of the book yourself if you read it... though if it ain't clear it's cause you didn't listen to me. 

Chapter-based Notes:

Chapter 1: Effectiveness Can Be Learned

What is important is to be working on the right things. You can't measure ones effectiveness with simple yard sticks for knowledge workers like done for manual work in the past. Heuristic tasks are not easily quantifiable yet there is this recent need to have everything be quantifiable in the short-term and what organizations need to understand is that you can only help their knowledge workers be effective and must trust it will take time to see the result of their effectiveness.

There is a self-proving thesis to giving autonomy to the knowledge worker for when the worker realizes they are no longer effective they will lose motivation and eventually wither to become an average contributor who just lives for a 9-5. Natural selection will weed out the ineffective when you let them roam free.

Autonomy is key. It's a requirement for knowledge workers. You may teach them but you must give them autonomy. The decision is theirs to be made. Only those in the front lines are fit to make the decisions on the spot. The teachers must be willing to bear the responsibility of such decisions. Thus is the task of the manager

To be effective one must 1) Stay focused to the key task and limit ALL distractions and 2) establish priorities and focus only on the key priorities

"There are only effort centers. The less an organization has to do to produce results, the better it does its job." -> Pull away from the consulting framework of profit and cost centers. The full system must be effective, not just one center. 

Executives tend to rely heavily on what is quantifiable and as internals of an organization are more quantifiable the executives will increase focus on that area. However, the importance must be paces on the qualitative problems that relate to the outside world for such events can have material impacts to the organization

"The computer only makes visible a condition that existed before it." -> Relying on historic facts to forecast is very much like performance chasing. History does not repeat and if using such details to predict details you will be gravely misguided for the future may only reflect patterns of the past

"If one cannot increase the supply of a resource, one must increase its yield"

There is no "effective personality", rather it's the learned ability to get the "right things done". Thus, effectiveness is a habit. To make this a habit one must 1) know where ones time goes to by systematic about its usage, 2) Ask "What results are expected of me?" to think about the "how" to achieve the "what", 3) strength/genius-area focused, 4) There is no choice but to do first things first and second things not at all, 5) "know that to make many decisions fast means to make the wrong decisions. What is needed are few, but fundamental, decisions."

Chapter 2: Know Thy Time

"People are time-consumers. And most people are time wasters." Don't just give bits of time here and there. It takes an infinite amount of time to build a relationship with a person so if meeting with people to get work done then schedule at least 1 hour of focused work time. It's about creating blocks of time to focus and not be interrupted. No cell phones, no distractions. If you have to do a key task set up 5-6 hour blocks where there is nothing but the task and you to get to draft zero. 

"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." -> The case to find integration between remote and non-remote work. 

Finding time-wasters: "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.

"Actually, all one has to do is to learn to say "no" if an activity contributes nothing to one's own organization, to oneself, or to the organization for which it is performed." What you don't do is just as important as what you do. If you can delegate to someone who can do it better than you, then do so. Better yield with finite time. 

On meetings: make an invite to everyone by letting them know about the agenda and being transparent about what the meeting is for and then let the employees decide for themselves if they need to be at the meeting. This stops people who shouldn't be there from wasting their time and vice versa. It also bestows the decision making to the employees. 

"Time-wastes often result form overstaffing." -> practically most tech companies that go through some sort of financing and go on a hiring spree with poor purpose and intent. 

"In a lean organization people have room to move without colliding with one another and can do their worth without having to explain it all the time."

Meetings are a massive time waster. The need for many meetings may mean a poor construction of jobs and organizational design as root causes. 

To make effective use of time you must first understand how you work. How long you can maintain your focus on a specific task and how long you need to make any form of materially meaningful progress. If you need 1.5 hrs to do anything meaningful then schedule such slots and limit all distractions. Phone calls and notifications can wait 90 minutes. No company went belly-up because someone waited 90 minutes. Blocks of focused time are the requirement to achieve any form of progress. Schedule it the way it works for you. Maybe it's 3 hours in the morning or 3 hours after dinner or batching tasks to various days like meetings on tuesdays and thursday only. 

Chapter 3 - What Can I Contribute

Know your purpose in your role and what you hope to achieve. Also know what your strengths are and use those as guiding principles to help in the decision making process of determining where your time should be allocated, to what tasks. Ask yourself: "What can I and no one else do which, if done really well, would make a real difference to this company?", this is a question that can be asked about everything in life. You should focus on the biggest contribution you can make and leave other things to people who do it better than you. 

Focusing on your genius area and the what/how you can contribute is also an organizational mindset that is required to make the company a growth-mindset company instead of a fixed-mindset company. From an organizational POV good managers must be able to communicate this mindset to the employees as well. They must ask: "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?", top executives know that their mission is to serve their own employees and NOT the other way around. 

Focusing on contribution requires effective human relations. Human relations is just part of the process. Effective human relations requires:

  • communication -> lead by example, 360 review/feedback, more 1-on-1 discussions

  • teamwork

  • self-development -> more contribution = more growth of self

  • development of others -> demand excellence and ambitious goals

Chapter 4 - Making Strength Productive

"To make strength productive is the unique purpose of organization"

No one is without weaknesses. The focus shouldn't be on rounding people out. The focus should be on maximizing people's strengths. People with great strengths have great weaknesses and that is why team construction is so important where the sum of all parts makes it a super effective team. A bunch of people who are average at everything makes an average team but a bunch of people with different specialized strength areas form an effective team. Hire for strength, overlook the weakness. The effective executive is an effective allocator of human capital. People in a company are like companies in a portfolio of investments. You want every one of them to have a competitive advantage that will expand over time. Ask what the employee can do uncommonly well. 

My disagreement with Drucker is on the minimum threshold of "weaknesses". I do think likeability and "no asshole" are essential to creating a sustainable and effective team and these can't be ignored. These may actually be the margin of safety factors you build into hiring individuals. 

"Human excellence can only be achieved in one area, or at the most in very few," if you are not reaching for excellence then you've settled for mediocrity. 

"One cannot hire a hand - the whole man always comes with it," you hire for the strength but know the weakness will come with it. 

"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?", this aligns with my perspective on career strategies where I think the begining parts of ones career should not be about setting roots and digging in but actually thrashing to learn more about the self and the world around before committing. 

Good questions for appraising people:

  • 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 Yes or No?

People are not arithmetic. Two mediocrities achieve even less than one mediocrity, they're just get in each other's way. 

A good question to ask your superiors is their strengths because it gives you a baseline for where you fit in the organization and how you can be of asset (hint, not in their strength area). 

"What are the things that I seem to be able to do with relative ease, while they come rather hard to other people?", this is the key question everyone should know how to answer but to be able to answer this you must have experienced more and that is where breadth is important. 

Chapter 5 - First Things First

Do ONE THING at a time. That is what effectiveness is. Say NO to all else. Simple rule per Derek Sivers: If it's not a "Hell Yes" then it's a "NO". 

"The people who get nothing done often work a great deal harder..... they underestimate the time for any one task. THey always expect that everything will go right, Yet, as every executive knows, nothing ever goes right," build up your own margin of safety by preparing for the worst. Assume you will be wrong and that you are always optimistic because you are bad at accounting for all the things that can go wrong! That is why you should focus on one thing at a time until that thing is complete!

What you don't do is just as important as what you do and executives need to know when to kill off ideas that are not paying off and focus on one project at a time. Executives must learn to prioritize and focus on doing one and figuring out if that project is worth continuing or killing off. That's it. Select projects or careers by what drives you now for that is what will let you stick through the "dip". Pick the opportunity that must aligns with you, aim high and don't settle for safe or easy. 

Settling for "low-hanging fruits" is not a sustainable solution, it's just a quick fix gimmick. A la consulting. 

Concentration on one task requires courage. It's not easy. If it was then there wouldn't be so few effective executives. It takes courage to stick to what really matters and say no to all else. 

"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."

Chapter 6 - The Elements of Decision-making

"Unless a decision has 'degenerated into work' it is not a decision," always have bias to action.

GM mastered the decentralized model when Alfred Sloan practically created an organization of independent entrepreneurs to run various operational divisions. This gave all the motivating factors of having ownership and autonomy and was a major reason for GMs success in the 1920s. Such organizational structures are visible now at Constellation software. There is no better way to form alignment of incentives with management than this method. Operating managers need to have the freedom to do things their own way and that is the only way they will bring energy and enthusiasm into the operations. "decentralization which balances local autonomy in operations with central control of direction and policy," the leader should not abdicate. Lead macro but let them roam micro. 

Executives must understand when to apply judgment and treat events as unique and when to treat events as being generic. Hence, rules, policies and principles to combat the generic will be required on average. The issue comes when management does not know that judgment should be applied to a unique event and not treat it as a generic and vice versa. 

"A country with many laws is a country of incompetent lawyers," limit decision making by making principles for generics and carry on. Hence, decision making requires a set of principles first, then one must know what the decision hopes to accomplish, a benchmark for the minimum outcome you seek. After which, prepare for the worst by starting with what is right. Assume you will have to compromise at the end so don't start with what's acceptable but what is right decision. This allows you to set out "boundary conditions". You don't start with "what's acceptable?", you'll just get cleaned out. Finally, you have to act. No action means nothing at the end. You have to find a way to convert the decision to simple actions. Define the actions to be taken, who should take it, what environment needs to be constructed to allow those who act to be successful at it. 

At the end of the day. It is environmental construction that will be key to an effective decision making process. 

Chapter 7 - Effective Decisions

"To get the facts first is impossible. There are no facts unless one has criterion of relevance. Events by themselves are not facts," hence my doubt with data first approaches. Humans will read data and it will be humans who misconstrue events and turn them into facts that fit their opinions. 

You start with opinions. These are untested hypothesis and you go about testing them against reality. To test them you must identify the set of relevant criteria first. You have to know which facts will be relevant. Set out the criteria that will make or break the hypothesis ahead of time to limit wild goose chases. Then reiterate the design with newly relevant facts. 

"The first rule in decision-making is that one does not make a decision unless there is disagreement," you must seek variance in perspectives because you're point of view is biased and limited. Continuously test opinions. Disagreements will lead to the preparation for the "alternative" if your decision turns out to be wrong. Always have an alternative. Never allow for a single point of failure. 

A thought for investors is to train new hires by making them solely work on bear cases for existing holdings within the portfolio. Variance of thought is required. A common practice in law firms. 

"Act or do not act; but do not hedge or compromise," back to focusing on what matters and concentrating. Concentrating requires courage and hedging is cowardice when it comes to decision making. The effective executive needs to draw a line of when enough facts have been gathered. There will always be a point of diminishing returns and the goal is to never get to that point. Once enough facts have been uncovered and any new facts will no longer be materially relevant, a decision must be made. For if not, it'll just lead to waste of time, effort and resources. The right decision may be the one that is difficult, disagreeable and frightening but it must be made. 

With the aid of technological improvements we should look to abolish the role of middle managers and effectively train operators into executives and decision-makers.  

Conclusion - Effectiveness Must be Learned

Track how you spend your time. Record exactly how you spend your day and your week and review it. 

Focus on your strengths. Your genius area. There isn't enough time to focus on weaknesses. 

"Self-development of an effective executive is true development of the person," work and life are gears in a holistic system and improvements into one will trickle into the other. It is inevitable. 

"Organizations are not more effective because they have better people. They have better people because hey motivate to self-development through their standards through their habits, through their climate. And these, in turn, result from systematic, focused, purposeful self-training of the individuals in becoming effective executives."