The Effective Executive

by Peter F. Drucker

All in all, the effective executive tries to be himself; he does not pretend to be someone else. He looks at his own performance and at his own results and tries to discern a pattern. “What are the things,” he asks, “that I seem to be able to do with relative ease, while they come rather hard to other people?”

But temperament is also a factor in accomplishment and a big one.

Unlike everything else discussed in this book so far, making strength productive is as much an attitude as it is a practice. But it can be improved with practice.

In every area of effectiveness within an organization, one feeds the opportunities and starves the problems.

In human affairs, the distance between the leaders and the average is a constant. If leadership performance is high, the average will go up. The effective executive knows that it is easier to raise the performance of one leader than it is to raise the performance of a whole mass.

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.

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.”

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.

Effective executives know that they have to get many things done—and done effectively. Therefore, they concentrate—their own time and energy as well as that of their organization—on doing one thing at a time, and on doing first things first.

The first rule for the concentration of executive efforts is to slough off the past that has ceased to be productive.

But also, as every executive has learned, nothing new is easy. It always gets into trouble. Unless one has therefore built into the new endeavor the means for bailing it out when it runs into heavy weather, one condemns it to failure from the start. The only effective means for bailing out the new are people who have proven their capacity to perform. Such people are always already busier than they should be. Unless one relieves one of them of his present burden, one cannot expect him to take on the new task.

The job is, however, not to set priorities. That is easy. Everybody can do it. The reason why so few executives concentrate is the difficulty of setting “posteriorities”—that is, deciding what tasks not to tackle—and of sticking to the decision.

That one actually abandons what one postpones makes executives, however, shy from postponing anything altogether. They know that this or that task is not a first priority, but giving it a posteriority is risky. What one has relegated may turn out to be the competitor’s triumph. There is no guarantee that the policy area a politician or an administrator has decided to slight may not explode into the hottest and most dangerous political issue.

A great deal could be said about the analysis of priorities. The most important thing about priorities and posteriorities is, however, not intelligent analysis but courage. Courage rather than analysis dictates the truly important rules for identifying priorities: Pick the future as against the past; Focus on opportunity rather than on problem; Choose your own direction—rather than climb on the bandwagon; and Aim high, aim for something that will make a difference, rather than for something that is “safe” and easy to do.

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.

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.

Effective executives, therefore, make effective decisions. They make these decisions as a systematic process with clearly defined elements and in a distinct sequence of steps. But this process bears amazingly little resemblance to what so many books today present as “decision-making.”

They know that the most time-consuming step in the process is not making the decision but putting it into effect. Unless a decision has “degenerated into work” it is not a decision; it is at best a good intention.

The least-known of the great American business builders, Theodore Vail, was perhaps the most effective decision-maker in U.S. business history. As president of the Bell Telephone System from just before 1910 till the mid-twenties, Vail built the organization into the largest private business in the world and into one of the most prosperous growth companies.

He saw to it that the yardsticks throughout the system by which managers and their operations were judged, measured service fulfillment rather than profit performance.

Vail’s third decision led to the establishment of one of the most successful scientific laboratories in industry, the Bell Laboratories. Again, Vail started out with the need to make a private monopoly viable. Only this time he asked: “How can one make such a monopoly truly competitive?” Obviously it was not subject to the normal competition from another supplier who offers the purchaser the same product or one supplying the same want. And yet without competition such a monopoly would rapidly become rigid and incapable of growth and change. But even in a monopoly, Vail concluded, one can organize the future to compete with the present. In a technical industry such as telecommunications, the future lies in better and different technologies. The Bell Laboratories which grew out of this insight were by no means the first industrial laboratory, not even in the United States. But it was the first industrial research institution that was deliberately designed

Even today few businessmen understand that research, to be productive, has to be the “disorganizer,” the creator of a different future and the enemy of today.

Sloan realized that this was not the peculiar and short-term problem of the company just created through merger, but a generic problem of big business. The big business, Sloan saw, needs unity of direction and central control. It needs its own top management with real powers. But it equally needs energy, enthusiasm, and strength in operations. The operating managers have to have the freedom to do things their own way. They have to have responsibility and the authority that goes with it. They have to have scope to show what they can do, and they have to get recognition for performance. This, Sloan apparently saw right away, becomes even more important as a company gets older and as it has to depend on developing strong, independent performing executives from within.

THE ELEMENTS OF THE DECISION PROCESS The truly important features of the decisions Vail and Sloan made are neither their novelty nor their controversial nature. They are: 1. The clear realization that the problem was generic and could only be solved through a decision which established a rule, a principle; 2. The definition of the specifications which the answer to the problem had to satisfy, that is, of the “boundary conditions”; 3. The thinking through 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; 4. The building into the decision of the action to carry it out; 5. The “feedback” which tests the validity and effectiveness of the decision against the actual course of events.

1. The first question the effective decision-maker asks is: “Is this a generic situation or an exception?”

Strictly speaking, one might distinguish between four, rather than between two, different types of occurrences. There is first the truly generic of which the individual occurrence is only a symptom.

Then there is the problem which, while a unique event for the individual institution, is actually generic.

Next there is the truly exceptional, the truly unique event.

Truly unique events are rare, however. Whenever one appears, one has to ask: Is this a true exception or only the first manifestation of a new genus?

All events but the truly unique require a generic solution. They require a rule, a policy, a principle. Once the right principle has been developed all manifestations of the same generic situation can be handled pragmatically; that is, by adaptation of the rule to the concrete circumstances of the case. Truly unique events, however, must be treated individually. One cannot develop rules for the exceptional.

By far the most common mistake is to treat a generic situation as if it were a series of unique events; that is, to be pragmatic when one lacks the generic understanding and principle. This inevitably leads to frustration and futility.

Equally common is the mistake of treating a new event as if it were just another example of the old problem to which, therefore, the old rules should be applied.

The effective decision-maker, therefore, always assumes initially that the problem is generic.

He always assumes that the event that clamors for his attention is in reality a symptom. He looks for the true problem. He is not content with doctoring the symptom alone.

And if the event is truly unique, the experienced decision-maker suspects that this heralds a new underlying problem and that what appears as unique will turn out to have been simply the first manifestation of a new generic situation. This also explains why the effective decision-maker a...

He too improvises, of course. But he asks himself every time, “If I had to live with this for a long time, would I be willing to?” And if the answer is “No,” he keeps on working to find a more general, a more conceptual, a more comprehensive solution—one which establishes the right principle.

The decision-maker also always tests for signs that something atypical, something unusual, is happening; he always asks: “Does the explanation explain the observed events and does it explain all of them?; he always writes out what the solution is expected to make happen—make automobile accidents disappear, for instance—and then tests regularly to see if this really happens; and finally, he goes back and thinks the problem through again when he sees something atypical, when he finds phenomena his explanation does not really explain, or when the course of events deviates, even in details, from his expectations. These are in essence the rules Hippocrates laid down for medical diagnosis well over 2,000 years ago. They are the rules for scientific observation first formulated by Aristotle and then reaffirmed by Galileo three hundred years ago. These, in other words, are old, well-known, time-tested rules, rules one can learn and can systematically apply.

2. The second major element in the decision process is clear specifications as to what the decision has to accomplish.

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.

It is not always easy to find the appropriate boundary conditions. And intelligent people do not necessarily agree on them.

In fact, clear thinking about the boundary conditions is needed so that one knows when a decision has to be abandoned.

The trouble with miracles is not, after all, that they happen rarely; it is that one cannot rely on them.

the unpleasant reality that a decision that has to satisfy two different and at bottom incompatible specifications is not a decision but a prayer for a miracle.

Yet, defining the specifications and setting the boundary conditions cannot be done on the “facts” in any decision of importance. It always has to be done on interpretation. It is risk-taking judgment.

Everyone can make the wrong decision—in fact, everyone will sometimes make a wrong decision. But no one needs to make a decision which, on its face, falls s...

3. 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 comp...

For there are two different kinds of compromise. One kind is expressed in the old proverb: “Half a loaf is better than no bread.” The other kind is expressed in the story of the Judgment of Solomon, which was clearly based on the realization that “half a baby is worse than no baby at all.”

Converting a decision into action requires answering several distinct questions: Who has to know of this decision? What action has to be taken? Who is to take it? And what does the action have to be so that the people who have to do it can do it? The first and the last of these are too often overlooked—with dire results.

The action must also be appropriate to the capacities of the people who have to carry it out.