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These are the assumptions that shape any organization’s behavior, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. (be sure to follow the previous link)
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These assumptions are about markets
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They are about identifying customers and competitors, their values and behavior
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They are about technology and its dynamics
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About a company’s strengths and weaknesses
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These assumptions are about what a company gets paid for
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They accept that attaining objectives and rapid growth demand a serious rethinking of the theory of the business
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They do not dismiss unexpected failure as the result of a subordinate’s incompetence or as an accident but treat it as a symptom of “systems failure.”
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They do not take credit for unexpected success but treat it as a challenge to their assumptions
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They accept that a theory’s obsolescence is a degenerative and, indeed, life-threatening disease
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A degenerative disease will not be cured by procrastination.
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It requires decisive action
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I do not propose to give here a full-blown “science of management economics,” if only because I have none to give
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1. What is the manager's job?
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It is to direct the resources and the efforts of the business toward opportunities for economically significant results.
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But every analysis of actual allocation of resources and efforts in business that I have ever seen or made showed clearly
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Secondly, to areas where even extraordinarily successful performance will have minimal impact on results
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2. What is the major problem?
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It is fundamentally the confusion between effectiveness and efficiency that stands between doing the right things and doing things right
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There is surely nothing quite so useless as doing with great efficiency what should not be done at all
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Yet our tools — especially our accounting concepts and data — all focus on efficiency
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What we need is
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A way to identify the areas of effectiveness (of possible significant results)
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A method for concentrating on them
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3. What is the principle?
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In a social situation a very small number of events — 10% to 20% at most — account for 90% of all results, whereas the great majority of events account for 10% or less of the results
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This is part of the last and most crucial “how to do it” requirement: the courage to go through with logical decisions — despite all pleas to give this or that product another chance, and despite all such specious alibis as the accountant’s “it absorbs overhead” or the sales manager’s “we need a full product line.”
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(Of course, these are not always unfounded alibis, but the burden of proof of every alibi rests with those that plead it.)
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What I have sketched out in this article is the manager's real work
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As such it requires that he attack the problem of increasing business effectiveness systematically
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With a plan of action
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With a method of analysis
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With an understanding of the tools he needs
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One basic truth will always be present:
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Every product and every activity of a business begins to obsolesce as soon as it is started
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Every product, every operation, and every activity in a business should, therefore, be put on trial for its life every two or three years
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Each should be considered the way we consider a proposal to go into a new product, a new operation or activity — complete with budget, capital appropriations request, and so on
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One question should be asked of each: “If we were not in this already, would we now go into it?”
And if the answer is “no,” the next question should be: “How do we get out and how fast?”
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Starting with the mission and its requirements
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It focuses the organization on action
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It defines the specific strategies needed to attain the crucial goals
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It creates a disciplined organization
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It alone can prevent the most common degenerative disease of organizations, especially large ones: splintering their always limited resources on things that are “interesting” or look “profitable” rather than concentrating them on a very small number of productive efforts
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A well-defined mission serves as a constant reminder of the need to look outside the organization not only for "customers" but also for measures of success
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Effective use of the board
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A functioning board
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A CEO who is clearly accountable to the board and whose performance is reviewed annually by a board committee
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A board whose performance is reviewed annually against preset performance objectives
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And it must be organized for the systematic abandonment of whatever is established, customary, familiar, and comfortable, whether that is a product, service, or process; a set of skills; human and social relationships; or the organization itself
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The organization's function is to put knowledge to work — on tools, products, and processes; on the design of work; on knowledge itself
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It is the nature of knowledge that it changes fast and that today's certainties always become tomorrow's absurdities
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Indeed, an organization is effective only if it concentrates on one task
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Diversification destroys the performance capacity of an organization, whether it is a business, a labor union, a school, a hospital, a community service, or a house of worship
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An organization is a tool
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And as with any other tool, the more specialized it is, the greater its capacity to perform its given task
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Because the modern organization is composed of specialists, each with his or her own narrow area of expertise, its mission must be crystal clear
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The greatest contribution of our data processing capacity so far has not even been to management
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It has been to operations — for example, computer-assisted design or the marvelous software that architects now use to solve structural problems in the buildings they design
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Yet even as we both overestimated and underestimated the new tools, we failed to realize that they would drastically change the tasks to be tackled
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Concepts and tools, history teaches again and again, are mutually interdependent and interactive
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One changes the other
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That is now happening to the concept we call a business and to the tools we call information
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The new tools enable us — indeed, may force us — to see our businesses differently
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Activity-based costing therefore gives not only much better cost control, but increasingly, it also gives result control
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What is important is not the tools
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It is the concepts behind them
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They convert what were always seen as discrete techniques to be used in isolation and for separate purposes into one integrated information system
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That is a new and radically different view of the meaning and purpose of information
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As a measurement on which to base future action rather than as a postmortem and a record of what has already happened
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The command-and-control organization that first emerged in the 1870s might be compared to an organism held together by its shell
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The corporation that is now emerging is being designed around a skeleton: information, both the corporation’s new integrating system and its articulation
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The new approach defines a business as the organization that adds value and creates wealth
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Amazingly few people know how they get things done
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Too many people work in ways that are not their ways, and that almost guarantees nonperformance
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For knowledge workers, How do I perform? may be an even more important question than What are my strengths?
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Just as people achieve results by doing what they are good at, they also achieve results by working in ways that they best perform
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A few common personality traits usually determine how a person performs
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You are a reader or a listener
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Whenever I, or any other consultant, start to work with an organization, the first thing I hear about are all the personality conflicts
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Most of these arise from the fact that people do not know what other people are doing and how they do their work, or what contribution the other people are concentrating on and what results they expect
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This failure to ask reflects human stupidity less than it reflects human history
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So the people who do these things must make sure that the marketing vice president understands what they are trying to do, why they are trying to do it, how they are going to do it, and what results to expect
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If the marketing vice president does not understand what these high-grade knowledge specialists are doing, it is primarily their fault, not hers
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They have not educated her
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Even people who understand the importance of taking responsibility for relationships often do not communicate sufficiently with their associates
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“This is what I am good at.
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This is how I work.
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These are my values.
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This is the contribution I plan to concentrate on and the results I should be expected to deliver,” the response is always, “This is most helpful.
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But why didn’t you tell me earlier?”
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And what do I need to know about your strengths, how you perform, your values, and your proposed contribution?
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Organizations are no longer built on force but on trust
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Increasingly, the success — indeed, the survival — of every business will depend on the performance of its knowledge workforce
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The only way that it can excel in a knowledge-based economy and society is by getting more out of the same kind of people — that is, by managing its knowledge workers for greater productivity
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Temps and especially PEOs [professional employee organizations] free up managers to focus on the business rather than on employment-related rules, regulations, and paperwork
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Companies thus have ample reason to try to do away with the routine chores of employee relations — whether by systematizing employee management in-house or by outsourcing it to temps or to a PEO
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But they need to be careful that they don’t damage or destroy their relationships with people in the process
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Indeed, the main benefit of decreasing paperwork may be to gain more time for people relations
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The key to greatness is to look for people’s potential and spend time developing it
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To build an outstanding university department requires spending time with the promising young post-docs and assistant professors until they excel in their work
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Building a world-class orchestra requires rehearsing the same passage in the symphony again and again until the first clarinet plays it the way the conductor hears it
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Get to know them and be known by them
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Mentor them and listen to them
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Challenge them and encourage them
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Even if these people are not traditional — read, legal — employees, they are still a capital resource for the organization and critical to its business performance
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An effective executive (preface intro) does not need to be a leader in the sense that the term is now most commonly used.
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Harry Truman did not have one ounce of charisma, for example, yet he was among the most effective chief executives in U.S. history.
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Similarly, some of the best business leaders and nonprofit CEOs I've worked with over a 65-year consulting career were not stereotypical leaders.
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They were all over the map in terms of their personalities, attitudes, values, strengths, and weaknesses.
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They ranged from extroverted to nearly reclusive, from easy-going to controlling, from generous to parsimonious.
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What made them all effective is that they followed the same eight practices:
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They asked, “What needs to be done?”
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They asked, “What is right for the enterprise?”
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They developed action plans.
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They took responsibility for decisions.
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They took responsibility for communicating.
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They were focused on opportunities rather than problems.
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They ran productive meetings.
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They thought and said “we” rather than “I. …”
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We've just reviewed eight practices of effective executives.
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I'm going to throw in one final, bonus practice.
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This one's so important that I'll elevate it to the level of a rule: Listen first, speak last
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about 
