The Effective Executive
by Peter Drucker — his other books
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Who Is An Executive?
Every knowledge worker in modern organization is an "executive" if, by virtue of his position or knowledge, he is responsible for a contribution that materially affects the capacity of the organization to perform and to obtain results.
Management books usually deal with managing other people.
The subject of this book is managing oneself for effectiveness.
That one can truly manage other people is by no means adequately proven.
But one can always manage oneself.
Indeed, executives who do not manage themselves for effectiveness cannot possibly expect to manage their associates and subordinates.
Management is largely by example.
Executives who do not know how to make themselves effective in their own job and work set the wrong example.
Don't memorize, calendarize !!!
- Preface (please read)
- Introduction: What Makes An Effective Executive?
- Characteristics of Real World Effective Executives
- Overview of Eight Practices
- Get The Knowledge You Need
- Write An Action Plan
- Think And Say "We"
- Bonus Rule: Listen first, speak last
- Effectiveness can be learned and must be earned
- 1: Effectiveness Can Be Learned
- Why We Need Effective Executives
- The absence of executives in yesterday's organizatons
- Today's large knowledge organizations
- Who Is An Executive?
- Executive Realities
- 1. The executive's time tends to belong to everybody else
- 2. Executives are forced to keep on "operating" unless they take positive action
- 3. Being within an "organization" pushes the executive toward ineffectiveness
- 4. Finally, the executive is "within" an organization
- About the nature of organizations
- Results are on the outside (see realities)
- Law of surface and mass applies
- An organization is an organ of society
- The computer and the inside preoccupation
- Important and relevant outside events are often qualitative and not capable of quantification
- The thalidomide tragedy
- The Edsel problem
- Its the changes in the trends that matter (see Managing in the Next Society)
- The danger
- The Promise Of Effectiveness
- Types of needs and available people
- Impossible dreams: Manager development of a universal genius
- Impossible dreams: More and better knowledge capabilities
- Impossible dreams: Operations research Superman
- Impossible dreams: Manager development programs
- Young, highly educated people's contempt for other areas
- Broad, shallow awareness needed
- Increasing the yield from today’s people
- Effectiveness: needed by organizations and executives
- But Can Effectiveness Be Learned?
- Effectiveness: not from birth
- If effectiveness can be learned, what is its nature?
- Drucker's need for effectiveness as a consultant
- No effective personality, its practices that matter
- Effectiveness is a habit—a complex of practices
- Practices can always be learned by practice
- The five practices of effectiveness
- Time management
- Focus on outward contribution
- Build on strengths
- Concentrate on a few major areas
- Make effective decisions
- 2: Know Thy Time
- Planning one's work rarely works
- Don't start with tasks. Start with time
- Time is the limiting factor in accomplishment
- Man is ill-equipped to manage his time
- Poor at estimating elasped time
- Poor at estimating where time has gone
- The Time Demands On The Executive
- Constant Pressures Toward Unproductive and Wasteful Time-Use
- Official dinners
- Hand-holding customers
- Peripheral Staff Meetings etc
- Executive tasks require large blocks of time
- Writing a report
- Conducting an experiment
- Working with people
- Working with knowledge workers
- Mixing personal relations and work relations is time-consuming
- The Span of Control
- A Large Organization Means More People Decisions
- The Time Demands of People Decisions
- Whom to Put on a Task Force
- People were not created as resources for organization
- Knowledge work replacing manual work
- The Demand of Innovation and Change
- Executives Must Manage Their Time
- Recording time usage
- Systematic time management is therefore the next step
- One has to find the nonproductive, time-wasting activities and get rid of them if one possibly can
- This requires asking oneself a number of diagnostic questions
- 1. First one tries to identify and eliminate the things that need not be done at all
- 2. The next question is: "Which of the activities on my time log could be done by somebody else
- The delegation myth & misunderstanding
- 3. The time of others he himself wastes
- Work manner may still be a problems
- Fear of making a mistake by over-pruning
- Pruning The Time-Wasters
- Lack of system or foresight
- The recurrent "crisis"
- Making results fit the forecast
- Spending money remaining in budget
- The recurrent crisis is simply a symptom of slovenliness and laziness
- A Well-Managed Organization Is a "Dull" Organization
- Malorganization (excess meetings)
- Meetings are by definition a concession to deficient organization
- In an ideally designed structure there would be no meetings
- We meet because …
- There will always be more than enough meetings
- Every meeting generates a host of little follow-up meetings
- Meetings need to be purposefully directed
- Meetings Have to Be the Exception Rather Than the Rule
- Special Organs That Only Meet
- Too many meetings always bespeak poor structure of jobs and the wrong organizational components
- Energy company example
- Malfunction in Information
- Information not being shared
- Information in the Wrong Form
- Remedying Time Wasters
- Consolidating "Discretionary Time"
- Time Available for Big Tasks Is Not Going to Be Much
- Bank President example
- Senior Executive Time Availability
- Need to Consolidate Time Into Large Units
- Different ways of consolidating time
- Working from home one day a week
- Operating days, Major work issue times
- Morning Work Periods at Home
- Consolidating minor matters doesn't work
- The effective approach
- Deadlines for important activities
- If Time Isn't Managed, Then Nothing Else Is
- 3: What Can I Contribute?
- The effective executive focuses on contribution
- The great majority of executives tend to focus downward
- Management consultant: why are you on the payroll
- Executive mentality: subordinate or top management
- The Executive's Own Commitment
- Looking outward toward results
- Scientific journal example
- Unused Potential in the Job
- Bank Agency department example
- Aiming low, at the wrong things, too narrowly
- Contribution may mean different things
- Every organization needs performance in three major areas
- Direct results
- When there is confusion there are no results
- Great Britain's nationalized airlines confusion
- Direct results always come first
- Any Organization Also Needs a Commitment to Values and Their Constant Reaffirmation
- Example: incompatible values
- Developing people for a different and better tomorrow
- Commitment to contribution is commitment to responsible effectiveness
- Changed demands of a new position
- World War II Washington executives
- Retail executive example: numbers to people
- Robert McNamara
- U.S. university presidents
- How To Make The Specialist Effective
- The Right Human Relations
- Productive relationships is the only valid test
- Examples: Marshall, Sloan, and Dreystadt
- Focus on Contribution Supplies the 4 Basic Requirements of Effective Human Relations
- Hospital example
- Traditional Concepts and Theories Are Totally Inadequate
- Knowledge Work Force Communications Information And IT
- Development of Others
- About self-development
- The Effective Meeting
- 4: Making Strength Productive
- Strengths Are the True Opportunities
- Staffing From Strength
- Civil War Generals
- Well-rounded people: a recipe for mediocrity or incompetence
- Strong people always have strong weaknesses too
- Avoiding weakness is a weakness
- Here lies a man who knew how to bring into his service men better than he was himself
- Another story about General Robert E. Lee illustrates the meaning of making strength productive
- Subordinates Are Paid to Perform and Not to Please Their Superiors
- The Nature of Man and Excellence
- Impact of Not Staffing From Strength
- To Focus on Strength Is to Make Demands for Performance
- To Try to Build Against Weakness Frustrates the Purpose of Organization
- Why Then, Is It Not Done All the Time?
- Structuring Jobs to Fit the Personalities Doesn't Work
- Jobs Need to Be Objective
- Avoiding Friendships on the Job
- Four Rules for Staffing for Strength
- Guard Against the "Impossible" Job, the Job That Simply Is Not for Normal Human Beings
- Conflicting Marketing Jobs
- University Presidents
- International Vice-President of Today's Large Multinational Business
- The ambassador of a major power
- The effective executive therefore first makes sure that the job is well-designed
- Make Each Job Demanding and Big
- Large Organizations Tend to Make Jobs Small
- This Rule Applies to the Job of the Beginning Knowledge Worker in Particular
- This Rule Is Universally Applicable
- Knowledge Workers Need to Evaluate Their Situation
- Start With What a Man Can Do Rather Than With What a Job Requires
- An Appraisal of a Person Is Needed Before One Has to Make People Decisions
- Few Large Organizations Use the Appraisals They Have
- Appraisals Designed by Clinical and Abnormal Psychologists
- Japanese Don't Use Appraisals
- Negative Impact of Focusing on Weakness
- Trap of Appraising Potential
- All One Can Measure Is Performance
- An Effective Appraisal Process
- To Get Strength One Has to Put Up With Weaknesses
- Conceit, Lack of Humility …
- No great people to their valets
- Relevant appointment questions
- Performance realities
- Intolerant of the Argument: "I Can't Spare This Man
- Moving the "Indispensable Person"
- Jobs Go The Best Qualified
- Removing Those Who Consistently Fail to Perform With High Distinction
- Finding the Right Place of the Nonperformer
- General Marshall: a Good Example of How One Makes Strength Productive
- The Responsibilities of a Superior
- The explosion in knowledge fields
- How Do I Manage My Boss? (see chapter 46 in Management, Revised Edition)
- Your Promotions Depend on Your Bosses Future Promotions
- Realities of Your Boss Getting Fired
- Nothing Quite as Conducive to Success, as a Successful and Rapidly Promoted Superior
- Making the Strength of the Boss Productive Is a Key to the Subordinate's Own Effectiveness
- Making the Strengths of the Boss Productive
- The Challenge Is Not to Reform the Boss
- Observing the Bosses Own Ways of Being Effective (Manners and Habits)
- Required Adaptation Is About "How" Rather Than "What"
- Focus on Strength and What He Can Do
- Making Yourself Effective
- Forget Limitations and Explore What Can Be Done
- Making Strengths Productive Is Equally Important in Respect to One's Own Abilities and Work Habits
- Making Strength Productive Is as Much an Attitude as It Is a Practice
- 5: First Things First
- Effectiveness Requires Contentration
- The Need to Concentrate—There Is Always a Time Deficit
- Performance Requires Concentration
- Example: Pharmaceutical CEO
- Doing One Thing at a Time
- Sloughing Off Yesterday
- Sloughing Off the Past That Has Ceased to Be Productive
- The Reality of Action & Time
- Government Needs to Practice Abandonment …
- Unchecked Growth of "Organizational Fat"
- "Is this still worth doing?"
- Practicing "Weight Control"
- Reality of New Efforts
- Organizations Needs Fresh People in Appropriate Positions
- Systematic sloughing off of the old is the one and only way to force the new
- Priorities And Posteriorities
- Time and People Demands Exceed the Supply
- Decision Options: Go With the Pressures or Executive's Choice
- If the Pressures Are Allowed to Make the Decision, the Important Tasks Will Predictably Be Sacrificed
- No Time for the Most Time-Consuming Part of Any Task, the Conversion of Decision Into Action
- If the Pressures Rule the Work of Top Management Does Not Get Done at All
- Setting Posteriorities and Sticking to them is the difficult task
- Postponement Essentially Results in Abandonment
- Example: Young Lovers Who Missed Their Oportunity
- Example: Initial Career Choice
- Example: The Merger That Didn't Happen
- The Risk of Postponing
- Examples in the Political Arena
- Setting a Posteriority Is Also Unpleasant
- Doing a Little Bit of Everything Accomplishes Nothing
- Courage Is the Key Factor in Identifying Priorities
- Truly important rules for identifying priorities
- Pick the future as against the past
- Focus on opportunity rather than on problems
- Choose your own direction—rather than climb on the bandwagon
- Aim for Something That Will Make a Difference
- Example: Courage in Research
- Example: Courage in Business
- Priorities and Posteriorities Always Have to Be Reconsidered and Revised in the Light of Realities
- Accomplishing One's Priority Tasks Always Changes the Priorities and Posteriorities Themselves
- Select Current Task > Review Situation > Pick Next Task
- Concentration—Only Hope of Becoming the Master of Time and Events Instead of Their Whipping Boy
- 6: The Elements of Decision-making (see foundations for future directed decisions)
- Two Case Studies In Decision-Making
- Theodore Vail & Bell Telephone System
- Our Business Is Service
- Public Regulation as the Only Alternative to Government Ownership
- Bell Laboratories—the Creator of a Different Future and the Enemy of Today
- The Mass Capital Market
- Alfred Sloan & GM Decentralization
- Major Common Features
- All Five Decisions Went Directly Counter to What "Everybody Knew" at the Time
- The Elements Of The Decision Process
- The truly important features of the decisions Vail and Sloan made
- These are the elements of the effective decision process
- Is this a generic situation or an exception?
- Example events: generic problems in the organization
- Example events: generic to the broader world
- Example events: the truly unique event
- Example events: the first manifestation of a new genus
- All events but the truly unique require a generic solution
- Time investment: which kind of situation is it?
- If the classification is wrong the decision will be wrong
- The Most Common Mistake Is to Treat a Generic Situation as if It Were a Series of Unique Events
- Equally Common: Treating a New Event as if It Were Just Another Example of the Old Problem
- Almost as common is the plausible but erroneous definition of the fundamental problem
- Or the definition of the problem may be incomplete
- The Effective Decision-Maker, Therefore, Always Assumes Initially That the Problem Is Generic
- The Effective Decision-Maker Always Tries for a Solution on the Highest Possible Conceptual Level
- The Decision-Maker Also Always Tests for Signs That Something Atypical Is Happening
- Clear Specifications as to What the Decision Has to Accomplish
- It is not always easy to find the appropriate boundary conditions
- A Decision That Does Not Satisfy the Boundary Conditions Is Ineffectual and Inappropriate
- Clear Boundary Conditions Thinking Is Needed So One Knows When a Decision Has to Be Abandoned
- Schlieffen Plan
- The Most Dangerous of All Possible Decisions
- Defining the Specifications and Setting the Boundary Conditions Is a Judgement
- Start Out With What Is Right Rather Than What Is Acceptable
- Drucker's First Consulting Assignment
- Kennedy's Bay of Pigs Fiasco
- Two Types of Compromise
- It Is Fruitless and a Waste of Time to Worry About What Is Acceptable
- Converting the Decision Into Action
- Policy Statements Without Action Commitment
- Converting a Decision Into Action Requires Answering Several Distinct Questions
- Who Has to Know?
- The Action Must Also Be Appropriate to the Capacities of the People Who Have to Carry It Out
- When People Have to Change Behavior, Habits, or Attitudes
- Vail's Decision That the Business of the Bell System Was Service
- Actions That Signal "They Don't Really Mean It"
- Feedback Has to Be Built Into the Decision to Provide Continuous Testing of the Expectations That Underlie the Decision
- Revisiting the Vail and Sloan Decisions
- Go Oneself and Look Is the Only Reliable Feedback
- But what about the decision itself?
- 7: Effective Decisions
- A decision is a judgment
- Begin With Opinions
- What Is the Criterion of Relevance and Appropriate Measurement?
- McNamara example
- Go Out and Look for the "Feedback" Discussed Earlier
- Personnel matters
- Auto safety
- It Is a Risk-Taking Judgment. Requires Alternatives
- Capital investment measurements
- Unless one has considered alternatives, one has a closed mind
- Create Dissension and Disagreement, Rather Than Consensus
- Alfred P. Sloan's process
- U.S. Presidents
- Three Main Reasons for the Insistence on Disagreement
- Safeguard Against the Decision-Maker's Becoming the Prisoner of the Organization
- Disagreement Alone Can Provide Alternatives to a Decision
- Disagreement Is Needed to Stimulate the Imagination
- The effective decision-maker, therefore, organizes disagreement
- Is a decision really necessary?
- One has to make a decision when a condition is likely to degenerate if nothing is done
- Conditions will take care of themselves even if nothing is done
- The great majority of decisions will lie between these extremes
- The decision is now ready to be made
- And it is at this point that most decisions are lost
- Not Going to Be Pleasant, Popular or Easy
- Let's Make Another Study
- Listen for the Inner Voice
- Decision-Making And The Computer
- The Computer Will Force Executives to Make, as True Decisions, What Are Today Mostly Adaptations
- Computer Strengths vs. Human Strengths
- Examples of specific situations
- Computerizing require rules and policies
- This Shift From the Small Adaptation to the Decision in Principle Has Been Going on for a Long Time
- The Computer Has the Same Impact on Strategic Decisions
- Fix Treating Generic Situations as a Series of Unique Events
- Conclusion: Effectiveness Must Be Learned
- Individual 50,000 Foot View & Recap
- The executive's job is to be effective
- Effectivenss can be learned
- The crucial role that effectiveness plays
- Recap of the five areas of special effort
- Time management
- Focus on contribution
- Making strength productive
- First things first
- Effective decisions
- Other areas of sefl-development
- The modest goal of being effective
- Effective Executives Are Central to Organization Development
- Executive Effectiveness Is the Way Toward Performance of the Organization
- Modern Society Depends on the Effectiveness of Large-Scale Orrganizations
- Effective Organizations Are Not Common
- Our One Best Hope to Make Modern Society Productive Economically and Viable Socially
Who Is An Executive?
Every knowledge worker in modern organization is an “executive” if, by virtue of his position or knowledge, he is responsible for a contribution that materially affects the capacity of the organization to perform and to obtain results.
This may be the capacity of a business to bring out a new product or to obtain a larger share of a given market.
It may be the capacity of a hospital to provide bedside care to its patients, and so on.
Such a man (or woman) must make decisions; he cannot just carry out orders.
He must take responsibility for his contribution.
And he is supposed, by virtue of his knowledge, to be better equipped to make the right decision than anyone else.
He may be overridden; he may be demoted or fired.
But so long as he has the job the goals, the standards, and the contribution are in his keeping.
Most managers are executives—though not all.
But many nonmanagers are also becoming executives in modern society.
For the knowledge organization, as we have been learning these last few years, needs both “managers” and “individual professional contributors” in positions of responsibility, decision-making, and authority.
This fact is perhaps best illustrated by a recent newspaper interview with a young American infantry captain in the Vietnam jungle.
➤ Asked by the reporter, “How in this confused situation can you retain command?” the young captain said: “Around here, I am only the guy who is responsible.
If these men don’t know what to do when they run into an enemy in the jungle, I’m too far away to tell them.
My job is to make sure they know.
What they do depends on the situation which only they can judge.
The responsibility is always mine, but the decision lies with whoever is on the spot.”
In a guerrilla war, every man is an “executive.”
There are many managers who are not executives.
Many people, in other words, are superiors of other people—and often of fairly large numbers of other people—and still do not seriously affect the ability of the organization to perform.
Most foremen in a manufacturing plant belong here.
They are “overseers” in the literal sense of the word.
They are “managers” in that they manage the work of others.
But they have neither the responsibility for, nor authority over, the direction, the content, and the quality of the work or the methods of its performance.
They can still be measured and appraised very largely in terms of efficiency and quality, and by the yardsticks we have developed to measure and appraise the work and performance of the manual worker.
Conversely, whether a knowledge worker is an executive does not depend on whether he manages people or not.
In one business, the market research man may have a staff of two hundred people, whereas the market research man of the closest competitor is all by himself and has only a secretary for his staff.
This should make little difference in the contribution expected of the two men.
It is an administrative detail.
Two hundred people, of course, can do a great deal more work than one man.
But it does not follow that they produce and contribute more.
Knowledge work is not defined by quantity.
Neither is knowledge work defined by its costs.
Knowledge work is defined by its results.
And for these, the size of the group and the magnitude of the managerial job are not even symptoms.
Having many people working in market research may endow the results with that increment of insight, imagination, and quality that gives a company the potential of rapid growth and success.
If so, two hundred men are cheap.
But it is just as likely that the manager will be overwhelmed by all the problems two hundred men bring to their work and cause through their interactions.
He may be so busy “managing” as to have no time for market research and for fundamental decisions.
He may be so busy checking figures that he never asks the question: ‘What do we really mean when we say “our market”?
And as a result, be may fail to notice significant changes in the market which eventually may cause the downfall of his company.
But the individual market researcher without a staff may be equally productive or unproductive.
He may be the source of the knowledge and vision that make his company prosper.
Or he may spend so much of his time hunting down details—the footnotes academicians so often mistake for research—as to see and hear nothing and to think even less.
Throughout every one of our knowledge organizations, we have people who manage no one and yet are executives.
Rarely indeed do we find a situation such as that in the Vietnam jungle, where at any moment, any member of the entire group may be called upon to make decisions with life-and-death impact for the whole.
But the chemist in the research laboratory who decides to follow one line of inquiry rather than another one may make the entrepreneurial decision that determines the future of his company.
He may be the research director.
But he also may be—and often is—a chemist with no managerial responsibilities, if not even a fairly junior man.
Similarly, the decision what to consider one “product” in the account books may be made by a senior vice-president in the company.*
It may also be made by a junior.
And this holds true in all areas of today’s large organization.
I have called “executives” those knowledge workers, managers, or individual professionals who are expected by virtue of their position or their knowledge to make decisions in the normal course of their work that have significant impact on the performance and results of the whole.
They are by no means a majority of the knowledge workers.
For in knowledge work too, as in all other areas, there is unskilled work and routine.
But they are a much larger proportion of the total knowledge work force than any organization chart ever reveals.
This is beginning to be realized—as witness the many attempts to provide parallel ladders of recognition and reward for managers and for individual professional contributors. ŧ What few yet realize, however, is how many people there are even in the most humdrum organization of today, whether business or government agency, research lab or hospital, who have to make decisions of significant and irreversible impact.
For the authority of knowledge is surely as legitimate as the authority of position.
These decisions, moreover, are of the same kind as the decisions of top management.
(This was the main point Mr. Kappel was making in the statement referred to above.)
The most subordinate manager, we now know, may do the same kind of work as the president of the company or the administrator of the government agency; that is, plan, organize, integrate, motivate, and measure.
His compass may be quite limited, but within his sphere, he is an executive.
Similarly, every decision-maker does the same kind of work as the company president or the administrator.
His scope may be quite limited.
But he is an executive even if his function or his name appears neither on the organization chart nor in the internal telephone directory.
And whether chief executive or beginner, he needs to be effective.
Many of the examples used in this book are taken from the work and experience of chief executives—in government, army, hospitals, business, and so on.
The main reason is that these are accessible, are indeed often on the public record.
Also big things are more easily analyzed and seen than small ones.
But this book itself is not a book on what people at the top do or should do.
It is addressed to everyone who, as a knowledge worker, is responsible for actions and decisions which are meant to contribute to the performance capacity of his organization.
It is meant for every one of the men I call “executives.”
Business, Market, and Knowledge realities
The realities of the executive’s situation both demand effectiveness from him and make effectiveness exceedingly difficult to achieve.
Indeed, unless executives work at becoming effective, the realities of their situation will push them into futility.
Take a quick look at the realities of a knowledge worker outside an organization to see the problem.
A physician has by and large no problem of effectiveness.
The patient who walks into his office brings with him everything to make the physician’s knowledge effective.
During the time he is with the patient, the doctor can, as a rule, devote himself to the patient.
He can keep interruptions to a minimum.
The contribution the physician is expected to make is clear.
What is important, and what is not, is determined by whatever ails the patient.
The patient’s complaints establish the doctor’s priorities.
And the goal, the objective, is given: It is to restore the patient to health or at least to make him more comfortable.
Physicians are not noted for their capacity to organize themselves and their work.
But few of them have much trouble being effective.
The executive in organization is in an entirely different position.
In his situation there are four major realities over which he has essentially no control.
Every one of them is built into organization and into the executive’s day and work.
He has no choice but to “cooperate with the inevitable.”
But every one of these realities ↓ exerts pressure toward nonresults and nonperformance.
1. The executive’s time tends to belong to everybody else.
If one attempted to define an “executive” operationally (that is, through his activities) one would have to define him as a captive of the organization.
Everybody can move in on his time, and everybody does.
There seems to be very little any one executive can do about it.
He cannot, as a rule, like the physician, stick his head out the door and say to the nurse, “I won’t see anybody for the next half hour.”
Just at this moment, the executive’s telephone rings, and he has to speak to the company’s best customer or to a high official in the city administration or to his boss—and the next half hour is already gone. 
2. Executives are forced to keep on “operating” unless they take positive action to change the reality in which they live and work.
In the United States, the complaint is common that the company president—or any other senior officer—still continues to run marketing or the plant, even though he is now in charge of the whole business and should be giving his time to its direction.
This is sometimes blamed on the fact that American executives graduate, as a rule, out of functional work and operations, and cannot slough off the habits of a lifetime when they get into general management.
But exactly the same complaint can be heard in countries where the career ladder is quite different.
In the Germanic countries, for instance, a common route into top management has been from a central secretariat, where one works all along as a “generalist.”
Yet in German, Swedish, or Dutch companies top management people are criticized just as much for “operating” as in the United States.
Nor, when one looks at organizations, is this tendency confined to the top; it pervades the entire executive group.
There must be a reason for this tendency to “operate” other than career ladders or even the general perversity of human nature.
The fundamental problem is the reality around the executive.
Unless he changes it by deliberate action, the flow of events will determine what he is concerned with and what he does.
Depending on the flow of events is appropriate for the physician.
The doctor who looks up when a patient comes in and says: “Why are you here today?” expects the patient to tell him what is relevant.
When the patient says, “Doctor, I can’t sleep.
I haven’t been able to go to sleep the last three weeks,” he is telling the doctor what the priority area is.
Even if the doctor decides, upon closer examination, that the sleeplessness is a fairly minor symptom of a much more fundamental condition he will do something to help the patient to get a few good nights’ rest.
But events rarely tell the executive anything, let alone the real problem.
For the doctor, the patient’s complaint is central because it is central to the patient.
The executive is concerned with a much more complex universe.
What events are important and relevant and what events are merely distractions the events themselves do not indicate.
They are not even symptoms in the sense in which the patient’s narrative is a clue for the physician.
If the executive lets the flow of events determine what he does, what he works on, and what he takes seriously, he will fritter himself away “operating.”
He may be an excellent man.
But he is certain to waste his knowledge and ability and to throw away what little effectiveness he might have achieved.
What the executive needs are criteria which enable him to work on the truly important, that is, on contributions and results, even though the criteria are not found in the flow of events.
3. The third reality pushing the executive toward ineffectiveness is that he is within an organization.
This means that he is effective only if and when other people make use of what he contributes.
Organization is a means of multiplying the strength of an individual.
It takes his knowledge and uses it as the resource, the motivation, and the vision of other knowledge workers.
Knowledge workers are rarely in phase with each other, precisely because they are knowledge workers.
Each has his own skill and his own concerns.
One man may be interested in tax accounting or in bacteriology, or in training and developing tomorrow’s key administrators in the city government.
But the fellow next door is interested in the finer points of cost accounting, in hospital economics, or in the legalities of the city charter.
Each has to be able to use what the other produces.
Usually the people who are most important to the effectiveness of an executive are not people over whom he has direct control.
They are people in other areas, people who in terms of organization, are “sideways.”
Or they are his superiors.
Unless the executive can reach these people, can make his contribution effective for them and in their work, he has no effectiveness at all.
Finally, the executive is within an organization.
Every executive, whether his organization is a business or a research laboratory, a government agency, a large university, or the air force, sees the inside—the organization—as close and immediate reality.
He sees the outside only through thick and distorting lenses, if at all.
What goes on outside is usually not even known firsthand.
It is received through an organizational filter of reports, that is, in an already predigested and highly abstract form that imposes organizational criteria of relevance on the outside reality.
But the organization is an abstraction.
Mathematically, it would have to be represented as a point—that is, as having neither size nor extension.
Even the largest organization is unreal compared to the reality of the environment in which it exists.
Specifically, there are no results within the organization.
All the results are on the outside.
The only business results, for instance, are produced by a customer who converts the costs and efforts of the business into revenues and profits through his willingness to exchange his purchasing power for the products or services of the business.
The customer may make his decisions as a consumer on the basis of market considerations of supply and demand, or as a socialist government which regulates supply and demand on the basis of essentially noneconomic value preferences.
In either case the decision-maker is outside rather than inside the business.
Similarly, a hospital has results only in respect to the patient.
But the patient is not a member of the hospital organization.
For the patient, the hospital is “real” only while he stays there.
His greatest desire is to go back to the “nonhospital” world as fast as possible.
What happens inside any organization is effort and cost.
To speak of “profit centers” in a business as we are wont to do is polite euphemism.
There are only effort centers.
The less an organization has to do to produce results, the better it does its job.
That it takes 100,000 employees to produce the automobiles or the steel the market wants is essentially a gross engineering imperfection.
The fewer people, the smaller, the less activity inside, the more nearly perfect is the organization in terms of its only reason for existence: the service to the environment.
This outside, this environment which is the true reality, is well beyond effective control from the inside.
At the most, results are codetermined, as for instance in warfare, where the outcome is the result of the actions and decisions of both armies.
In a business, there can be attempts to mold the customers’ preferences and values through promotion and advertising.
Except in an extreme shortage situation such as a war economy, the customer still has the final word and the effective veto power (which explains why every Communist economy has run into trouble as soon as it moved beyond extreme shortages and long before it reached a position of adequate market supply in which the customer, rather than the political authorities, makes the real and final decisions).
But it is the inside of the organization that is most visible to the executive.
It is the inside that has immediacy for him.
Its relations and contacts, its problems and challenges, its crosscurrents and gossip reach him and touch him at every point.
Unless he makes special efforts to gain direct access to outside reality, he will become increasingly inside-focused.
The higher up in the organization he goes, the more will his attention be drawn to problems and challenges of the inside rather than to events on the outside.
➤ An organization, a social artifact, is very different from a biological organism.
Yet it stands under the law that governs the structure and size of animals and plants: The surface goes up with the square of the radius, but the mass grows with the cube.
The larger the animal becomes, the more resources have to be devoted to the mass and to the internal tasks, to circulation and information, to the nervous system, and so on.
Every part of an amoeba is in constant, direct contact with the environment.
It therefore needs no special organs to perceive its environment or to hold it together.
But a large and complex animal such as man needs a skeleton to hold it together.
It needs all kinds of specialized organs for ingestion and digestion, for respiration and exhalation, for carrying oxygen to the tissues, for reproduction, and so on.
Above all, a man needs a brain and a number of complex nervous systems.
Most of the mass of the amoeba is directly concerned with survival and procreation.
Most of the mass of the higher animal—its resources, its food, its energy supply, its tissues—serve to overcome and offset the complexity of the structure and the isolation from the outside.
An organization is not, like an animal, an end in itself, and successful by the mere act of perpetuating the species.
An organization is an organ of society and fulfills itself by the contribution it makes to the outside environment.
And yet the bigger and apparently more successful an organization gets to be, the more will inside events tend to engage the interests, the energies, and the abilities of the executive to the exclusion of his real tasks and his real effectiveness in the outside.
This danger is being aggravated today by the advent of the computer and of the new information technology.
The computer—being a mechanical moron, can handle only quantifiable data.
These it can handle with speed, accuracy, and precision.
It will, therefore, grind out hitherto unobtainable quantified information in large volume.
One can, however, by and large quantify only what goes on inside an organization—costs and production figures, patient statistics in the hospital, or training reports.
The relevant outside events are rarely available in quantifiable form until it is much too late to do anything about them.
This is not because our information-gathering capacity in respect to the outside events lags behind the technical abilities of the computer.
If this were the only thing to worry about, we would just have to increase statistical efforts—and the computer itself could greatly help us to overcome this mechanical limitation.
The problem is rather that the important and relevant outside events are often qualitative and not capable of quantification.
They are not yet “facts.”
For a fact, after all, is an event which somebody has defined, has classified and, above all, has endowed with relevance.
To be able to quantify one has to have a concept first.
One first has to abstract from the infinite welter of phenomena a specific aspect which one then can name and finally count.
➤ The thalidomide tragedy which led to the birth of so many deformed babies is a case in point.
By the time doctors on the European continent had enough statistics to realize that the number of deformed babies born was significantly larger than normal—so much larger that there had to be a specific and new cause—the damage had been done.
In the United States, the damage was prevented because one public health physician perceived a qualitative change—a minor and by itself meaningless skin tingling caused by the drug—related it to a totally different event that had happened many years earlier, and sounded the alarm before thalidomide actually came into use.
The Ford Edsel holds a similar lesson.
All the quantitative figures that could possibly be obtained were gathered before the Edsel was launched.
All of them pointed to its being the right car for the right market.
The qualitative change—the shifting of American consumer-buying of automobiles from income-determined to taste-determined market-segmentation—no statistical study could possibly have shown.
By the time this could be captured in numbers, it was too late—the Edsel had been brought out and had failed.
The truly important events on the outside are not the trends.
They are changes in the trends.
These determine ultimately success or failure of an organization and its efforts.
Such changes, however, have to be perceived; they cannot be counted, defined, or classified.
The classifications still produce the expected figures—as they did for Edsel.
But the figures no longer correspond to actual behavior.
The computer is a logic machine, and that is its strength—but also its limitation.
The important events on the outside cannot be reported in the kind of form a computer (or any other logic system) could possibly handle.
Man, however, while not particularly logical is perceptive—and that is his strength.
The danger is that executives will become contemptuous of information and stimulus that cannot be reduced to computer logic and computer language.
Executives may become blind to everything that is perception (i. e., event) rather than fact (i. e., after the event).
The tremendous amount of computer information may thus shut out access to reality.
Eventually the computer—potentially by far the most useful management tool—should make executives aware of their insulation and free them for more time on the outside.
In the short run, however, there is danger of acute “computeritis.”
It is a serious affliction.
The computer only makes visible a condition that existed before it.
Executives of necessity live and work within an organization.
Unless they make conscious efforts to perceive the outside, the inside may blind them to the true reality.
These four realities the executive cannot change.
They are necessary conditions of his existence.
But he must therefore assume that he will be ineffectual unless he makes special efforts to learn to be effective.
 This comes out clearly in Sune Carlson’s Executive Behavior (Stockholm, Strombergs. 1951), the one study of top management in large corporations which actually recorded the time-use of senior executives.
Even the most effective executives in Professor Carlson’s study found most of their time taken up with the demands of others and for purposes which added little if anything to their effectiveness.
In fact, executives might well be defined as people who normally have no time of their own, because their time is always pre-empted by matters of importance to somebody else.
See What Executives Should Remember for a broader "work" radar.
See Effective Executive preview for a dynamic outline of The Effective Executive.
See The Effective Executive in Action for an initial "workbook" approach.
For a broader "life" frame see Living in more than one world : how Peter Drucker's wisdom can inspire your life by Bruce Rosenstein.
The Daily Drucker is an even more comprehensive "radar" loading resource.
Early career work and Managing Oneself may be of interest for less ambitious types.
Consider the resources above along side Who Says Elephants Can't Dance?: Leading a Great Enterprise through Dramatic Change (the IBM turnaround) by Louis V. Gerstner, Jr. This comparison provides a "time-scape" view of our unfolding social world.
Please consider calendarizing these books and the other concepts on this page. Reading is useless without applying. Applying ain't easy—think corporate crisis stories.
This work is the doorway to a genuinely interesting life.
The following ↓ is a condensed strategic brainscape that can be explored and modified to fit a user’s needs
The concepts and links below ↓ are …
major foundations ↓ for future directed decisionS
aimed at navigating
a world constantly moving toward unimagined futureS ↓
YouTube: The History of the World in Two Hours
— beginning with the industrial revolution ↑ ↓
Management and the World’s Work
In less than 150 years, management ↑ has transformed
the social and economic fabric of the world’s developed countries …
Take responsibility for yourself and
don’t depend on any one organization ↑ ↓ (bread-crumb trailS below)
We can only work on the thingS on our mental radar ↑ at a point in time ↓
About time ↓ The future that has already happened
The economic and social health of our world
our capacity to navigate unimagined futureS
(and not be prisoners of the past)
The assumption that tomorrow is going to be
an extrapolation of yesterday sabotages the future — an
organization’s, a community’s and a nation’s future.
The assumption ↑ sabotages future generations — your children’s,
your grandchildren’s and your great grandchildren’s — in
spite of what the politicians say …
The vast majority of organization and political power structures
are engaged in this ↑ futile mind-set …
while rationalizing the evidence
The future is unpredictable and that means
it ain’t going to be like today
(which was designed & produced yesterday)
The capacity to navigate is governed by what’s between our ears ↓
When we are involved in doing something ↑
it is extremely difficult to navigate
and very easy to become a prisoner of the past.
We need to maintain a pre-thought ↓
systematic approach to work and work approach ↓
Click on either side of the image below to see a larger view
based on reality →
the non-linearity of time and events
and the unpredictability of the future
with its unimagined natureS. ↓ ↑
(It’s just a matter of time before we can’t get to the future
from where we are presently)
larger view ↓
Intelligence and behavior ↑ ↓ ← Niccolò Machiavelli ↑ ↓
Political ecologists believe that the traditional disciplines define fairly narrow and limited tools rather than meaningful and self-contained areas of knowledge, action, and events … continue
❡ ❡ ❡
Foundational ↑ Books → The Lessons of History — unfolding realities (The New Pluralism → in Landmarks of Tomorrow ::: in Frontiers of Management ::: How Can Government Function? ::: the need for a political and social theory ::: toward a theory of organizations then un-centralizing plus victims of success) ::: The Essential Drucker — your horizons? ::: Textbook of Wisdom — conceptual vision and imagination tools ::: The Daily Drucker — conceptual breadth ::: Management Cases (Revised Edition) see chapter titles for examples of “named” situations …
What do these ideas, concepts, horizons mean for me? continue
Society of Organizations
“Corporations once built to last like pyramids
are now more like tents.
Tomorrow they’re gone or in turmoil.”
“The failure to understand the nature, function, and
purpose of business enterprise” Chapter 9, Management Revised Edition
“The customer never buys ↑ what you think you sell.
And you don’t know it.
That’s why it’s so difficult to differentiate yourself.” Druckerism
“People in any organization are always attached to the obsolete —
the things that should have worked but did not,
the things that once were productive and no longer are.” Druckerism
What Everybody Knows Is Frequently Wrong ::: If You Keep Doing What Worked in the Past You’re Going to Fail ::: Approach Problems with Your Ignorance—Not Your Experience ::: Develop Expertise Outside Your Field to Be an Effective Manager ::: Outstanding Performance Is Inconsistent with Fear of Failure ::: You Must Know Your People to Lead Them ::: People Have No Limits, Even After Failure ::: Base Your Strategy on the Situation, Not on a Formula — A Class With Drucker: The Lost Lessons of the World's Greatest Management Teacher
Why Peter Drucker Distrusted Facts (HBR blog) and here
Best people working on the wrong things continue
Conditions for survival
Making the future — a chance for survival ↑
“For what should America’s new owners, the pension funds,
hold corporate management accountable?” and
“Rather, they maximize the wealth-producing capacity of the enterprise”
Search for the quotes above here
Successful careerS are not planned ↑ here and ↓
What do these issues, these challenges mean for me & … — an alternative
Exploration paths → The memo they don’t want you to see ::: Peter Drucker — top of the food chain ::: Work life foundations (links to Managing Oneself) ::: A century of social transformation ::: Post-capitalist executive ::: Allocating your life ::: What executives should remember ::: What makes an effective executive? ::: Innovation ::: Patriotism is not enough → citizenship is needed ::: Drucker’s “Time” and “Toward tomorrowS” books ::: Concepts (a WIP) ::: Site map a.k.a. brainscape, thoughtscape, timescape
Just reading ↑ is not enough, harvesting and action thinking are needed … continue
Information ↑ is not enough, thinking ↓ is needed … first then next + critical thinking
Larger view of thinking principles ↑ Text version ↑ :::
Always be constructive ↑ What additional thinking is needed?
Initially and absolutely needed: the willingness and capacity to
regularly look outside of current mental involvements continue
bread-crumb trail end
Peter Drucker: Conceptual Resources
The Über Mentor
A political / social ecologist
a different way of seeing and thinking about
the big picture
— lead to his top-of-the-food-chain reputation
about Management (a shock to the system)
“I am not a ‘theoretician’; through my consulting practice I am in daily touch with the concrete opportunities and problems of a fairly large number of institutions, foremost among them businesses but also hospitals, government agencies and public-service institutions such as museums and universities.
And I am working with such institutions on several continents: North America, including Canada and Mexico; Latin America; Europe; Japan and South East Asia.” — PFD
List of his books
Large combined outline of Drucker’s books — useful for topic searching.
“High tech is living in the nineteenth century,
the pre-management world.
They believe that people pay for technology.
They have a romance with technology.
But people don't pay for technology:
they pay for what they get out of technology.” —
The Frontiers of Management
Keywords and tags: career-evolution career-change career-early-work career-knowledge-worker career-management career-skills career-education tlnkweffectiveexecutive