The Effective Executive Summary

I am a fan of Peter Drucker. If you have read a lot of business books, but never picked up a Peter Drucker book like The Effective Executive, you may find that reading Drucker sort of makes a lot of business books irrelevant. He is considered the godfather of a good deal of modern management and business theory for good reason.

Drucker dedicated his career to one huge question: How can we make society both more productive and more humane?

He believed that the self-development of the individual’s professional life is central to the development of the organization, whether it be a business, a government agency, a research laboratory, a hospital, or a military service.

Whereas other business thinkers tend to focus on the organization, Drucker saw that the causation was the reverse: by investing in the individual, it ultimately made the organization stronger.

Though he tended to focus on words like “executive” or “management,” the implications of his thinking was not limited to executives in the sense we normally think about the term, but anyone in a business who was making decisions.

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.

The way in which knowledge workers slice and dice up the world is consequential. We are all entrepreneurs now, it is only a question of if we recognize it and take responsibility for it.

​​Drucker believed that there was a common set of principles which could make any individual productive. ​​

​​As my old piano teacher said to me in exasperation when I was a small boy. “You will never play Mozart the way Arthur Schnabel does, but there is no reason in the world why you should not play your scales the way he does.”
…There is, in other words, no reason why anyone with normal endowment should not acquire competence in any practice. Mastery might well elude him; for this one might need special talents. But what is needed in effectiveness is competence. What is needed are “the scales”.

According to Drucker, these are essentially five such practices—five such habits of the mind that have to be acquired to be an effective executive. 

1. Effective executives know where their time goes. They work systematically at managing the little of their time that can be brought under their control.
2. Effective executives focus on outward contribution. They gear their efforts to results rather than to work. They start out with the question, “What results are expected of me?” rather than with the work to be done, let alone with its techniques and tools.
3. Effective executives build on strengths—their own strengths, the strengths of their superiors, colleagues, and subordinates; and on the strengths in the situation, that is, on what they can do. They do not build on weakness. They do not start out with the things they cannot do.
4. Effective executives concentrate on the few major areas where superior performance will produce outstanding results. They force themselves to set priorities and stay with their priority decisions. They know that they have no choice but to do first things first—and second things not at all. The alternative is to get nothing done.
5. Effective executives make effective decisions. They know that this is, above all, a matter of system—of the right steps in the right sequence. They know that an effective decision is always a judgment based on “dissenting opinions” rather than on “consensus on the facts”. And they know that to make many decisions fast means to make the wrong decisions. What is needed are few, but fundamental, decisions. What is needed is the right strategy rather than razzle-dazzle tactics.

These things seem simple, and, in a sense, they are. But very few individuals actually do them despite the fact that they will produce outsized results. I refer back to these frequently and nearly always find there is at least one area where I’m not doing a great job.

Full Summary and Quotes

The following are quotes from The Effective Executive annotated with my own notes.

Effective Executives Know Where Their Time Goes

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.

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 that 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.

• Note: The flow of events has very little useful informational content, executives need to step back. Activities like quarterly reviews and weekly reviews help.

Effective executives, in my observation, do not start with their tasks. They start with their time. And they do not start out with planning. They start by finding out where their time actually goes. Then they attempt to manage their time and to cut back unproductive demands on their time.

Finally they consolidate their “discretionary” time into the largest possible continuing units. This three-step process:

• Note: This is why you do a time audit and plan time with chunking/batching.

• The first step toward executive effectiveness is therefore to record actual time-use. The specific method in which the record is put together need not concern us here. There are executives who keep such a time log themselves. Others, such as the company chairman just mentioned, have their secretaries do it for them. The important thing is that it gets done, and that the record is made in “real” time, that is, at the time of the event itself, rather than later on from memory. A good many effective executives keep such a log continuously and look at it regularly every month. At a minimum, effective executives have the log run on themselves for three to four weeks at a stretch twice a year or so, on a regular schedule. After each such sample, they rethink and rework their schedule. But six months later, they invariably find that they have “drifted” into wasting their time on trivia.

• First one tries to identify and eliminate the things that need not be done at all, the things that are purely waste of time without any results whatever. To find these time-wastes, one asks of all activities in the time records: “What would happen if this were not done at all?” And if the answer is, “Nothing would happen,” then obviously the conclusion is to stop doing it. It is amazing how many things busy people are doing that never will be missed. There are, for instance, the countless speeches, dinners, committee memberships, and directorships which take an unconscionable toll of the time of busy people, which are rarely enjoyed by them or done well by them, but which are endured, year in and year out, as an Egyptian plague ordained from on high. 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 to be performed.

• The next question is: “Which of the activities on my time log could be done by somebody else just as well, if not better?”

• The first task here is to identify the time-wasters which follow from lack of system or foresight. The symptom to look for is the recurrent “crisis,” the crisis that comes back year after year.

• A recurrent crisis should always have been foreseen. It can therefore either be prevented or reduced to a routine which clerks can manage. The definition of a “routine” is that it makes unskilled people without judgment capable of doing what it took near-genius to do before; for a routine puts down in systematic, step-by-step form what a very able man learned in surmounting yesterday’s crisis.
  • Note: Create SOPs for any recurring task and use guiding principles – what is one decision that I can make to prevent needing to make 1000 decisions in the future.

• First, create unbroken blocks for individual think time, preferably during the most lucid time of day; these pockets of quietude might be only ninety minutes, but even the busiest executive must do them with regularity. Second, create chunks of deliberately unstructured time for people and the inevitable stuff that comes up. Third, engage in meetings that matter, making particular use of carefully constructed standing meetings that can be the heartbeat of dialogue, debate, and decision; and use some of your think time to prepare and follow up.
  • There are a good many ways of doing this. Some people, usually senior men, work at home one day a week; this is a particularly common method of time-consolidation for editors or research scientists. Other men schedule all the operating work—the meetings, reviews, problem-sessions, and so on—for two days a week, for example, Monday and Friday, and set aside the mornings of the remaining days for consistent, continuing work on major issues.
    • Note: Paul Graham’s Maker/Manager time and Focus/Buffer/Free Days are two good systems for implementing this.

• But even this disciplined man had to resign himself to having at least half his time taken up by things of minor importance and dubious value, things that nonetheless had to be done—the seeing of important customers who just “dropped in,” attendance at meetings which could just as well have proceeded without him; specific decisions on daily problems that should not have reached him but invariably did.
  • Note: Just assume half of your time is manager time and plan for it.
  • The unexpected always happens—the unexpected is indeed the only thing one can confidently expect. And almost never is it a pleasant surprise. Effective executives therefore allow a fair margin of time beyond what is actually needed. In the second place, the typical (that is, the more or less ineffectual) executive tries to hurry—and that only puts him further behind. Effective executives do not race. They set an easy pace but keep going steadily. Finally, the typical executive tries to do several things at once. Therefore, he never has the minimum time quantum for any of the tasks in his program. If any one of them runs into trouble, his entire program collapses.

• 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.
  • Note: Have one key thing per quarter, per week and per day.

• 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.
  • Note: As Steve Blank would say, get out of the building. At every level, you must have executives and managers doing customer facing activities. It is a qualitative thing which requires fingerspitzengefuhl. You can never stop interacting with the market.

How To Do Meetings Well

• First question with a meeting is “do we need it?”

• As a rule, meetings should never be allowed to become the main demand on an executive’s time. Too many meetings always bespeak poor structure of jobs and the wrong organizational components. Too many meetings signify that work that should be in one job or in one component is spread over several jobs or several components. They signify that responsibility is diffused and that information is not addressed to the people who need it.
  • Note: To some extent, excessive meetings happen because of improper org structure. Amazon seems to have managed this well because they have to build things to work without meetings.

• Preparation with a clear purpose in mind (“Why are we having these meetings?”) and disciplined follow-up. Those who make the most of meetings frequently spend substantially more time preparing for the meeting than in the meeting itself.

• The key to running an effective meeting is to decide in advance what kind of meeting it will be. Different kinds of meetings require different forms of preparation and different results:
  • A meeting to prepare a statement, an announcement, or a press release. For this to be productive, one member has to prepare a draft beforehand. At the meeting’s end, a preappointed member has to take responsibility for disseminating the final text.
  • A meeting to make an announcement—for example, an organizational change. This meeting should be confined to the announcement and a discussion about it.
  • A meeting in which one member reports. Nothing but the report should be discussed.
  • A meeting in which several or all members report. Either there should be no discussion at all or the discussion should be limited to questions for clarification. Alternatively, for each report there could be a short discussion in which all participants may ask questions. If this is the format, the reports should be distributed to all participants well before the meeting. At this kind of meeting, each report should be limited to a preset time—for example, 15 minutes.
  • A meeting to inform the convening executive. The executive should listen and ask questions. He or she should sum up but not make a presentation.
  • A meeting whose only function is to allow the participants to be in the executive’s presence. Cardinal Spellman’s breakfast and dinner meetings were of that kind. There is no way to make these meetings productive. They are the penalties of rank. Senior executives are effective to the extent to which they can prevent such meetings from encroaching on their workdays. Spellman, for instance, was effective in large part because he confined such meetings to breakfast and dinner and kept the rest of his working day free of them.

• Sloan, who headed General Motors from the 1920s until the 1950s, spent most of his six working days a week in meetings—three days a week in formal committee meetings with a set membership, the other three days in ad hoc meetings with individual GM executives or with a small group of executives. At the beginning of a formal meeting, Sloan announced the meeting’s purpose. He then listened. He never took notes and he rarely spoke except to clarify a confusing point. At the end, he summed up, thanked the participants, and left. Then he immediately wrote a short memo addressed to one attendee of the meeting. In that note, he summarized the discussion and its conclusions and spelled out any work assignment decided upon in the meeting (including a decision to hold another meeting on the subject or to study an issue). He specified the deadline and the executive who was to be accountable for the assignment.

• He sends out a printed form which reads: “I have asked [Messrs Smith, Jones, and Robinson] to meet with me [Wednesday at 3] in [the fourth floor conference room] to discuss [next year’s capital appropriations budget]. Please come if you think that you need the information or want to take part in the discussion. But you will in any event receive right away a full summary of the discussion and of any decisions reached, together with a request for your comments.” Where formerly a dozen people came and stayed all afternoon, three men and a secretary to take the notes now get the matter over with within an hour or so. And no one feels left out.
  • Note: Take meeting notes and send those around instead of having someone observe. This is also what Matt Mullenweg talked about on his podcast 100 Matt Mullenweg: Collaboration Is Key.

Effective Executives Focus On Outward Contribution

• The first practice is to ask what needs to be done. Note that the question is not “What do I want to do?” Asking what has to be done, and taking the question seriously, is crucial for managerial success. Failure to ask this question will render even the ablest executive ineffectual. When Truman became president in 1945, he knew exactly what he wanted to do: complete the economic and social reforms of Roosevelt’s New Deal, which had been deferred by World War II. As soon as he asked what needed to be done, though, Truman realized that foreign affairs had absolute priority. He organized his working day so that it began with tutorials on foreign policy by the secretaries of state and defense. As a result, he became the most effective president in foreign affairs the United States has ever known. He contained Communism in both Europe and Asia and, with the Marshall Plan, triggered 50 years of worldwide economic growth.

• First, the executive defines desired results by asking: “What contributions should the enterprise expect from me over the next 18 months to two years? What results will I commit to? With what deadlines?”

• Effective executives find themselves asking other people in the organization, their superiors, their subordinates, but above all, their colleagues in other areas: “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?”

• The action plan is a statement of intentions rather than a commitment. It must not become a straitjacket. It should be revised often, because every success creates new opportunities. So does every failure.
  • Note: This is why I like 90 Day Plans. It’s long enough to make meaningful progress but short enough to be nimble.

• The action plan needs to create a system for checking the results against the expectations. Effective executives usually build two such checks into their action plans. The first check comes halfway through the plan’s time period; for example, at nine months. The second occurs at the end before the next action plan is drawn up.
  • Note: A 90 day plans and review process accomplishes this.

Effective executives treat change as an opportunity rather than a threat. They systematically look at changes, inside and outside the corporation, and ask, “How can we exploit this change as an opportunity for our enterprise?” Specifically, executives scan these seven situations for opportunities:

• An unexpected success or failure in their own enterprise, in a competing enterprise, or in the industry;
  • Note: Unexpected successes are the best source of strategy a la the OODA Loop.
• A gap between what is and what could be in a market, process, product, or service (for example, in the nineteenth century, the paper industry concentrated on the 10 percent of each tree that became wood pulp and totally neglected the possibilities in the remaining 90 percent, which became waste);
• Innovation in a process, product, or service, whether inside or outside the enterprise or its industry;
• Changes in industry structure and market structure;
• Demographics
• Changes in mindset, values, perception, mood, or meaning.
• New knowledge or a new technology.

• Individual self-development in large measure depends on the focus on contributions. The man who asks of himself, “What is the most important contribution I can make to the performance of this organization?” asks in effect, “What self-development do I need? What knowledge and skill do I have to acquire to make the contribution.

• Executives who take responsibility for contribution in their own work will as a rule demand that their subordinates take responsibility too. They will tend to ask their men: “What are the contributions for which this organization and I, your superior, should hold you accountable? What should we expect of you? What is the best utilization of your knowledge and your ability?” And then communication becomes possible, becomes indeed easy.
  • Note: ask people what they think their job is. This is a good thing to ask as part of a regular 6 month performance review.

Effective Executives Build On Strengths

• To make strength productive is the unique purpose of organization. It cannot, of course, overcome the weaknesses with which each of us is abundantly endowed. But it can make them irrelevant. Its task is to use the strength of each man as a building block for joint performance.
  • Note: the purpose of an organization is to combine strengths in a way that parts are greater than the whole, if the organization does not achieve this, it is failing.

• Whoever tries to place a man or staff an organization to avoid weakness will end up at best with mediocrity. The idea that there are “well-rounded” people, people who have only strengths and no weaknesses (whether the term used is the “whole man,” the “mature personality,” the “well-adjusted personality,” or the “generalist”) is a prescription for mediocrity if not for incompetence. Strong people always have strong weaknesses too. Where there are peaks, there are valleys.

• Effective executives never ask “How does he get along with me?” Their question is “What does he contribute?” Their question is never “What can a man not do?” Their question is always “What can he do uncommonly well?” In staffing, they look for excellence in one major area, and not for performance that gets by all around.
  • Note: Utilize people for what they are good at and then craft things around their weaknesses.

• We can so structure an organization that the weaknesses become a personal blemish outside of, or at least beside, the work and accomplishment. We can so structure as to make the strength relevant. A good tax accountant in private practice might be greatly hampered by his inability to get along with people. But in an organization, such a man can be set up in an office of his own and shielded from direct contact with other people. In an organization, one can make his strength effective and his weakness irrelevant.
  • Note: true of partnerships too. before hiring anyone, you have to ask if it will offset existing weaknesses in the organization. The key point though is you don’t need to develop your weaknesses that much because you can hire around them.

• Making strengths productive is equally important in respect to one’s own abilities and work habits. It is not very difficult to know how we achieve results. By the time one has reached adulthood, one has a pretty good idea as to whether one works better in the morning or at night. One usually knows whether one writes best by making a great many drafts fast, or by working meticulously on every sentence until it is right. One knows whether one speaks well in public from a prepared text, from notes, without any prop, or not at all. One knows whether one works well as a member of a committee or better alone—or whether one is altogether unproductive as a committee member. Some people work best if they have a detailed outline in front of them; that is, if they have thought through the job before they start it. Others work best with nothing more than a few rough notes. Some work best under pressure. Others work better if they have a good deal of time and can finish the job long before the deadline. Some are “readers,” others “listeners.” All this one knows, about oneself—just as one knows whether one is right-handed or left-handed. These, it will be said, are superficial. This is not necessarily correct—a good many of these traits and habits mirror fundamentals of a man’s personality such as his perception of the world and of himself in it. But even if superficial, these work habits are a source of effectiveness. And most of them are compatible with any kind of work. The effective executive knows this and acts accordingly.
  • Note: it’s important and a good use of time to optimize how we work, how to consume information, what tasks, when to work, etc.

• 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?”

Effective Executives Concentrate On The Few Major Areas Where Superior Performance Will Produce Outstanding Results

• They concentrate on one task if at all possible. If they are among those people—a sizable minority—who work best with a change of pace in their working day, they pick two tasks. I have never encountered an executive who remains effective while tackling more than two tasks at a time.

• After completing the original top-priority task, the executive resets priorities rather than moving on to number two from the original list. He asks, “What must be done now?” This generally results in new and different priorities.
  • Weekly Reviews and Quarterly Reviews are a good way to be systematic about this.

• Good executives focus on opportunities rather than problems. Problems have to be taken care of, of course; they must not be swept under the rug. But problem-solving, however necessary, does not produce results. It prevents damage. Exploiting opportunities produces results.

• It is much easier to draw up a nice list of top priorities and then to hedge by trying to do “just a little bit” of everything else as well. This makes everybody happy. The only drawback is, of course, that nothing whatever gets done.
  • Note: Have a not to-do list every quarter of things you are committing to not doing.

• A good many studies of research scientists have shown that achievement (at least below the genius level of an Einstein, a Niels Bohr, or a Max Planck) depends less on ability in doing research than on the courage to go after opportunity. Those research scientists who pick their projects according to the greatest likelihood of quick success rather than according to the challenge of the problem are unlikely to achieve distinction.
  • Note: you have to have the courage to work on something unpopular for a long time (low time preference) to make an outsized impact. In Howard Marks words, you must be contrarian yet correct.

Effective Executives Make Effective Decisions

• We rarely face truly unique, one-off decisions. And there is an overhead cost to any good decision: It requires argument and debate, time for reflection and concentration, and energy expended to ensure superb execution. So, given this overhead cost, it’s far better to zoom out and make a few big generic decisions that can apply to a large number of specific situations, to find a pattern within—in.
  • Note: Create heuristics. You need to not make one-off decisions over and over, get to the root cause and create guiding principles. What is the one decision I can make that will avoid having to make 1,000 decisions in the future?

• If it were a decision today to start something you are already in (to enter a business, to hire a person, to institute a policy, to launch a project, etc.), would you? If not, then why do you persist?

• It finds that the basic decisions in respect to inventory are not inventory decisions at all. They are highly risky business decisions. Inventory emerges as a means of balancing different risks: the risk of disappointing customer expectations in respect to delivery and service; the risk and cost of turbulence and instability in manufacturing schedules; and the risk and cost of locking up money in merchandise which might spoil, become obsolete or otherwise deteriorate.
  • Note: business decisions are always part of a broader system and you need to understand the upstream and downstream effects of those decisions. You have to acknowledge that reality has a surprising amount of detail and think about it at a high level.

• 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.
  • Note: You need to have clear processes.

• Effective executives do not make a great many decisions. They concentrate on the important ones. They try to think through what is strategic and generic, rather than “solve problems”.
  • Note: Work the System by being a fire prevention specialist and not a firefighter. Solve the root problem.

• The company he took over in 1922 was a loose federation of almost independent chieftains. Each of these men ran a unit which a few short years before had still been his own company—and each ran it as if it were still his own company… 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. Everyone before Sloan had seen the problem as one of personalities, to be solved through a struggle for power from which one man would emerge victorious. Sloan saw it as a constitutional problem to be solved through a new structure; decentralization which balances local autonomy in operations with central control of direction and policy.
  • Note: Most executives fail because of the Maginot Line Problem, they fail to zoom out far enough and consider the issue too narrowly. You need to apply systems thinking and root cause analysis.
  • 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.
    • Note: This is why a company needs heuristics or general operating principles to Work the System, you need to enable/empower people with a general principle to adapt it to seemingly unique/one-off events which are in fact manifestations of a core problem.
  • 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.
  • The effective executive does not need to make many decisions. Because he solves generic situations through a rule and policy, he can handle most events as cases under the rule; that is, by adaptation. “A country with many laws is a country of incompetent lawyers,” says an old legal proverb. It is a country that attempts to solve every problem as a unique phenomenon, rather than as a special case under general rules of law. Similarly, an executive who makes many decisions is both lazy and ineffectual.
    • Note: Seemingly specific problems often have deeper, more general roots and if you can identify and fix those, you prevent many future issues.
  • While the effective decision itself is based on the highest level of conceptual understanding, the action to carry it out should be as close as possible to the working level and as simple as possible.
    • Note: strategic decisions should translate into very specific and definable tasks – vertical coherence.
  • 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 that 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”; What are the objectives the decision has to reach? What are the minimum goals it has to attain? What are the conditions it has to satisfy? In science, these are known as “boundary conditions”.
    3. The thinking through what is “right,” that is, the solution that will fully satisfy the specifications before attention is given to the compromises, adaptations, and concessions needed to make the decision acceptable. One has to start out with what is right rather than what is acceptable (let alone who is right) precisely because one always has to compromise in the end. But if one does not know what is right to satisfy the specifications and boundary conditions, one cannot distinguish between the right compromise and the wrong compromise—and will end up by making the wrong compromise.
       • Note: also true with goal setting, don’t start by not putting things down because they seem unrealistic or unachievable or you are embarassed by them, just say the truth.
    4. The building into the decision of the action to carry it out; Converting the decision into action is the fourth major element in the decision process. While thinking through the boundary conditions is the most difficult step in decision-making, converting the decision into effective action is usually the most time-consuming one. Yet a decision will not become effective unless the action commitments have been built into the decision from the start. In fact, no decision has been made unless carrying it out in specific steps has become someone’s work assignment and responsibility. Until then, there are only good intentions. … 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?
       • A story that has become a legend among operations researchers illustrates the importance of the question “Who has to know?” A major manufacturer of industrial equipment decided several years ago to discontinue one model. For years it had been standard equipment on a line of machine tools, many of which were still in use. It was decided, therefore, to sell the model to present owners of the old equipment for another three years as a replacement, and then to stop making and selling it. Orders for this particular model had been going down for a good many years. But they shot up as former customers reordered against the day when the model would no longer be available. No one had, however, asked, “Who needs to know of this decision?” Therefore nobody informed the clerk in the purchasing department who was in charge of buying the parts from which the model itself was being assembled. His instructions were to buy parts in a given ratio to current sales—and the instructions remained unchanged. When the time came to discontinue further production of the model, the company had in its warehouse enough parts for another eight to ten years of production, parts that had to be written off at a considerable loss.
         • Note: This is why you need to have shared communication where everything is going out to everyone and people are empowered to make decisions on their own and push back.
       • One has to make sure not only that responsibility for the action is clearly assigned and that the people responsible are capable of doing the needful. One has to make sure that their measurements, their standards for accomplishment, and their incentives are changed simultaneously. Otherwise, the people will get caught in a paralyzing internal emotional conflict.
         • Note: I think this is best done as part of performance reviews every six months, have to look at what is needed from them and then make sure their KPIs or measures of success line up for that.
    5. The “feedback” which tests the validity and effectiveness of the decision against the actual course of events. These are the elements of the effective decision process.
       • Finally, feedback has to be built into the decision to provide a continuous testing, against actual events, of the expectations that underlie the decision.
       • Military organizations learned long ago that futility is the lot of most orders and organized the feedback to check on the execution of the order. They learned long ago that to go oneself and look is the only reliable feedback.* Reports—all a president is normally able to mobilize—are not much help. All military services have long ago learned that the officer who has given an order goes out and sees for himself whether it has been carried out. At the least he sends one of his own aides—he never relies on what he is told by the subordinate to whom the order was given. Not that he distrusts the subordinate; he has learned from experience to distrust communications… With the coming of the computer, this will become even more important, for the decision-maker will, in all likelihood, be even further removed from the scene of action. Unless he accepts, as a matter of course, that he had better go out and look at the scene of action, he will be increasingly divorced from reality. All a computer can handle are abstractions. And abstractions can be relied on only if they are constantly checked against the concrete. Otherwise, they are certain to mislead us.
         • Note: The military has a go-see culture where the higher-ups always go inspect what is going on because they know that reality has a surprising amount of detail. Toyota had this as part of their andon cord practices. This is not about trust, it is about communication and how much is lost. Screen sharing is the most important thing for this as it relates to distributed work, after a task is completed then there should be a screen share video sent to show how it is working.
       • To go and look for oneself is also the best, if not the only, way to test whether the assumptions on which a decision had been made are still valid or whether they are becoming obsolete and need to be thought through again. And one always has to expect the assumptions to become obsolete sooner or later. Reality never stands still very long. Failure to go out and look is the typical reason for persisting in a course of action long after it has ceased to be appropriate or even rational. This is true for business decisions as well as for governmental policies. It explains in large measure the failure of Stalin’s postwar policy in Europe but also the inability of the United States to adjust its policies to the realities of de Gaulle’s Europe or the failure of the British to accept until too late, the reality of the European Common Market. One needs organized information for the feedback. One needs reports and figures. But unless one builds one’s feedback around direct exposure to reality—unless one disciplines oneself to go out and look—one condemns oneself to a sterile dogmatism and with it to ineffectiveness.
         • Note: This is a recognition of legibility, one needs facts and figures but one needs them to be connected with the underlying reality which can be obscured by legible indicators.
       • There is one final question the effective decision-maker asks: “Is a decision really necessary?” One alternative is always the alternative of doing nothing. Every decision is like surgery. It is an intervention into a system and therefore carries with it the risk of shock. One does not make unnecessary decisions any more than a good surgeon does unnecessary surgery. Individual decision-makers, like individual surgeons, differ in their styles. Some are more radical or more conservative than others. But by and large, they agree on the rules.
         • Note: Always ask, will this problem solve itself if left alone?
       • If the answer to the question “What will happen if we do nothing?” is “It will take care of itself,” one does not interfere. Nor does one interfere if the condition, while annoying, is of no importance and unlikely to make any difference anyhow.
         • Note: Will the problem resolve itself and does it matter in the first place? Many decisions don’t even need to be made.

Drucker On Hiring

• An organization is like a biological organism in one key way: Internal mass grows at a faster rate than external surface; thus, as the organization grows, an increasing proportion of energy diverts to managing the internal mass rather than contributing to the outside world. Combine this with another Druckerian truth: The accomplishments of a single right person in a key seat dwarf the combined accomplishment of dividing the seat among multiple B-players. Get better people, give them really big things to do, enlarge their responsibilities, and let them work.
  • Note: Better to Keep it lean with a-players then hire too much.
  • My first-grade arithmetic primer asked: “If it takes two ditch-diggers two days to dig a ditch, how long would it take four ditch-diggers?” In first grade, the correct answer is, of course, “one day.” In the kind of work, however, with which executives are concerned, the right answer is probably “four days” if not “forever”.

• Resist the temptation to redesign seats on the bus to specific personalities (except for the exceptionally rare genius), as this will inevitably create seats you don’t need.
  • Note: Don’t create work for someone, if there isn’t something that needs doing then wind it down

• Effective executives know this and check up (six to nine months later) on the results of their people decisions. If they find that a decision has not had the desired results, they don’t conclude that the person has not performed.
  • Note: Do a six-month review after hiring or promoting someone. If it is not going well then end it.

• People who have failed in a new job should be given the choice to go back to a job at their former level and salary. This option is rarely exercised; such people, as a rule, leave voluntarily, at least when their employers are U.S. firms. But the very existence of the option can have a powerful effect, encouraging people to leave safe, comfortable jobs and take risky new assignments.
  • Note: People should know prior to a promotion that they can go back to prior role which will make them more willing to take a risk.

• Among the effective executives I have had occasion to observe, there have been people who make decisions fast, and people who make them rather slowly. But without exception, they make personnel decisions slowly and they make them several times before they really commit themselves.

• Alfred P. Sloan, Jr., former head of General Motors, the world’s largest manufacturing company, was reported never to make a personnel decision the first time it came up. He made a tentative judgment, and even that took several hours as a rule. Then, a few days or weeks later, he tackled the question again, as if he had never worked on it before. Only when he came up with the same name two or three times in a row was he willing to go ahead. Sloan had a deserved reputation for the “winners” he picked. But when asked about his secret, he is reported to have said: “No secret—I have simply accepted that the first name I come up with is likely to be the wrong name—and I, therefore, retrace the whole process of thought and analysis a few times before I act.” Yet Sloan was far from a patient man.
  • Note: Hire slow.

• How then do effective executives staff for strength without stumbling into the opposite trap of building jobs to suit personality? By and large, they follow four rules:
  1. They do not start out with the assumption that jobs are created by nature or by God. They know that they have been designed by highly fallible men. And they are therefore forever on guard against the “impossible” job, the job that simply is not for normal human beings.
     • The rule is simple: Any job that has defeated two or three men in succession, even though each had performed well in his previous assignments, must be assumed unfit for human beings. It must be redesigned.
  2. The second rule for staffing from strength is to make each job demanding and big. It should have the challenge to bring out whatever strength a man may have. It should have a scope so that any strength that is relevant to the task can produce significant results.
     • Note: people tend to perform how we expect them to perform. Often, if you make the job bigger then they will rise to it.
     • The demands of any job above the simplest are also bound to change, and often abruptly. The “perfect fit” then rapidly becomes the misfit. Only if the job is big and demanding, to begin with, will it enable a man to rise to the new demands of a changed situation.
       • Note: you need to make the job big!
  3. Effective executives know that they have to start with what a man can do rather than with what a job requires. This, however, means that they do their thinking about people long before the decision on filling a job has to be made, and independently of it.
     • Appraisals—and the philosophy behind them—are also far too much concerned with “potential.” But experienced people have learned that one cannot appraise potential for any length of time ahead or for anything very different from what a man is already doing.
       • Note: focus on what people have done successfully, not what they “could” do. Hire people who have done things.
     • Effective executives, therefore, usually work out their own radically different form. It starts out with a statement of the major contributions expected from a man in his past and present positions and a record of his performance against these goals. Then it asks four questions:
       1. “What has he [or she] done well?”
       2. “What, therefore, is he likely to be able to do well?”
       3. “What does he have to learn or to acquire to be able to get the full benefit from his strength?”
       4. “If I had a son or daughter, would I be willing to have him or her work under this person?”
          • “If yes, why?”
          • “If no, why?”
     • By themselves, character and integrity do not accomplish anything. But their absence faults everything else. Here, therefore, is the one area where weakness is a disqualification by itself rather than a limitation on performance capacity and strength.
       • Note: you need the baseline thing buffet talks about: integrity, hard work, honesty. Then after that, you select for strengths.
  4. The effective executive knows that to get strength one has to put up with weaknesses.
     • There have been few great commanders in history who were not self-centered, conceited, and full of admiration for what they saw in the mirror.
     • The effective executive will therefore ask: “Does this man have strength in one major area? And is this strength relevant to the task? If he achieves excellence in this one area, will it make a significant difference?” And if the answer is “yes,” he will go ahead and appoint the man.
     • Altogether it must be an unbreakable rule to promote the man who by the test of performance is best qualified for the job to be filled. All arguments to the contrary—“He is indispensable” . . . “He won’t be acceptable to the people there” . . . “He is too young” . . . or “We never put a man in there without field experience”—should be given short shrift. Not only does the job deserve the best man. The man of proven performance has earned the opportunity. Staffing the opportunities instead of the problems not only creates the most effective organization, it also creates enthusiasm and dedication.
       • Note: you want to reward merit because it attracts good people that are otherwise overlooked.

• One hires new people to expand on already established and smoothly running activity. But one starts something new with people of tested and proven strength, that is, with veterans.

• An organization needs to bring in fresh people with fresh points of view fairly often. If it only promotes from within it soon becomes inbred and eventually sterile. But if at all possible, one does not bring in the newcomers where the risk is exorbitant—that is, into the top executive positions or into leadership of an important new activity. One brings them in just below the top and into an activity that is already defined and reasonably well understood.