Book Review: The Effective Executive by Peter Drucker

Peter Drucker is one of the most widely read and followed management thinkers. In light of his impact on the business world, I thought it was time to read one of his books. I choose, “The Effective Executive” based on the recommendation of Mark Horstman at Manager Tools who argues that professionals ought to,  “Read this book once a year.” It’s a short book but well worth reading, especially for knowledge workers in large organizations. Even though the book was written in 1967, the core lessons of the book continue to resonate. One world on terminology – Drucker uses the word “executive” to mean knowledge worker or professional, not only those with executive job titles (e.g. Vice-President, CFO, CEO etc) or executive responsibilities. In this review, I will explore Drucker’s comments on time management, contribution and decision making.

There’s an old saying that what gets measured gets managed. The second chapter of the book has the simple title “Know Thy Time.” Drucker bluntly argues that time-wasting activities and bureaucratic activity are all but impossible to escape in organizations. Simply tracking how time is used can yield significant benefits. To go a level deeper, Drucker recommends, “The first task here is to identify time-wasters which follow from lack of system or foresight… A crisis that recurs a second time is a crisis that must not occur again.” After all, solving a crisis situation is usually stressful and is rarely the most productive way to work. The book has much more to say on time management but time tracking and crisis prevention are two critical insights that I found particularly valuable.

Contribution – what can I contribute to the organization? – is a theme that Drucker explores in a thoughtful way. As he puts early in the chapter, “… the man who focuses on contribution and who takes responsibility for results, no matter how junior, is in the most literal sense of the phrase, ‘top management.’” The most important actionable recommendation in this section is directly at knowledge workers who are invariably experts in a specific domain of knowledge. The effective knowledge worker must know their domain but also make the effort to connect to the broader organization. Drucker illustrates the principle using an accountant example:

“If cost accountants, for example, asked these questions, they would soon find out which of their assumptions – obvious to them – are totally unfamiliar to the managers who are to use the figures. They would soon find out which of the figures that to them are important are irrelevant to the operating people and which figures, barely seen by them and rarely reported, are the ones the operating people really need every day.”

Knowing one’s profession is necessary but not sufficient to be effective in Drucker’s view.

The final chapters of the book explore decision making, an important aspect of leadership. Reading this section reminded me of President Obama’s comments on decision-making in a 2012 article in Vanity Fair:

Nothing comes to my desk that is perfectly solvable,” Obama said at one point. “Otherwise, someone else would have solved it. So you wind up dealing with probabilities. Any given decision you make you’ll wind up with a 30 to 40 percent chance that it isn’t going to work. You have to own that and feel comfortable with the way you made the decision. You can’t be paralyzed by the fact that it might not work out.

The thought of operating in such a probabilistic environment may be daunting to those accustomed to simpler decisions but it is not impossible. Drucker’s decision making advice can make a great deal of difference. For example, Drucker recommends looking for the generic rather than the symptomatic in decision making. If one can address fundamental problems with decisions, the impact of each decision will be much greater and the effective executive will have far fewer fires to put out. Drucker also points out that threats can worsen and opportunities decay when no decision is made – it is important to recall that circumstances can continue to change even while one works through the decision making process. Drucker’s decision making process deserves further exploration than I can provide here but it is certainly valuable.

This is the second book I finished in 2013 as part of my goal to read 25 books by the end of the year. Since I have a tendency to focus on non-fiction reading, my next book will be a novel: “The Profession” by Steven Pressfield.

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