THE FUNDAMENTALS OF EXECUTIVE SUCCESS

by Peter Drucker Harvard Business Review

An effective executive does not need to be a leader in the sense that the term is now most commonly used. Harry Truman did not have one ounce of charisma, for example, yet he was among the most effective chief executives in US history.

Similarly, some of the best business and non-profit chief executives I have worked with over a 65-year consulting career were not stereotypical leaders. They were all over the map in terms of their personalities, attitudes, values, strengths and weaknesses.

They ranged from extroverted to nearly reclusive, from easygoing to controlling, from generous to parsimonious.

What made them all effective is that they followed the same eight practices:

They asked, "What needs to be done?"

They asked, "What is right for the enterprise?"

They developed action plans.

They took responsibility for decisions.

They took responsibility for communicating.

They were focused on opportunities rather than problems.

They ran productive meetings.

They thought and said "we" rather than "I".

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.

When Truman became US 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.

But as soon as he asked what needed to be done, Truman realised that foreign affairs had absolute priority. He organised his working day so that it began with tutorials on foreign policy by the secretaries of state and defence.

As a result, he became the most effective president in foreign affairs the US has ever known.

Similarly, Jack Welch realised that what needed to be done at General Electric when he took over as CEO was not the overseas expansion he wanted to launch. It was getting rid of GE businesses that, no matter how profitable, could not be No.1 or No.2 in their industries.

The answer to the question "what needs to be done?" almost always contains more than one urgent task, but effective executives do not splinter themselves.

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

To refer again to America's best-known CEO. Every five years, according to his autobiography, Welch asked himself, "What needs to be done now?" Every time, he came up with a new and different priority.

Welch also thought through another issue before deciding where to concentrate his efforts for the next five years. He asked himself which of the two or three tasks at the top of the list he was best suited to undertake. Then he concentrated on that task; the others he delegated.

Effective executives' second practice, as important as the first, is to ask, "Is this the right thing for the enterprise?" They do not ask if it's right for the owners, the stock price, the employees, or the executives.

Of course they know that shareholders, employees and executives are important constituencies who have to support a decision, or at least acquiesce in it, if the choice is to be effective.

They know that the share price is important not only for the shareholders but also for the enterprise, since the price-earnings ratio sets the cost of capital.

They also know that a decision that isn't right for the enterprise will ultimately not be right for any of the stakeholders.

Knowledge is useless to executives until it has been translated into deeds, but before springing into action the executive needs to plan his or her course. The executive needs to think about desired results, probable restraints, future revisions, check-in points and the implications for how to spend time.

First, the executive defines the 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?"

Then restraints on action must be considered: "Is this course of action ethical? Is it acceptable within the organisation? Is it legal? Is it compatible with the mission, values, and policies of the organisation?"

Affirmative answers don't guarantee that the action will be effective, but violating these restraints is certain to make it both wrong and ineffectual.

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.

The same is true for changes in the business environment, in the market and especially in people within the enterprise.

All these changes demand that the plan be revised. A written plan should anticipate the need for flexibility.

In addition, 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.

Finally, the action plan has to become the basis for the executive's time management. Time is an executive's most scarce and most precious resource.

When they translate plans into action, executives need to pay particular attention to decision making, communication, opportunities (as opposed to problems) and meetings. I'll consider these one at a time.

Take responsibility for decisions. A decision has not been made until people know:

The name of the person accountable for carrying it out.

The deadline.

The names of the people who will be affected by the decision and therefore have to know about, understand, and approve it, or at least not be strongly opposed to it.

The names of the people to be informed of the decision, even if they are not directly affected by it.

An extraordinary number of organisational decisions run into trouble because these bases aren't covered.

One of my clients, 30 years ago, lost its leadership position in the fast-growing Japanese market because the company, after deciding to enter into a joint venture with a new Japanese partner, never made it clear who was to inform the purchasing agents that the partner defined its specifications in metres and kilograms rather than feet and pounds, and nobody ever did relay that information.

Effective executives make sure that both their action plans and their information needs are understood. Specifically, this means they share their plans with, and ask for comments from, all their colleagues; superiors, subordinates and peers.

At the same time, they let each person know what information he or she will need to get the job done. The information flow from subordinate to boss is usually what gets the most attention, but executives need to pay equal attention to peers' and superiors' information needs.

We all know, thanks to Chester Barnard's 1938 classic The Functions of the Executive, that organisations are held together by information, rather than by ownership or command.

Still, far too many executives behave as if information and its flow were the job of the information specialist, for example, the accountant. As a result, they get an enormous amount of data they do not need and cannot use, but little of the information they do need.

The best way around this problem is for executives to identify the information they need, ask for it, and keep pushing until they get it.

Good executives focus on opportunities rather than problems. Problems have to be dealt with, of course; they

Date Posted: 29-Jun-2004