The Effective Executive Part 2

The Effective Executive (Part 2) by P F Drucker

First Things First

(i) Pick the future as against the past

(ii) Focus on opportunity rather than on problem

(iii) Choose your own direction – rather than climb on the bandwagon

(iv) Aim high, aim for something that will make a difference, rather than for something that is “safe” and easy to do.

Elements of Decision Making

(1) Realise that the problem was generic and could only be solved through a decision which establish a principle or rule;

(2) Define the speciation or the “boundary conditions” that the answer to the problem must satisfy

(3) Think through what is “right”. That is, the solution which will fully satisfy the specification before attention is given to the compromises, adaptations and concessions needed to make the decision acceptable

(4) The building into the decision of the action to carry it out

a. Who has to know this decision?

b. What action has to be taken? Who is going to take it?

c. What the action has to be so that the person who has to do it can do it?

d. Change the measurements, standards for accomplishments and incentives simultaneously, so that the people are incentivised to carry out the decision.

(5) The “feedback” which tests the validity and effectiveness of the decision against the actual course of events.

a. The decision maker has to go out and look at the results himself. If not, he has to send one of his aides to observe the results.

Effective Decision

The effective executive encourages opinions. But he also insists that the people who voice them also think through what it is that the “experiment”. That is, the testing of the opinion against reality – would have to show. The executive therefore ask: “What do we have to know to test the validity of this hypothesis? What would the facts have to be to make this opinion tenable?” And he makes it a habit -- in himself and the people with whom he works – to think through and spell out what needs to be looked at, studied and tested. He insists that people who voice an opinion also take responsibility for defining what factual findings can be expected and should be looked out for.

Whenever one analyzes the way a truly effective decision has been reached, one finds that a great deal of work and though went into finding the appropriate measurement. The traditional measurement reflects yesterday’s decision. That there is need for a new one normally indicates that the measurement is no longer relevant.

Effective decision makers create dissension and disagreement, rather than consensus. There are three reasons:

a) It is the only safeguard against the decision maker’s becoming the prisoner of the organization. Everyone is a special pleader, trying to obtain the decision he favors.

b) Second, disagreements can provide alternatives to a decision. Decision without alternatives is a desperate gambler’s throw. If one has thought through alternatives during the decision making process, one has something to fall back on, something that has been thought through, studied and understood. Without such an alternative, one is likely to flounder dismally when reality proves a decision to be inoperative.

c) Last, disagreement is needed to stimulate the imagination.

The effective executive is concern first with understanding. Only then does he even think about who is right and who is wrong.

There is one final question the effective executive asks: “Is a decision really necessary?” One alternative is always the option of doing nothing. The effective decision maker compares the effort and risk of action to risk of inaction. The guidelines are:

a) Act if on balance the benefits greatly outweigh cost and risk; and

b) Act or do not act; but do not “hedge” or compromise.