Great managers may be charismatic or dull, generous or tightfisted, visionary or numbers oriented. But every effective executive follows eight simple practices. What Makes an Effective Executive by Peter F. Drucker An effective executive does not need to be a • They ran productive meetings. leader in the sense that the term is now most • They thought and said “we” rather than “I.” commonly used. Harry Truman did not have The first two practices gave them the knowl- one ounce of charisma, for example, yet he edge they needed. The next four helped them was among the most effective chief executives convert this knowledge into effective action. in U.S. history. Similarly, some of the best busi- The last two ensured that the whole organiza- ness and nonprofit CEOs I’ve worked with tion felt responsible and accountable. over a 65-year consulting career were not ste- reotypical leaders. They were all over the map Get the Knowledge You Need in terms of their personalities, attitudes, val- The first practice is to ask what needs to be ues, strengths, and weaknesses. They ranged done. Note that the question is not “What do I from extroverted to nearly reclusive, from want to do?” Asking what has to be done, and easygoing to controlling, from generous to taking the question seriously, is crucial for man- parsimonious. agerial success. Failure to ask this question will What made them all effective is that they render even the ablest executive ineffectual. followed the same eight practices: When Truman became president in 1945, he • They asked, “What needs to be done?” knew exactly what he wanted to do: complete • They asked, “What is right for the enter- the economic and social reforms of Roosevelt’s prise?” New Deal, which had been deferred by World • They developed action plans. War II. As soon as he asked what needed to be • They took responsibility for decisions. done, though, Truman realized that foreign af- • They took responsibility for communicating. fairs had absolute priority. He organized his • They were focused on opportunities rather working day so that it began with tutorials on than problems. foreign policy by the secretaries of state and OPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. OPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. C harvard business review • june 2004 page 1 What Makes an Effective Executive defense. As a result, he became the most effec- if it’s right for the owners, the stock price, the tive president in foreign affairs the United employees, or the executives. Of course they States has ever known. He contained Commu- know that shareholders, employees, and execu- nism in both Europe and Asia and, with the tives are important constituencies who have to Marshall Plan, triggered 50 years of worldwide support a decision, or at least acquiesce in it, if economic growth. the choice is to be effective. They know that Similarly, Jack Welch realized that what the share price is important not only for the needed to be done at General Electric when he shareholders but also for the enterprise, since took over as chief executive was not the over- the price/earnings ratio sets the cost of capital. seas expansion he wanted to launch. It was get- But they also know that a decision that isn’t ting rid of GE businesses that, no matter how right for the enterprise will ultimately not be profitable, could not be number one or num- right for any of the stakeholders. ber two in their industries. This second practice is especially important The answer to the question “What needs to for executives at family owned or family run be done?” almost always contains more than businesses—the majority of businesses in every one urgent task. But effective executives do country—particularly when they’re making not splinter themselves. They concentrate on decisions about people. In the successful fam- one task if at all possible. If they are among ily company, a relative is promoted only if he those people—a sizable minority—who work or she is measurably superior to all nonrela- best with a change of pace in their working tives on the same level. At DuPont, for in- day, they pick two tasks. I have never encoun- stance, all top managers (except the controller tered an executive who remains effective and lawyer) were family members in the early while tackling more than two tasks at a time. years when the firm was run as a family busi- Hence, after asking what needs to be done, ness. All male descendants of the founders the effective executive sets priorities and were entitled to entry-level jobs at the com- sticks to them. For a CEO, the priority task pany. Beyond the entrance level, a family might be redefining the company’s mission. member got a promotion only if a panel com- For a unit head, it might be redefining the posed primarily of nonfamily managers judged unit’s relationship with headquarters. Other the person to be superior in ability and perfor- tasks, no matter how important or appealing, mance to all other employees at the same are postponed. However, after completing level. The same rule was observed for a cen- the original top-priority task, the executive re- tury in the highly successful British family sets priorities rather than moving on to num- business J. Lyons & Company (now part of a ber two from the original list. He asks, “What major conglomerate) when it dominated the must be done now?” This generally results in British food-service and hotel industries. new and different priorities. Asking “What is right for the enterprise?” To refer again to America’s best-known does not guarantee that the right decision will CEO: Every five years, according to his autobi- be made. Even the most brilliant executive is ography, Jack Welch asked himself, “What human and thus prone to mistakes and preju- needs to be done now?” And every time, he dices. But failure to ask the question virtually came up with a new and different priority. guarantees the wrong decision. But Welch also thought through another issue before deciding where to concentrate his Write an Action Plan efforts for the next five years. He asked himself Executives are doers; they execute. Knowledge which of the two or three tasks at the top of is useless to executives until it has been trans- the list he himself was best suited to under- lated into deeds. But before springing into ac- Peter F. Drucker is the Marie Rankin take. Then he concentrated on that task; the tion, the executive needs to plan his course. Clarke Professor of Social Science and others he delegated. Effective executives try to He needs to think about desired results, prob- Management at the Peter F. Drucker focus on jobs they’ll do especially well. They able restraints, future revisions, check-in and Masatoshi Ito Graduate School of know that enterprises perform if top manage- points, and implications for how he’ll spend Management at Claremont Graduate ment performs—and don’t if it doesn’t. his time. University in Claremont, California. He Effective executives’ second practice—fully First, the executive defines desired results by has written nearly two dozen articles as important as the first—is to ask, “Is this the asking: “What contributions should the enter- for HBR. right thing for the enterprise?” They do not ask prise expect from me over the next 18 months harvard business review • june 2004 page 2 What Makes an Effective Executive to two years? What results will I commit to? sion has not been made until people know: With what deadlines?” Then he considers the • the name of the person accountable for restraints on action: “Is this course of action carrying it out; ethical? Is it acceptable within the organiza- • the deadline; tion? Is it legal? Is it compatible with the mis- • the names of the people who will be af- sion, values, and policies of the organization?” fected by the decision and therefore have to Affirmative answers don’t guarantee that the know about, understand, and approve it—or at action will be effective. But violating these re- least not be strongly opposed to it—and straints is certain to make it both wrong and • the names of the people who have to be ineffectual. informed of the decision, even if they are not The action plan is a statement of intentions directly affected by it. rather than a commitment. It must not be- An extraordinary number of organizational come a straitjacket. It should be revised often, decisions run into trouble because these bases because every success creates new opportuni- aren’t covered. One of my clients, 30 years ago, ties. So does every failure. The same is true for lost its leadership position in the fast-growing changes in the business environment, in the Japanese market because the company, after market, and especially in people within the en- deciding to enter into a joint venture with a terprise—all these changes demand that the new Japanese partner, never made clear who plan be revised. A written plan should antici- was to inform the purchasing agents that the pate the need for flexibility. partner defined its specifications in meters and In addition, the action plan needs to create kilograms rather than feet and pounds—and a system for checking the results against the nobody ever did relay that information. expectations. Effective executives usually build It’s just as important to review decisions pe- Asking what has to be two such checks into their action plans.