MBA1153 Must Read: The Effective Executive by Peter Drucker

Foreign. Welcome to the $100 RMBA show, the business podcast that gives you a return on investment for your time every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online and Today's episode is a must read episode on our Must Read Episodes I share with you a book that I've read that has influenced me as an entrepreneur. I share with you some of its takeaways, why I loved it so much, and why you should read it too. Today's must read is the Effective Executive by Peter Drucker. Peter Drucker is known as the forefather of management and marketing. His work has been studied by so many people, management schools, business schools across the world. So he's an authority when it comes to knowing how to excel in business. Now, even though the book is called the Effective Executive, it's super applicable to entrepreneurs. It's all about how to hire the right people, how to delegate, how to make the right management decisions. Some of the insights that you're going to learn today is why you should stop wasting your time at client dinners, why hiring salespeople with other interesting skills is a good move, and why holding long decision making meetings might actually save you time. He also talks about how to lead by example and what it means to be a leader. I've been a student of Peter Drucker's work for some time now, so this book was really a great summation of his thoughts and his teachings. Can't wait to share them with you today. So let's get into it. Let's get down to business. Today's must Read the Effective Executive starts out and how you as a leader of the company, need to lead by example. By improving your own skills, you will help others succeed. Think about an executive you admire. Sarah Blakely, Gary Vaynerchuk, Reid Hoffman. Does this person seem so skilled? It's as if they were born for the job. Well, Drucker says the reality is that executives aren't born, they're made, which means you can become one too. He says being a great manager means to reflect and to look into yourself. Management is about transforming other people and the first transformation you gotta make is yourself. You gotta lead by example. He says an effective executive knows what needs to happen, how to put ideas into action, and how to promote a sense of responsibility and accountability throughout the entire organization. You got to hold yourself accountable so others can Feel like they have to hold themselves accountable as well. You can't evaluate and say, hey, you're responsible for the work you do if you're not being responsible yourself. He talks about how US President Harry Truman is a good example of an effective leader. He says when Truman took office in 1945, although he wanted to focus on domestic issues, he. He realized that issues abroad needed attention. So he focused on foreign policy, and eventually he established himself as one of the most effective foreign policy presidents in American history. He says these types of results are not by accident. Truman had to develop himself and do something that was uncomfortable to him, something that he actually didn't want, but he had to address the needs of the country and he had to improve himself to be able to do the job. So he says, review your own performance. Where are your areas of weakness? Where can you improve as a leader? Are you communicating properly with your team? Are you giving them clear instructions? Are you there to support them when they need it? Are you giving them a blueprint to success in your company? Next in the book, he says that great leaders know that they are judged by the results and not by their intentions. Your team, the people that work for you, they want to see results from you. They want to see progression, they want to see the company get better, to grow. That the experience at working at your company gets better. It doesn't matter if you intend to do it or not. What I mean by that is that you can have the best intentions. Like, I really wanted them to love the job, but if you created an environment where they can't love the job, that's all that matters, people's experience. So knowing that as the leader, you have to understand that, hey, I have a goal. I need to make sure that people are feeling served, that people feel supported, that they like what they do, that they feel there's upward mobility in their job. And I gotta plot a path towards that goal. I gotta do the things in my company that allow that to happen and not just say, oh, that's my, you know, culture. That's what I believe in. But if your beliefs and actions don't match, it's going to result in unhappy employees. People that work for you are looking for results. He also talks about decision making, how you have to stand by your decisions, even the face of criticism. He says decision making starts with the most critical decision, and that's is this decision actually worth making? You can answer this question by asking yourself two other questions. What would happen in this situation if you did nothing? And the next question Is would the probable outcome of your decision greatly outweigh its risks and costs? So by making this decision, the result of the decision, will it greatly outweigh the risks you took and the cost it took to make this decision? Don't proceed unless the answer to the second question is yes. Sometimes we don't remind ourselves also that, hey, sometimes you don't have to do something. You don't always have to take action. Some of us were very trigger happy when it comes to, you know, responding to customer feedback. Hey, if I don't do something about this feedback, then that means I'm not doing a good job. No, sometimes it's not worth you doing that. It's not a priority or it's gonna cause more harm than good. Or to Drucker's advice, it doesn't greatly outweigh the risks or the costs. He also says effective decision makers also pay attention to boundary conditions or the conditions that form the basis of a decision. Another word for this is circumstance. So, for example, he gives another U.S. president example here. When Franklin D. Roosevelt campaigned for U.S. president in 1933, he promised to repair the economy after the Great Depression. And his plan was just to use the existing balanced budget. The balanced budget was his boundary condition. But between the end of the presidential campaign and his inauguration, Roosevelt watched as the economy got worse and the balanced budget disappeared. Yet since he was a great decision maker, Roosevelt realized that since his boundary condition was no longer available, his plan for recovery was unfeasible. The circumstances changed. Thus, economic reform was a more effective course of action, meaning that he had to change his decision. He had to change his plan, because if circumstances change, things out of his control change. So he's got to pivot, he's got to change along with it. He can't just be stubborn and be like, nope, I'm going to just do what I said before. So understand that your circumstances can change. So you have to change. You got to change. Do things differently. If, you know, sales dip in your business, if a competitor comes out and challenges your company, if you sell swimming pools for a living and it's the winter, the circumstance is different now. You have to change your marketing strategies, your whole strategy, depending on the situation. Gotta be flexible. He has a great quote in this book and it's everyone can make the wrong decision. In fact, everyone will sometimes make the wrong decision. Meaning expect it. Expect that there is a good chance that you're gonna make some wrong decisions along the way. It's ok, you just gotta roll with the punches, learn from it and adjust. Speaking of decisions, he talks about how to make right decisions, how to learn to be attentive to other viewpoints, learn from past outcomes, and how to listen to your team. This is why I think it's so important to have a diverse team. A team that has members from different cultural backgrounds and different perspectives that come from different parts of the world. They're gonna have different viewpoints on a certain topic and a certain decision. Their opinion matters because they are a reflection of a global marketplace. So always listen to everything your team says. When I say listen, I'm saying consider. Consider what they're saying. You don't have to follow it point blank, but you have to take it in consideration when you're making decisions. These varied viewpoints help you make solid decisions and weigh the pros and cons. He also talks about time management in this book and how to eliminate useless activities that just kill time. But he does say that when you meet with your management team, with the people that make the decisions in your business, that's time well spent. Why? Because a decision needs to be solid. And once you have a decision, you're just going to have to follow through and take action. That can be done outside of meetings. Implementation can be done in smaller teams, in individual work, in individual time, right in everybody's own time. But coming up with decisions and knowing the direction you're going to take in different aspects of your business, whether it's your sales or marketing or customer service or research and development, you really, really need to invest the time to meet with your team to make these decisions. Even if it's once a week. Don't be too conservative about decision making meetings. These discussions are why having a team is great. Collaborating together and sharing ideas to come up with the best ideas with the best decisions. Speaking of job descriptions, Peter Drucker in his book actually talks about when looking to hire a new talent, be sure your job description is written clearly and thoughtfully. Job descriptions often include ludicrous lists of requirements and qualifications. To the extent that it's almost impossible to imagine any one person who will fit this position and will have all these things, it's up to you to create a better job description or the person that you're hiring to do it. You're looking for somebody with the right fit. So if you want to hire great talent, it starts with the job description. Say you're looking for a new salesperson. You find a candidate that partially fits, but who also has coding skills. Some people might say, oh, they don't really fit the position. But a sharp executive, a sharp leader will say, wow, this is a rare find. I need somebody that can do some coding, understand coding, because hey, we're a software company and actually could sell the product better. Could they understand the technology behind it? So. So even if you find somebody that applies to your job that has skills that are not in the job description, those skills can help them in any way do a better job or help your company or help the people in the company, then that's a plus. And that's a rare find. All in all, Peter Drucker's book the Effective Executive helps you tune your strengths, helps you identify your areas for improvement, and allows you to follow his few basic principles for navigating within your organization and leading your organization forward. Thank you so much for listening to the 100 MBA show. That wraps up today's lesson. If you love our must read episodes and you have a book that you recommend for me to read, I would love to hear about it. Just email me@omar00mba.net before I go, I want to leave you with this. One of the pieces of advice that Peter Drucker passes on in this book is to start a time diary to figure out where your time goes, to figure out where you're spending your time all day so you can be more effective. I love this idea. In this day and age, there's technology to help you do that right on your computer. It's called Time Doctor. Actually, it's a software that's owned and run by one of my good friends, Rob Rossin. Shout out to you, rob and time doctor.com. it's a great little app that's very, very affordable that allows you to track where you're spending all your time on your computer. It will be eye opening if you give it a try. I know they have a free trial take on Peter Drucker's advice and give it a shot. All right, I'll check you in tomorrow's episode. I'll see you then. Take care, Sam.