We Study Billionaires - The Investor’s Podcast Network - TIP 079 : The Effective Executive - by Peter Drucker (Business Podcast)

Starting point is 00:00:00 We study billionaires, and this is episode 79 of The Investors Podcast. Broadcasting from Bel Air, Maryland. This is the Investors Podcast. They'll read the books and summarize the lessons. They'll test the waters and tell you when it's cold. They'll give you actionable investing strategies. Your host, Preston Pish, and Sting Broderson. Hey, how's everybody doing out there?

Starting point is 00:00:30 This is Preston Pish, and I'm your host for Newspish. The Investors podcast, and as usual, I'm accompanied by my co-host Stig Broderson out in Denmark. And today, we've got another book for you. And this book is called The Effective Executive. And we picked this one up because it was recommended by Jeff Bezos. I'm sure most people know who Jeff Bezos is. He's the founder of Amazon. His net worth is around $29 billion.

Starting point is 00:00:55 And this is one of the books that he highly recommends for executive management and leadership within his organization. So that's why we picked this one up. I was really, really excited to read this book because I know Bezos puts a lot of emphasis on it and it's one of his top reads for the company. But I really, I did not enjoy this book. I really didn't. Let me start off with this.

Starting point is 00:01:19 The information that is in this book that you're going to read is absolutely 100% great information. It is information that is really going to lead decision-making. acres down the right path inside of an organization. But my issue with the book was that it was really boring. I just did not have, I did not have fun reading this. This was, it was bad. You know, I think of it like this. When we were reading the book, how to win friends and influence people, I love that book. And I think the reason that that book is so good is because you learn and you also have stories that go with it at the same time. And the writing style in Carnegie

Starting point is 00:02:00 He's How to Win Friends is just fantastic because he starts off with the story and he walks you down this really interesting story where you don't know where it's going to go. And then at the end, you hear the conclusion of the story and then he wraps it up really nicely with like the learning lesson. This was more like this book here, the effective executive was just like they were just telling you, hey, you got to do this, you got to do that. And it's all really boring like leadership executive stuff. So I don't want to say that the book was bad because the book was,

Starting point is 00:02:30 very, very good. The information is excellent, and we're going to discuss that, hopefully in a more enjoyable manner. But the information is really good. The issue is just the style is definitely the issue I had with this book. The writing style was not fun. And I have a hard time even recommending this for people. But let's get to the book. Stig, I'm assuming you have a similar opinion. I don't know how you could have had fun reading this. But go ahead. Maybe you did. I don't know. Let's hear your opinion. No, I definitely didn't like it. I'm not even sure I like the content. to be honest. But, you know, it might not be fair. It's kind of like if I was told to review Sex and the City, I would probably say it's a horrible chick flag. And then someone would say,

Starting point is 00:03:11 well, it's like you're probably not the target group and that would be right. And I kind of feel like the same way with this book, I probably can't find a job I would rather not have than being a CEO, let alone an effective CEO. So it's probably not fair. Yeah. I thought the same thing at first about the content. Like the style is horrible. I don't even know if I agree with the content. But you know what? When I was going back and I was kind of looking at my notes for recording the episode, you know, I was looking back through and I was like, you know what, this content is very good. What he's recommending is good information. It's just the style in which it was presented was horrible. So we'll try our best to maybe provide real life examples of our own.

Starting point is 00:03:49 When we're talking some of these, I don't know. But we'll see how it goes. So let's go ahead and dive into the book. So chapter one of the book is titled, Effectiveness Can Be Learned. And, you know, there's a lot of people out there that say leaders are born versus leaders are created. And for Peter Drucker, he's of the opinion that they are created. And I would have to agree with this. I've seen some guys and I've had kind of a unique background. I've mentioned it a couple times on the show. So I went to the United States Military Academy at West Point. And the school, if there's one thing that the school does, It's essence is trying to teach people how to become leaders. So for four years you sit around and what you really do is you're just learning the elements of

Starting point is 00:04:32 leadership. It's all about leadership, that whole school, the whole time you're there. And so with this point here, I completely agree with Drucker just because of my personal experience and seeing this happen firsthand with people that a decade earlier and you wouldn't think, there's no way that guy could ever, you know, lead an organization. And here you go. He's like the CEO of a company, you know, 10, 20 years later and you're just amazed at the progression that does take place. So I agree with him at that point.

Starting point is 00:05:00 And I think that it's, I think he probably starts off the book with that just so that he can maybe motivate people. Because if you're reading this and you're like, oh, well, I don't have one ounce of leadership experience. You'll read that and you'll kind of get motivated to think, hey, you know, I can become the leader that I actually strive to become. The thing that he says that separates the effective executive from not being effective. or being loved by their organization. And you don't have to be loved. You could actually be hated and still be pretty effective. I mean, look at Steve Jobs.

Starting point is 00:05:29 I would say most people did not like him. But that guy got results. And that's his point. That's what Drucker's getting to is at the end of the day, the thing that matters for these executives is do they get the desired results that they're after? And that's what really sets them apart from being an effective executive to not being one. Now, you get into a whole different discussion if you're somebody that,

Starting point is 00:05:51 your organization looks up to and aspires to be and that you motivate for years to come the people below them. That's a whole other discussion. And that's something that I think probably should not be removed from the discussion. And I kind of wish that that was something else that was discussed in the book, which was not. Because for me, I think about the compounding impact that that has for not only the organization, but for every other organization that that person goes to later in life. And I feel like as a mentor, that's something that's just vitally important, that you think about not just getting the result, but also getting the result and doing it in a manner that motivates and inspires the other people that are around you. And I think that that's a huge

Starting point is 00:06:37 mark that he missed in this book. I'm curious to hear Stig's thoughts on the first chapter. Yeah, I think what Drugg really wants for the first chapter is just to tell us that effectiveness there's really, is a skill, a skill like anything else here in life. And while he's saying that we can have talents, we really can't do that much about the talent that we have. It's basically just the way it is. And you might compare this to say a basketball player. You're just to build a certain way and you're just, that's how tall you are. You really can't do something about that, but you can still work on your fitness and acquire technical skills. Look at Martin Jordan. He wasn't the tallest player, but he was the best. So separating what is how much,

Starting point is 00:07:18 and what a skill. I think that was his main takeaway. But really that it's an easy skill to acquire. There's no way saying that it's harder to be an effective CEO than to learn a new language or learn how to fly fish. I don't know why I came up with those two examples, but that's really the way he's looking at it. It's just a skill. And the CEO is basically, for any organization, the CEO is basically just paid to be effective. And I would like to stress. I think that if you're effective first and then you work on your inspirational type skills, if you will, I think that the ladder kind of comes along with the former. And, you know, if you focus on that thing to make your organization successful and effective,

Starting point is 00:08:07 people are going to be happy because they're going to know that they're contributing to a good cause and something that's actually producing value for the world. And I just think that if you're a leader, you really got to focus there first. You've got to focus on how can I be the most effective and create the most value within the people that I lead and the things that I do. That's all I have for the first chapter. It looks like Stig's good too. So we're going to move on to the second one. So the title of the second chapter is know thy time. So here's a chapter that Peter Drucker and I completely agree on. What are you doing with your time? Because that's your most valuable

Starting point is 00:08:42 commodity. And I'll tell you what, you get around effective executives or you get around people that operate at a very high level that are key decision makers within an organization, you're going to find the thing that they value the most is their time. And there's just not enough of it. And so one of the ways that Drucker talks about how you can really kind of benefit from understanding this is you've got to audit your time. You've got to think, and you don't do this all the time. You obviously do this, you know, once a month, once a quarter, whatever it might be. I think he, if I remember right, I think he recommended once a quarter or something like that. But you audit your time, you look back and you say, okay, for this day, and you typically do this,

Starting point is 00:09:27 let's say you have an executive assistant at this level. You'd have an executive assistant that would really kind of look at your calendar for the day and then compare that with the results that you got and what you were actually doing. But this audit is really important for you to understand. hey, I just spent an hour really not doing anything other than roaming around and talking to people that really wasn't adding to their value or their work ethic that they were doing. You were just really interrupting them and wasting their time. You have to audit that time and understand what value you're creating. And you more importantly have to understand what those habits are that are developed on a daily pattern. Like what's the pattern look like? I start the day at 7 o'clock and for the first hour I read email. Was that value added? Maybe it was. Maybe it wasn't. That's where you have to make that determination and you have to really look at what's becoming

Starting point is 00:10:18 a habit. What is consuming my time if I have eight hours in a day or I have 12 hours in the day or whatever? How am I consuming that time? And am I doing it most effectively? Because when you figure that question out, you're going to see your productivity of not just yourself, but the subordinates that you lead is going to go through the roof. Let's take a quick break and hear from today's spot. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long

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Starting point is 00:14:54 on meetings. And this is really something I'd like to discuss because in all the books, the press and I have been reading, and I'd say whenever I'm sitting down with a friend when we discuss this concept. It seems like everyone agrees that we spend too much time on meetings. I can't wrap my head around why we still do it. It's kind of like we all agree that we must sleep every night,

Starting point is 00:15:15 otherwise we will be exhausted the next day, but still we wouldn't sleep. It's so illogical for me that why we spend so much time on meetings. And Peter Dr. Draghi, he even mentioned a meeting that CEO went to, and he thought it was horrible. He didn't think it was creating any value. And what he later found was all the support, that was actually at the meeting, they had the same impression.

Starting point is 00:15:37 But there was just this culture that everyone participated in the meeting had to ask one question to signal that they're interested in coming to that meeting. So basically, this was just a game that everyone lost in. So I love this point. And I think it's so important for people. When you set up a meeting, A, you need to make sure that you have the right audience and not one single solitary person more. B, you have to know if it is important information that you didn't want everybody to be there,

Starting point is 00:16:07 what is your distribution plan to distribute the notes and the important information that was gained out of the meeting? The third thing is what is the end state of the meeting? What is the desired outcome or decision point that needs to be reached at the end of the meeting? If you can't answer those three things before the start of any meeting, just cancel it. I mean, just cancel it as fast as you can because you're willing. wasting time. I've been known that, you know, if I'm sitting in a room and I'm running a meeting of, call it 30 people, I will look up and count the number of heads in there. I'll look at the time that was spent doing it. And then I'll look at the average salary, call it 100,000 of each person

Starting point is 00:16:47 in the room. And I'll say, okay, so this was a $10,000 meeting or whatever it might be. It's something you have to think about. And so then you're saying, well, what kind of value was created for that dollar figure for us to sit here and talk about it. about just it was an information update. Some are very important. Don't get me wrong. Some are vital. Some are absolutely vital.

Starting point is 00:17:09 And there's nothing more infuriating than not communicating effectively with everyone on your team or your organization. But at the same time, you have to be very careful that these things don't turn in the monsters and devour all the time within your organization. So Stig, fantastic point. Sorry to drag that one out. But you can tell I have some scar tissue in that one. Yeah, well, Preston, that's probably why in our organization we don't have any meetings.

Starting point is 00:17:35 I was surprised because we actually spoke like just an hour or something yesterday, and that was probably the first meeting in a whole organization for, I don't know, for how long. So it's probably because we don't like meetings in our organization. That is so true. When Israelists got me is, it's really my first job upon graduation. And that was the time I learned about the concept of FaceTime. So for all of you out there, it doesn't know what FaceTime is. It's really the concept of you can't leave the office before the first.

Starting point is 00:18:00 boss does it. And you can't have to pretend you're doing something, even though it's like five or six o'clock and everyone exhausted. You don't want us to go home to the family. But you can't do it before your boss leaves and then he leaves and everyone else leaves. And it's just so inefficient. It was just so frustrating for me. Also from a ideological point of view, you can probably see why I have this rant towards corporate Denmark or corporate America. So basically, I just don't believe in working more hours. I believe in working effective hours, which is also one of the takeaways from this chapter. And I think that you should set up your own organization towards, say, 40 hours. I personally don't believe in working more than 40 hours per week. And even that for me

Starting point is 00:18:42 would be a busy week for me. And I think that if I work more, it's probably because I haven't be good enough to outsource or prioritize. I wouldn't get enough rest. I wouldn't have enough time with my family if I spend, say, 60 hours. I know that might take up a lot. a lot of people because we see this differently, but I think that you should be able to do your job in 40 hours or less. So I really like your point, Stig. And I think that if you're a leader out there and you're listening to this, I've got a challenge for you because I think that the mindset of people staying till 7 o'clock at night because

Starting point is 00:19:15 that's how late the boss is there before they leave is crazy and ludicrous. When I think that leaders within an organization don't realize is that when a person goes home and spends time with their family, they're happy. And when they come back to work the next day and they're happy, they're going to work more effectively. So when people don't appreciate that fact that you give people their free time or that you're pushing them out the door, that in my opinion, either you lose your talent within your organization or you have people that just aren't productive because they're not in the mental mindset to do things successfully. So this is what I challenge leaders to do is walk down the hall and say, hey, what is it that you're working on

Starting point is 00:19:59 right now that's that important that you're here at 7 p.m. or 6 p.m. or whatever it might be. And just listen to the response. And maybe it is something that's really important. And if it is, just, you know, you got to thank them unconditionally, just as much as you can for their hard work. But most likely, they're going to say they're working on something that's due in a week from now, which means they're there because you're there. And that's when you need to say, hey, get out of here. I want you to go back and spend time with your family. Your family time is very important to me. That is so important as a leader to value other people's free time and to push them out the door.

Starting point is 00:20:35 And I'll tell you, you're going to get so much more work out of that person when you treat them that way. Chapter 3. What can I contribute? The problem with a lot of organizations is that the executives tend to focus downwards and concentrate more on the efforts instead of the results. And so let me give you an example of that. Have you ever heard, you know, boss that, you know, he's kind of defending his team's work? Let's say that they worked really hard on something for a month or two or whatever. And you can hear the leader of that team saying something to his boss.

Starting point is 00:21:11 And he's saying, you know, we worked this many hours. They did all these great things. They worked so hard on this and blah, blah, blah, blah. And they never get to what value. the team actually created with the product or service that they were working on. And this is where Peter Drucker, you know, is really kind of bringing home this point of what can I contribute? Like, what is the result opposed to what was the activity that occurred in order to get the

Starting point is 00:21:37 result? And so he's telling the leadership within an organization to focus on that, focus on what is the result. And this really kind of goes to the idea that Stig and I have talked about in other episodes of the act versus the intent. what is the intent of what you're building? Like what is the so what? What is it doing for society?

Starting point is 00:21:57 What is it that the value that's being created? That's what you need to focus on. When you focus on that, you're going to find that you're focusing your time in the right areas. I think my key takeaway from this chapter is when Peter Drucker is talking about, listen to what the CEO is actually saying. Is he saying that it's my job to provide my manager just with the right information? Because that is what he should be saying. or is he saying, I have 800 employees or my turnover is $3 billion.

Starting point is 00:22:26 What is he saying? What's kind of value is it creating? And the thing, if we circle back to the point about results and providing value, really, I think a concept that you will see more and more in the corporate world is you get paid by the result. So you will probably be moving away from the 9 to 5 way of working and more into what results you produce. So you actually have companies, this is mainly in some startup companies,

Starting point is 00:22:54 but you're seeing a trend here where people are not required to come and sit in the booth or come at least to the workplace from this hours to that hour. But really they're told that this is what I expect to you to have done in, say, six weeks,

Starting point is 00:23:10 how many hours you do it, how you spend your time where you're sitting, that's really not important. It's really a question of, what can I contribute, what are my results? And then he rounds up the chapter by saying, we should just remember that the CEO is really just the ultimate helper for the organization. His main job at the end of the day is really to be the resource allocation manager.

Starting point is 00:23:33 He holds all these resources at a very high level in order to make the company. And it could be capital resources. It could be human labor. It could be whatever. But he's that resource manager. He needs to know where he needs to plug those resources down to maybe the lowest level. in order to knock out that critical path event so that he can achieve the bigger objective of the business.

Starting point is 00:23:57 Okay, so let's move on the chapter four. This one's called making strength positive. And I didn't like this chapter. I agree with what he's saying, but I also disagree because I think he is overlooking something. So in this chapter, he focuses on this idea that a leader, instead of focusing on minimizing the weaknesses that are present with an employee, the executive should focus. on maximizing the strengths.

Starting point is 00:24:22 And so he gets into this conversation of, you've got to find what somebody's good at, put them in that job, and that's what you focus on and just ignore the weaknesses. And that's kind of, maybe that's not what he meant, but that's kind of how it came across to me in the book. And I don't like that.

Starting point is 00:24:37 And the reason I don't like that is because I think that whenever you hire somebody or you are a leader within an organization, you have people below you, and they have skills, and let's look at it this way. They have assets and they have liabilities. If you don't understand both of those pieces, the assets and the liabilities of each one of your subordinates, you're missing the boat completely.

Starting point is 00:25:00 And now let me give you an example. So billionaire Warren Buffett, he has a quote. He says that the most dangerous person in your organization is the person who's the smartest and the person who has bad ethics. when you have that person in your organization, you need to get rid of them as fast as you can. And I totally agree with that. So there's an example of a person who has a huge positive. They're very smart.

Starting point is 00:25:28 They can intellectually solve problems for you. But their weakness, their dark side of this is that you can't trust them. And on top of that, they might, you know, take your proprietary information and sell it to somebody else or take the idea and take, you know, they might do something underhanded. And that liability, this goes back to asymmetrical risk and upside downside calculations, that person poses an enormous threat to you. So if you don't understand what those weaknesses are, man, you're totally missing the boat. And for him to talk in the book here in Chapter 4 about just focusing on the positive and put them in a job that maximizes their strengths, to me, that is a really bad recommendation.

Starting point is 00:26:08 You know, Prest, I think I read this chapter a bit different. I don't know if it has something to do with the way I was educated because the way I'm taught to think about weaknesses is that if we have weaknesses, we need to fix that. That's kind of the way that I've been taught how to look at that. And what he's doing is that he's actually comparing this to the Japanese labor market. I think that was really an interesting cultural study. And apparently on the Japanese labor market, when you have employment, it's really for life or close to life. which to me as a capitalist seems like a horrible way of structuring a labor market. But apparently both the employer and the employees looks at this relationship and say,

Starting point is 00:26:49 okay, so this is for life. And so what the Japanese are saying is that they can't afford to focus on weaknesses. They can only afford to focus on strength. And they were not thinking in terms of how they could fix weaknesses, which was the way I was reading the chapter, but just saying, if you are good at this, then we need to make you a specialist in that field and then grow our organization like that. But that doesn't mean that I disagree with you, present. I completely agree that if an employee or a manager or a CEO for that matter, if they don't have integrity,

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Starting point is 00:30:46 Back to the show. You have to have a good audit of what the strengths are and the weaknesses and you have to be aware of what potential risks are associated with that strength. That's what I'm saying. Now, I agree with Drucker on the fact that when you find that person with, let's just say that the weakness that's attached to the strength and you're willing to assume the risk associated with that weakness and you've made the decision, hey, we're going to have this person. Now you've got to really focus on maximizing their strength. I agree with that wholeheartedly. And I think what Druckers were also saying in the book is that if you focus on the weakness and you're talking about the weakness and you're trying to correct the weakness, you're really kind of wasting a lot of.

Starting point is 00:31:28 of time that could be used and maximized by focusing on their strength and being more productive. I agree with that. Okay, so chapter five, first things first. And this chapter with truckers really trying to get to is just this understanding that the secret to being effective is concentration. And this is something that I completely agree with, all the different billionaires that we study, always talk about how important focus is. And something else that I think kind of goes hand in hand with this is just the ability to

Starting point is 00:31:57 prioritize and know what's actually important. And I think in order to know it's important, you really got to kind of ask your workforce. You've got to talk to your people as an executive. You've got to say, hey, if there's one thing, and this would just be going down the hall and just talking to different people, if there's one thing that we need to do really well, what is it? What is going to add the most value? Or what opportunity out there are we not capitalizing on that would create an enormous value for us? And then the hard part for the executive, after they capture all this information, is then making the assessment of, okay, what sits at the top of that priority and why? Why does it sit at the top of the priority? Because a lot of the times the executive will look at it and be like,

Starting point is 00:32:38 well, this is going to increase our bottom line, period. And they're not thinking about maybe the brand that they're paying for or the goodwill that they're paying for in order to increase that bottom line. There's always a give and take. And as a smart executive, you have to be thinking, in my personal opinion, you've got to be thinking long term well before. you're thinking short term? Because the person who's thinking short term is totally robbing from their future whenever they make those decisions. I think the best example I can come up with from this chapter is actually not from this chapter because I really, really didn't like the chapter. But in another book that we read, I think it was the one thing. There was this great

Starting point is 00:33:14 example with Steve Jobs whenever he returned to Apple. And apparently Apple at that point in time had 350 products. And what Jobs did, the first thing he did was to throw out 300 and 4040. those products and all want to be focusing on 10 products. This really goes back to what Preston is saying about quality. This is the time of the internet. This is the time of information overload. There are so much content. There are so many products out there. You should focus on one thing. Or an average example, perhaps 10 things, but basically you should concentrate. You should really focus what is it that creates the most value. And let me just give me really a down-to-earth example here. So we have a weekly podcast. And at some point of time, Preston,

Starting point is 00:33:57 and I, we discussed, or I think I suggested that we might want to do like a daily show or twice a week or something like that. And luckily, because Preston is a lot smarter than me, he's saying that we probably shouldn't be doing that. We should just be focusing on the quality of having one show. And today, I completely agree with that. If anything, you know, you would rather see us do like two shows per month instead of two shows per week.

Starting point is 00:34:22 So many podcasts out there, why do you want to listen at twice as many have the quality? It just doesn't make any sense to me as a business owner. All right. So let's go ahead. There's only two chapters left. So we'll finish this up. So chapter six, the elements of decision making. So I love talking about decision making because at the end of the day, that's what we are.

Starting point is 00:34:42 As a human being or as a leader or anything, it all comes down to decision making. Right now, you're making a conscious decision. You're making a decision to listen to this show. You also might be making a decision that you're driving your car and making a left-hand turn right now. I don't know what you're doing. But you are, no matter where you take a stop in time, you can stop right now. You could go back the last 10 years. If you stop time at any given point, you are consciously making a decision.

Starting point is 00:35:10 So inherently, that's what we are. We're decision makers. And when you see people that rise way up to a very high level and it might be in business, it might be in sports, it might be in whatever, you have to really kind of make the leap of faith that that person has just made very good decisions along that array of time to bring that person to that point where they got. So whenever we talk about the elements of decision making, I think that this is such a key topic and something that's really important for people to fully understand and know that each decision that they make is a culminating experience,

Starting point is 00:35:48 which leads to right now where you're at. So an effective executive, according to the book, knows that his decisions will have an enormous impact on the entire company. And so in the book, when we talk about the elements of decision making in chapter six, what Drucker gets at is he says, many executives also make the mistake of confusing a generic situation with a unique situation. And so he's saying that most of the things that happen within a business are really kind of generic situations and generic decisions. And they're actually not something that the leader really needs to take much

Starting point is 00:36:23 time thinking about because there's a presidents that's set. There's a scope in which typical decisions come in and they go right out and the person, the leader can quickly make those decisions. But what he's saying the person really needs to focus their attention on are the unique decisions. The ones that he's never had to make before. And those are the ones that the first thing you've got to do is you've got to ask yourself, how much time do I have to make this decision? Does this a decision need to be made right now or do I have an hour or a day or a week in order to make it. And if you have more time and there's going to be no impact, you need to dig, as a leader, you need to dig as deep as you possibly can in order to figure out all the facts,

Starting point is 00:37:05 assumptions, opinions that go along with that decision. And that's what separates, you know, great decision makers versus poor decision makers. And we had Mike Figlioli on our show. And that was one of the main things that I remember from our interview with Mike. He wrote one of the books that we we're talking about with leadership. The name of his book is Think Outside the Box. We asked Mike, we said, what's the one thing? What's the common thread? Because you were an executive consultant.

Starting point is 00:37:31 What's the one thread that you see amongst all these people? And Mike said, you know, when you're around somebody who's just a great decision maker and has been there for a long time, they've just got this pause about them. And they just, they think. They don't just immediately start pontificating about what they know, what they don't know and then make a decision. they're just very thoughtful and they don't make a decision right out of the gate. They think about it. They know that they have time on their side in order to make an informed decision. And I love to that point.

Starting point is 00:38:00 And I totally agree with him. And I think that that's one of the key elements to great decision making. One thing I really liked about this chapter is when he's talking about an executive decision is really not a decision unless it's backed up by action. And the CEO might say we should start selling a product in Europe or, you know, something. very, not as concrete, but saying something like, we should change our focus and this is what you should do now. But Draca is saying that unless you are very specific in your decision making, it's not a decision because then it's not your decision and won't be implemented. So whenever you are making a decision and a executive decision, you must make sure that

Starting point is 00:38:39 all the responsibilities are determined. So who should do what and do they have the right skills and the right information to do that in the first place? And if they don't, how will they acquire the skills. It's also the notion of the CEO, not just saying we should do something, and then he would have like a thousand employees that can just read his mind and just carry out the decision. No, it really has to stop from the top. So the seventh chapter kind of goes hand in hand with the sixth chapter. The title of the six chapter is the element of decision making. And then in the seventh chapter, it's called effective decisions. So in this chapter, Drucker says that executives, instead of running behind facts, executives should focus on opinions more than

Starting point is 00:39:22 the facts. I guess I kind of agree with this. I think that it's a good point. I don't know if I would go as far as saying that they should focus more on that versus more on the other because I think it's really situational dependent. But I do agree with this idea that I think a lot of leaders, and I think this is more of what he was trying to say in the chapters, most leaders just look at the facts. And they say, well, lay it out for me in a PowerPoint presentation and show me the facts and then I'll make my decision. And they completely ignore the opinions of the 20 other people sitting in the room as the decision is made who probably disagree with what he just made. So I like the fact that he's bringing this up. I just think that you need to be balanced as a leader. You have to go around that

Starting point is 00:40:05 room. You have to gain those insights and those opinions. And then when somebody does disagree with you, I think when you're around a great leader, they really kind of go to that person more. And often they say, well, why do you have that opinion? Tell me, quantify that for me. Why do you think that we should do the opposite of this? And a lot of the times you'll find that that person down at the lower level has better information than you do as a leader at the top. And so that's what Drucker, I think, is really trying to get at with this. But here's what I'll challenge you. You might go around the room and get the opinions of, let's say, 10 people at the boardroom. And they all want to do one thing. And it might be the easier thing to do. It might not be the

Starting point is 00:40:43 thing that's harder for them to implement and actually go about doing. And here's the thing about being a leader. You know facts that they don't know. Maybe you know that you have an additional $10 million to make a mistake and really try to pursue something big that would be a 10x gain within the business. And you've been instructed by your superior to take a little bit of risk and go out on a limb and try to create something that's going to add enormous value for the business. And so the subordinates might not know that piece of it. And so I think the more that you can disclose and the more that you can just be upfront and honest with everybody in the room and disclose the facts, assumptions and opinions with everybody involved. And this is the really key point. At the end

Starting point is 00:41:26 of all that, after you've made that assessment of all those different things, you as the leader, make the decision. Because if you don't, you're just dead in the water. You make the decision and you know what? If it's an unpopular decision, you make that decision, you stand by and you execute and you move in that direction and you've got to have that positive mindset that even though there's people out there that disagree with you, you know what you're doing and you're going down that path and you move out on it. I think what Pete drug does really well in this chapter is to come up with an example of a good law firm.

Starting point is 00:41:59 And what he's saying is that the beginner fresh out of law school is first assigned to draft the strongest case for the other lawyer's client. And he's not only doing that because it's the most intelligent thing to do to win case. But the more important reason is that it discourages the new lawyer to think that he knows that his case is right. And it forces him to see the two cases as alternative. Because when you have two alternatives, you can make the effective decision yourself. Just as a jury will have two cases and they should decide which one they believe in, it's the same for a CEO. All right. This was a very good book, I think, with the content and the ideas that it forces

Starting point is 00:42:41 you to think about as a leader. I did not like the style, like I said up front. But the name of the book is the effective executive by Peter Drucker, a very, very famous book. Drucker's written, I want to say, over 40 books. So he is one accomplished author, which you would think his style would be really good after writing all those books, but evidently not. This one was written back in 1967. Jeff Bezos, net worth of $29 billion, founder of Amazon is the one who recommended this book, and that's why we were reading it. So all in all, interesting read. If you do want to read this book via audiobook, go to our website and click on our link for Audible, and that's a service through Amazon. You can listen to this book completely for free if you

Starting point is 00:43:26 click on the link and go to audibles from our website. So that could be a free gift from Stig and I to you to read this book if you're wanting to dive into it. I really don't necessarily recommend this book because it was really dry. But if you're one of these people that are really trying to emerge within your organization as a key leader and manager, I think that this would be a good read for you. I think this would be very beneficial. So that's all we have for you guys this week. We really just appreciate everyone out there, leaving us reviews and doing all these amazing things, commenting on our forum and posts. And we just thoroughly enjoy the interaction with our audience. And we owe it all to you to be able to do this and really kind of have this discussion

Starting point is 00:44:05 each week. So thank you for what you guys do. And that's all we have for you. So we'll see you guys next week. Thanks for listening to The Investors Podcast. To listen to more shows or access to the tools discussed on the show, be sure to visit www.com. Submit your questions or request a guest appearance to the Investors podcast by going to www.com. If your question is answered during the show, you will receive a free autographed copy of the Warren Buffett Accounting Book. This podcast is for entertainment purposes only. This material is copyrighted by the TIP network and must have written approval before a commercial application.

We Study Billionaires - The Investor’s Podcast Network - TIP 079 : The Effective Executive - by Peter Drucker (Business Podcast)

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