How To Be An Effective Entrepreneur


I recently re-read Peter Drucker's The Effective Executive. The book is fantastic and I would recommend it to anyone in any management position at any company. The skills and ideas from the book are useful to almost anyone, yet as I read through the book, I realized that these ideas have largely been ignored in books on entrepreneurship. So, what follows is an adaptation of Drucker's primary ideas to entrepreneurial situations. Be warned that they are not easy things to implement, and require lots of practice and discipline, but all that hard work is exactly why you end up a more effective entrepreneur.

1. Know Thy Time

Those who make the worst use of their time are the first to complain of its shortness. — Jean de la Bruyere

Where does your time go? You think you know, but I will bet there is a very good chance you are wrong. Drucker did time studies on many executives, and nearly all of them were shocked when they found out where they really spent their time. Drucker writes:

I sometimes ask executives who pride themselves on their memory to put down their guess as to how they spend their own time. Then I lock these guesses away for a few weeks or months. In the meantime, the executives run an actual time record on themselves. There is never much resemblance between the way these men thought they used their time and their actual records.

Time is important to manage because the supply is fixed, and cannot go up regardless of the demand. Entrepreneurs who don't understand where there time goes will end up sleeping less, working more, and ending up with burn-out. Drucker suggests keeping a time journal. Yes, it adds a few minutes of work to your day, but it saves you countless hours in the long run.

2. Focus on Contribution
To be effective is not to ask "what do I want to do?" but rather "where can I contribute?" One reason many entrepreneurs fail is that they get into it thinking they will do all of the fun glamorous stuff and can delegate all of the stuff they find boring and dull. That almost never happens. Even entrepreneurs in an industry they love invariably get stuck doing some tasks they don't like.

Drucker recommends a focus on contribution. Entrepreneurs have a limited amount of time, and cannot therefore get bogged down in activities that don't contribute results to the organization. Startups are already understaffed, underfunded, and under-recognized by customers. It will take a ton of time and energy just to have a shot at success. Don't waste it by being caught up in work that doesn't impact the success of the company. Focus where you can make the greatest contribution.

Keep in mind that your ability to contribute will change as the company grows and expands. Initially, you may contribute in a very different way than you will over the long-term. You may have to do HR and sales to start, but might get to a point where (if these aren't your strengths) you hire someone else to do them.

3. Make Strength Productive
It can be difficult to hire for a startup. Job roles and responsibilities are usually undefined, or poorly defined, and will change as the company grows. I've spoken to too many entrepreneurs that complain about what their employees can't do. But that is irrelevant. Focus on their strengths.

People with strong skills in one area often have strong weaknesses in another. Unfortunately, polymaths are in short supply. So your job is to harness the strengths of your employees, and ignore their weaknesses. John isn't good in front of customers? Then don't put him on phone calls or in meetings with them. Sally is a poor writer? Don't let her lead documentation efforts.

Startups are most successful when the skills of a small group of people are channeled towards a single goal. There isn't time to develop your weaknesses. Do the best you can do and focus on making your strengths productive.

4. First Things First
Most people work by making a list of priorities. Then they tackle their top priority, their second priority, etc. This is not the way entrepreneurs should work. Why? Because priorities change quickly in startups. Make a list of your priorities. Do the first one. Make a new list. Your new top priority may be different.

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Doing first things first requires the discipline to say "no." I am a poster boy for getting involved in cool and fun projects that were ultimately distractions from my goals. Learning to say no to things that, if I had the time I would really like to do, is one of the things I struggle with most. Don't be like me.

Doing first things first also means focusing on your top priority, not multitasking your way through it. Seriously, if something is your absolute top priority for the moment, doesn't it deserve your full attention? Save multitasking for your down time.

Drucker tells a story about a super CEO that managed to get more done than anyone else he ever consulted with. The he lets the CEO's secret out of the bag.

He did this by a single-minded concentration on one task at a time.

This is the "secret" of those people who "do so many things" and apparently so many difficult things. They do only one at a time. As a result, they need much less time in the end than the rest of us.

Drucker goes on to point out that concentration doesn't mean working harder.

The people who get nothing done often work a great deal harder. In the first place, they underestimate the time for any one task. They always expect that everything will go right…In the second place, the typical executive tries to hurry — and that only puts him further behind…the typical executive tries to do several things at once. Therefore, he never has the minimum time quantum for any of the tasks in his program.

Likewise, many an entrepreneur has failed from being spread too thin. Make sure you put first things first.

5. Make Good Decisions
This topic is a whole series of posts in itself, but I will highlight some of Drucker's thinking on making good decisions that I think is especially helpful to entrepreneurs.

  • unless a decision has "degenerated into work" it is not a decision; it is at best a good intention
  • understand if you are facing a generic situation or an exception
  • generic situations should be answered with a rule or principle, exceptions should be dealt with as they occur

Remember that good decision making does not seek consensus, but disagreement. Why? Because disagreement helps to safeguard the decision maker against his own cognitive biases and predispositions, and it allows the group to think through alternatives that may have to be implemented in the future. For instance, if everyone on your team agrees on your revenue model, then if your revenue model doesn't work, what do you do? If you had some disagreement, by definition you already have a second option (and possibly more). You can do whatever the disagreers initially wanted to do.

6. Effectiveness Can Be Learned
Drucker states that

effectiveness, in other words, is a habit; that is, a complex of practices. And practices can always be learned. Practices are simple, deceptively so; even a seven-year-old has no difficulty in understanding a practice. But practices are always exceedingly hard to do well.

Success in any entrepreneurial venture is unlikely. Ineffectiveness just compounds the challenges that already exist when starting something new. Shotgun management doesn't work for entrepreneurs. You can't spread yourself out everywhere and hope all those little pieces have enough impact to make a difference. Entrepreneurs need to be effective. That doesn't mean you have to stay the course when the course turns out to be the wrong one. It doesn't mean you ignore parts of your company. It simply means you have an optimization problem – how to make the most impact with your limited time and attention.

Drucker said there is nothing worse than doing something well that shouldn't be done at all. Be effective, and get the right things done.