High Output Management by Andy Grove

These are the notes I have taken while reading High Output Management by Andy Grove. I had previously read Grove’s Only the Paranoid Survive and saw Keith Rabois tweet that he re-reads “High Output Management” every year.

Additional notes I’ve taken while reading other books can be found here.

The output of a manager is the output of the organizational units under his or her supervision or influence. The question then becomes, what can managers do to increase the output of their teams?

Managerial Leverage: Measures the impact of what managers do to increase the output of their teams. High managerial productivity depends on choosing to perform tasks that possess high leverage.

(1) Are you adding real value or merely passing information along? How do you add more value? In principal, every hour should be spent increasing the output or the value of the output of the people whom you’re responsible for.

(2) Are you plugged into what’s happening around you? That includes both inside your company and the industry as a whole. Or do you wait for a supervisor or others to interpret what is happening and tell you?

(3) Are you trying new ideas, new techniques, and new technologies? That means actually trying them - not just reading.

Managing the Breakfast factory

Dashboards => Which five pieces of information would you want to look at each day, immediately upon arrival at the office?

Productivity => One way to increase productivity is to do whatever we are doing now but faster. Another is by increasing the leverage of the activities.

Managerial Leverage

What is a manager’s output? Don’t confuse this with activities - descriptions of what managers do as they create a final result. Output != activity.

At Intel, if a manager is in charge of a wafer fabrication plan, his output consists of completed, high quality, fully processed silicon wafers.

If he supervises a design group, his output consists of completed designs that work correctly and are ready to go into manufacturing.

The principal of a high school’s output is trained and educated students, who have either completed their schooling or are ready to move onto the next year of their studies.

If a manager is a surgeon, his output is a fully recovered, healthy patient. While his output is a cured patient. The activities he does are scrubbing, cutting and suturing.

While the manager’s own work is clearly very important, that in itself does not create output. His organization does. By analogy, a coach or quarterback alone does not score touchdowns and win games. Entire teams with their participation and guidance and direction do. League standings are kept by team, not by individual.

The manager’s job ends when he is tired and ready to go home, not when he or she is done. The manager is never done. There is always more to be done, more that should be done and more that can be done.

Much of Grove’s day is spent acquiring information, in many different ways: reading reports, talking to people inside and outside the company, customer complaints, etc.

The Real Purpose of Written Reports

As they are written and formulated, the author is forced to be more precise than he might be verbally. Hence their value stems from the discipline and the thinking the writer is forced to impose upon himself as he identifies and deals with trouble spots in his presentation. Reports are more a medium of self-discipline than a way to communicate information. Writing the report is important; reading it often is not.

The same holds true for capital authorization processes. The process is what is important, not the authorization itself. The preparation and justification of spending capital is what’s important - the soul searching, the analysis, and the juggling.

How you handle your own time is, in my view, the single most important aspect of being a role model and leader.

Leverage of Managerial Activity

1. Increasing the rate with which a manager performs his activities, speeding up his work.
2. Increasing the leverage associated with the various managerial activities.
3. Shifting the mix of a manager’s activities from those with lower to those with higher leverage.

Each time a manager imparts his knowledge, skills, or values to a group, his leverage is high, as members of the group will carry what they learn to many others.

One Intel development engineer creates the manufacturing process that is the foundation for the work of many product designers. The leverage of this one development engineer is enormous.

Negative Leverage

Leverage can also be negative. Suppose I am a key participant at a meeting, and I arrive unprepared. Not only do I waste the time of the people attending the meeting due to my lack of preparation. I also deprive other participants the opportunity to use that time for something else.

When a manager puts off making a decision that affects the work of other people, that lack of a decision is the same as a negative decision. No green light is a red light and can stop the work for a whole organization.

One Intel marketing engineer is responsible for setting prices for the product line. Hundreds of salespeople in the field can be negatively affected if prices are set too high.

The Art of Management

The art of management lie in the capacity to select from many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them.

Leverage as Delegation

Delegation without follow-through is abdication. You can never wash your hands of a task. Even after you delegate it, you are still responsible for its accomplishment, and monitoring the delegated task is the only practical way for you ensure a result.

Batching

Batching of similar tasks is a production principle that can be applied to managerial work. Any manufacturing operation requires a certain amount of setup time. For managerial work to proceed efficiently, we should use the same setup effort across a group of similar activities.

For example, if a manager has a number of reports to read or performance reviews to approve, he should set aside a block of time and do a batch of them together to maximize the mental setup time needed for the task.

Interruptions

We should do everything to prevent little stops and starts in our days as well as interruptions brought on by big emergencies.

Manufacturers turn out standard products. By analogy, if you can pin down interruptions you’re getting, you can prepare standard response for those that pop up most often.

Meetings - The Medium of Managerial Work

Process Oriented Meeting => Knowledge is shared and information is exchanged.

Mission Oriented Meeting => The purpose is to solve a specific problem

One on One Meetings

One on ones should last an hour at a minimum. Anything less tends to make the subordinate confine himself to simple things that can be handled quickly.

Where should it take place? A supervisor can learn a lot by going to his subordinate’s office. Is he organized? Does he repeatedly have to spend time looking for a document he wants? Does he get interrupted all the time? How does he approach his work?

One on ones should be regarded as the subordinate's meeting with its agenda and tone set by him. Somebody needs to prepare for the meeting. The subordinate should prepare an outline, which is important because because it forces him to think through in advance all of the issue and points he plans to raise.

Grove’s Principle of Didactic Management

“Ask one more question!” When the supervisor thinks the subordinate has said all he want to about a subject, he should ask another question. Keep the flow of thoughts coming by prompting the subordinate with queries until both feel satisfied that they have gotten to the bottom of a problem.

Decisions, Decisions

When someone graduates with a technical degree, for the next couple of years, he is fully up to date on the technology at the time. If he does well, he will be promoted to higher and higher positions. His power will grow but his intimate familiarity with current technology will fade. Even today’s veteran manager who was once an outstanding engineer is no longer the technical expert he was when he joined the company. At Intel, managers get a little more obsolete each day.

Planning: Today’s Actions for Tomorrow’s Output

What is your present status? What are you producing now? What will you be producing as your projects in the pipeline are completed? Where will your business be if you do nothing different from what you are doing now?

Environmental Demand

What is your environment? Look at your own group within the organization as if it were a stand alone company.

Determine your customers’ expectations and their perception of your products.

What do my customers want from me now? What will they want from me a year from now?

Closing the Gap

When closing the gap between your environmental demand and current activities, ask “what do you need to do to close the gap?” and “what an you do to close the gap?”

The Output of the Planning Process

I have see far too many people upon recognizing today's gap try very hard to determine what decision has to be made to close it. But today's gap represents a failure of planning sometime in the past. By analogy, forcing ourselves to concentrate on the decisions needed to fix today's problem is like scurrying after our car has already run out of gas.

Management by Objectives

MBO => If you don’t know where you’re going, you’ll never get there. Or as an old Indian saying goes, “if you don’t know where you’re going, any road will get you there.”

MBO only needs to answer two questions

1. Where do I want to go? (the answer provides the objective)
2. How will I pace myself to see if I am getting there? (the answer gives us milestones or key results)

Example: I want to go to the airport to catch a plane in an hour. This is my objective. I know that I must drive through towns A, B, an C on my way to get there. My key results are driving through towns A, B, C in 10, 20, and 30 minutes respectively. If I have been driving for 20 minutes and haven’t made it to town A yet, I know I’m lost. Unless I get off the highway and ask someone for directions, I probably won’t make my flight.

MBO is designed to give feedback relevant to the specific task at hand. It should tell us how we are doing so we can make adjustments in whatever we are doing if need be.

The Sports Analogy

When a person is not doing his job, there can only be two reasons for it. The person either can’t do it or won’t do it; he is either capable or not motivated. To determine which, we can employ a simple mental test: if the person’s life depended on doing the work, could he do it?

The single most important task of a manager is to elicit peak performance from his subordinates. So if two things limit high output management, a manager has two ways to tackle the issue: through training and motivation.

Marathons

Why does a person who is not terribly interested in his work at the office stretch himself to the limit running a marathon? What makes him run? He is trying to beat other people or the stopwatch. This is a simple model of self-actualization, wherein people will exert themselves to run farther or faster, while their efforts fill barrels with sweat. They will do this not for money, but just to beat the distance, the clock or other people.

The Ideal Coach

1. The ideal coach takes no personal credit for the success of the team, and because of that, his players trust him.
2. He is tough on his team. By being critical, he tries to get the best performance his team members can provide.

Task Relevant Maturity

When an associate does poor work, the reaction often is “He has to make mistakes. That’s how he learns!” The problem with this is that the subordinate’s tuition is paid by his customers, and that is absolutely wrong. The responsibility for teaching the subordinate must be assumed by his supervisor, and not paid for by the customers or his organization.

It’s Not Easy to Be a Good Manager

A manager once told me that his supervisor definitely practiced an effective communicating style with him because they skied and drank together. He was wrong. There is a huge distinction between a social relationship and a communicating management style, which is a caring involvement in the work of the subordinate. Close relationships off the job may help to create an equivalent relationship on the job, but they should not be confused.

Performance Appraisal

Performance reviews are the single most important form of task relevant feedback supervisors can provide. It is how we assess our subordinates’ level of performance and how we deliver that assessment to them individually.

The review process also represents the most formal type of institutionalized leadership. It is the only time a manager is mandated to act as judge and jury: we managers are required by the organization that employs us to make a judgement regarding a fellow worker and then to deliver that judgement to him, face to face.

There is no cut and dry way to measure and characterize an employee’s work completely. Most jobs involve activities that are not reflected by our output in the time period covered by the review.

When reviewing a manager, should you judge his performance or the performance of the group under his supervision? You should be doing both. Ultimately what you are after is the performance of the group, but the manager is there to add value in some way.

The performance rating of a manager cannot be higher than the one we would give to his organization. It is important to assess actual performance, not appearances, real output, not good form.

You don’t want to signal to the whole company that to do well, you must “act” like a good manager, talk like one, and emulate one - but you don’t need to perform like one.

By elevating someone, we are, in effect, creating role models for others in our organization.

When we promote our best, we are saying to our subordinates that performance is what counts.

Reviewing the Ace

For the high achievers, reviews tended to be retrospective assessments, analyses of what the subordinate had done in the course of the prior year. Even though their key purpose was to improve the subordinate’s future performance, a majority of the reviews made little or no attempt to define what the subordinate needed to do to improve his performance or even maintain his current level.

Conducting the Interview

The applicant should do 80 percent of the talking during the interview. What he talks about should be your main concern.

You should interrupt and stop him. If you don’t, you are wasting your only asset in (the interview time) in which you have to get as much information and insight as possible.

Technical Knowledge => Not engineering or scientific knowledge but what he knows about performing the job he wants - his skill level.

You’re trying to assess how this person performed in an earlier job using his skills and technical knowledge. It’s not just what the candidate knows but what he he did with what he knows.

Ask the candidate what he would like to know about you, about the company or the job. The questions he asks will tell you what he already knows about the company, what he would like to know more about and how well prepared he is for the interview.

“I Quit”

This is what I most dread as a manager: a subordinate, highly valued and esteemed, decides to quit. I am talking not about someone whose motives are more money and better perks at another company, but about an employee who is dedicated and loyal yet feels his work is not appreciated. You and the company don’t want to lose him, and his decision to leave reflects on you. If he feels his efforts have gone unrecognized, you have not done your job and have failed as a manager.

In almost all cases, the employee is quitting because he feels he is not important to you. If you do not deal with the situation right at the first mention, you’ll confirm his feelings and the outcome is inevitable.

Drop what you are doing. Sit him down and ask him why he is quitting. Let him talk - don’t argue about anything with him. He’s rehearsed his speech countless times. Once he’s done with all the reasons he wants to leave. Ask him more questions. Make him talk. After the prepared points are delivered, the real issues may come out.

If the subordinate says he’s accepted a job somewhere else and can’t back out, you have to make him quit again. He’s made two commitments = first to his potential employer who he only vaguely knows and second to you - his present employer. The commitments he has made to the people he has been working with daily are far stronger than one made to a casual new acquaintance.

Compensation as Task-Relevant Feedback

If the absolutely amount of a raise is important, the person is motivated by physiological or safety/security needs. If the relative amount of a raise - what he got compared to others - is important, he is motivated by self-actualization. Money is a measure, not a necessity.

There are two ways of calculating salaries. At one extreme, the dollar level is determined by experience only. At the other, by merit alone. In the merit-only approach, salary is independent of time spent in the job. “I don’t care if you are one year out of college or have spent twenty years in the work force. I only care how you perform in this job.”

When a person is promoted into a position over his/her head, it is dead wrong for the company to force that person out of the company. Management should face up to its own error in judgement and take deliberate steps to put that person into a job he can do. You know from past experience that person can perform well.

Training is the Boss’s Job

Training is one of the highest leverage activities a manager can perform.

For example, if you have ten students in your class. Next year, they will collectively work 20,000 hours for your organization. If your training leads to a one percent improvement in subordinate performance, your company will gain the equivalent of two hundred hours of work as a result.

This assumes that the training accurately addresses what students need to know to do their jobs better. For training to be effective, it has to be closely tied to how things are actually done in your organization.

Training must be done by a person who represents a suitable role model. Proxies, no matter how well versed they might be in the subject matter, cannot assume that role. The person standing in front of the class should be seen as a believable, practicing authority on the subject taught.