[notes] High Output Management

High Output Management (1995) by Andrew S. Grove #

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NOTE: Bewarned, these notes are un-edited, un-revised, and un-styled. I plan on cleaning them up eventually, but until then, I apologize.

My boss at Noom told me to read this book. He said the Noom’s management style was based on Google’s management style, which in turn was based on Intel’s management style. And frankly, having a company other than Toyota being noted as a model of successful management philosophy intrigued me.

Andrew Grove was the president of Intel.

# Part One: The Breakfast Factory

1. The Basics of Production: Delivering a Breakfast (or a College Graduate, or a Compiler, or a Convicted Criminal…) #

Basic requirements of production: build and deliver products in response to the demands of the customer

Production Flow #

“The key idea is that we construct our production flow by starting with the longest (or most difficult, or most sensitive, or most expensive) step and work our way back.”

Production Operations #

Adding Value #

“A common rule we should always try to heed is to detect and fix any problem in a production process at the lowest-value stage possible.”

2. Managing the Breakfast Factory #

Indicators as a Key Tool #

Controlling Future Output #

  1. build to order
  2. build to forecast
    • risk capital to respond to anticipated future demand in good order
    • ideally try to match the manufacturing flow and the sales flow
    • since neither are completely predictable => build some slack into the system

“Ideally, inventory should be kept at the lowest-value stage.”

Assuring Quality #

“The key principle is to reject the defective ‘material’ at its lowest-value stage.”

Productivity #

# Part Two: Management is a Team Game

3. Managerial Leverage #

“A manager’s output = The output of his organization + The output of the neighboring organizations under his influence”

Manager’s tasks:

“I have to confess that the information most useful to me, and I suspect most useful to all managers, comes from quick, often casual verbal exchanges.”

High-Leverage Activities #

“Leverage can also be negative. Some managerial activities can reduce the output of an organization.”

Delegation as Leverage #

“Delegation without follow-through is abdication.”

“Making certain types of decisions is something managers frequently delegate to subordinates. How is this best done? By monitoring their decision-making process.”

“From my experience a large portion of managerial work can be forecasted.”

“It is important to say ‘no’ earlier rather than later because we’ve learned that to wait until something reaches a higher value stage and then abort due to lack of capacity means losing more money and time.”

“As a rule of thumb, a manager whose work is largely supervisory should have six to eight subordinates.”

Interruptions – The Plague of Managerial Work #

[!!! don’t really think this is a much better solution]

4. Meetings – The Medium of Managerial Work #

“Meetings are the medium through which managerial work is performed.”

Process-Oriented Meetings #

3 Kinds of Process-Oriented Meetings at Intel

  1. One-On-Ones
    • meeting between a supervisor and a subordinate
    • principal way their business relationship is maintained
    • should be at least an hour
    • should be regarded as the subordinate’s meeting (e.g. agenda and tone set by the subordinate)
    • both supervisor and subordinate should have a copy of the outline and both should take notes on it
  2. Staff Meetings
    • between supervisor and subordinates
    • presents an opportunity for interaction among peers
    • should discuss anything that affects more than two of the people present
    • should be mostly controlled (with an agenda), but should also include an open session
    • supervisor should be the meeting’s moderator and facilitator
    • should encourage free discussion among subordinates
    • staff meetings are the ideal medium for decision-making
  3. Operation Reviews
    • medium of interaction for people who don’t otherwise have much opportunity to deal with one another
    • basic purpose is to keep the teaching and learning going on between employees several organization levels apart
    • organizing manager => organize the meeting
    • reviewing manager => role model
    • audience => actively listen and ask questions

Mission-Oriented Meetings #

5. Decisions, Decisions #

“In businesses that mostly deal with information and know-how, a manager has to cope with the rapid divergence that develops between power based on position and power based on knowledge, which occurs because the base of knowledge that constitutes the foundation of the business changes rapidly.”

Ideal Decision Making Process #

  1. Free Discussion
    • peer-group syndrome => general bias to avoid throwing support behind a losing position (don’t want to stick your neck out, don’t want to sound dumb)
    • peer-plus-one => peers plus a senior manager to lead the discussion (helps overcome peer-group syndrome)
  2. Clear Decision
    • the greater the disagreement, the more important that the decision be clear
  3. Full Support

“Another desirable and important feature of the model is that any decision be worked out and reached at the lowest competent level.”

“In our business we have to mix knowledge-power people with position-power people daily, and together they make decisions that could affect us for years to come.”

6. Planning: Today’s Actions for Tomorrow’s Output #

The Planning Process #

  1. Establish projected need or demand
  2. Establish your present status
  3. Reconcile (1) and (2)
    • strategy => the set of actions you decide upon

“Finally, remember that by saying ‘yes’ – to projects, a course of action, or whatever – you are implicitly saying ‘no’ to something else. This, of course, is an inevitable, inescapable consequence of allocating any finite resource.”

Management by Objectives (MBO): The Planning Process Applied to Daily Work #

A successful MBO system needs only to answer two questions:

  1. Where do I want to go? (=> objective)
  2. How will I pace myself to see if I am getting there? (=> milestones or key results)

“It is entirely possible for a subordinate to perform well and be rated well even though he missed his specified objective.”

# Part Three: Team of Teams

7. The Breakfast Factory Goes National #

“In fact, the centralization-decentralization dichotomy is so pervasive that it has become on of the most important themes in the management of our network.”

8. Hybrid Organizations #

Though most are mixed, organizations can come in two extreme forms:

“The desire to give the individual branch manager the power to respond to local conditions moves us toward a mission-oriented organization. But a similarly legitimate desire to take advantage of the obvious economies of scale and to increase the leverage of the expertise we have in each operational area across the entire corporation would push us toward a functional organization.”

“Alfred Sloan summed up decades of experience at General Motors by saying, ‘Good management rests on a reconciliation of centralization and de-centralization.’ Or, we might say, on a balancing act to get the best combination of responsiveness and leverage.”

Hybrid form => mixture of mission-oriented and functional

“Having so much of Intel organized in functional units also has its disadvantages. The most important is the information overload hitting a functional group when it must respond to the demands made on it by diverse and numerous business units. … Nowhere is this more evident than in the negotiations that go on to secure a portion of centralized – and limited – resources of the corporation. … Indeed, things often move beyond negotiation to intense and open competition among business units for the resources controlled by the functional groups.”

“What are some of the advantages of organizing much of a company in a mission-oriented form? There is only one. It is that the individual business units can stay in touch with the needs of their business or product areas and initiate changes rapidly when those needs change. That is it. All other considerations favor the functional-type of organization.”

“Grove’s Law: All large organizations with a common business purpose end up in a hybrid organizational form.”

“The most important task before such an organization is the optimum and timely allocation of its resources and the efficient resolution of conflicts arising over that allocation.”

9. Dual Reporting #

10. Modes of Control #

The Most Appropriate Mode of Control #

# Part Four: The Players

11. 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 not capable or not motivated.”

“My description of what makes people perform relies heavily on Maslow’s theory of motivation, simply because my own observations of working life confirm Maslow’s concepts. For Maslow, motivation is closely tied to the idea of needs, which cause people to have drives, which in turn result in motivation. A need once satisfied stops being a need and therefore stops being a source of motivation. Simply put, if we are to create and maintain a high degree of motivation, we must keep some needs unsatisfied at all times.”

“A simple test can be used to determine where someone is in the motivational hierarchy. If the absolute sum of a raise in salary an individual receives in important to him, he is working mostly within the physiological or safety modes. If, however, what matters to him is how his raise stacks up against what other people got, he is motivated by esteem/recognition or self-actualization, because in this case money is clearly a measure.”

“Imagine how productive our country would become if managers could endow all work with the characteristics of competitive sports.”

“And the best way to get that spirit into the workplace is to establish some rules of the game and ways for employees to measure themselves.”

[!!!
not sure I agree with the competitive nature of adding competition to the workplace
]

12. Task-Relevant Maturity (TRM) #

“The conclusion is that varying management styles are needed as task-relevant maturity varies. Specifically, when the TRM is low, the most effective approach is one that offers very precise and detailed instructions, wherein the supervisor tells the subordinate what needs to be done, when, and how: in other words, a highly structured approach. As the TRM of the subordinate grows, the most effective style moves from the structured to one more given to communication, emotional support, and encouragement, in which the manager pays more attention to the subordinate as an individual than to the task at hand. As the TRM becomes even greater, the manager’s involvement should be kept to a minimum, and should primarily consist of making sure that the objectives toward which the subordinate is working are mutually agreed upon.”

“A word of caution is in order: do not make a value judgment and consider a structured management style less worthy than a communication-oriented one. … Remember, we are after what is most effective.”

13. Performance Appraisal: Manager as Judge and Jury #

“Giving performance reviews is the single most important form of task-relevant feedback we as supervisors can provide.”

“The fundamental purpose is to improve the subordinate’s performance.”

“The review is usually dedicated to two things: first, the skill level of the subordinate, to determine what skills are missing and to find ways to remedy that lack; and second to intensify the subordinate’s motivation in order to get him on a higher performance curve for the same skill level.”

Assessing Performance #

Delivering the Assessment #

3 types of performance reviews:

  1. One the One Hand… On the Other Hand…
    • some good some bad
    • subordinate, like most people, has only a finite capacity to deal with facts, issues, and suggestions
    • so limit your feedback to what the subordinate can handle
  2. The Blast
    • mostly bad
    • biggest step is to get the subordinate to assume responsibility
    • then decide on a solution
    • it is important that subordinate is committed to the solution (even if they don’t agree with it)
  3. Reviewing the Ace
    • mostly good
    • make sure to still give advice for improvement

14. Two Difficult Tasks #

Interviewing #

The purpose of an interview is to:

“The applicant should do 80% of the talking during the interview.”

“An interview produces the most insight if you steer the discussion toward subjects familiar to both you and the candidate.”

[!!! even if you’re a manager interviewing an engineer?]

“The information to be gained here tends to fall into four distinct categories. First, you’re after an understanding of the candidate’s technical knowledge. … Second, you’re trying to assess how this person performed in an earlier job using his skills and technical knowledge; in short, not just what the candidate knows, but also what he did with what he knows. Third, you are after the reasons why there may be any discrepancy between what he knew and what he did, between his capabilities and his performance. And finally, you are trying to get a feel for his set of operational values, those that would guide him on the job.”

“I Quit!” #

“Your initial reaction to his announcement is absolutely crucial. … in almost all cases, the employee is quitting because he feels he is not important to you. … Drop what you are doing. Sit him down and ask him why he is quitting. Let him talk. … Make him talk after the prepared points are delivered, the real issues may come out. Don’t argue, don’t lecture, and don’t panic.”

15. Compensation as Task-Relevant Feedback #

“As managers, our concern is to get a high level of performance from our subordinates. So we want to dispense, allocate, and use money as a way to deliver task-relevant feedback.”

“In the abstract, there are two ways to administer base salaries. At one extreme, the dollar level is determined by experience only; at the other, by merit alone.”

[!!! Grove takes a jab at teachers here, relating traditional teacher compensation models to pass/fail grading system]

Some other notes from me: #

[!!! really should improve these]

 
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