Book: High Output Management
Author(s): Andrew S. Grove

This book is one of the most famous books ever written about management in the workplace. I had read excerpts here and there and even a nice [blogpost] by Ben Horowitz from a16z but had never taken the time to read it in full. So, as soon as I started doing more managerial work at AiFi I picked it up and give it a go, I wasn’t disappointed.

Andre Grove is, simply put, one of the fathers of modern day management and the creator of most of the process that successful companies have implemented over the past 20 years, one big example being Google.

Among the many processes and concepts that the book introduces and explains in detail are OKRs (Objectives and Key Results.) At AiFi we started using OKRs early on, and this book really explains what they are and how and when are they useful. So many things became crystal clear and I’ve been revisiting it very often.

Notes and Highlights

“Being second best in a tough environment is simply not good enough”

If the world operates as one big market, every employee will compete with every person anywhere in the world who is capable of doing the same job.

In a Japanese office, a manager and his subordinates all sit around a big long table. People work on their own assignments but when they need to exchange information, everybody they work with spit within speaking distance.

Middle managers are the muscle and bone of every sizable organization, no matter how loose or “flattened” the hierarchy, but they are largely ignored despited their immesne importante to our society and economy.

Companies that have had generations of employees growing up under a no-layoff policy are now dumping ten thousand people at a time onto the street. Unfortunately, that’s all part of the process of adaptation.

“Let chaos reign, then reign in chaos”

We found that all our employees “produce” in some sense – some make chips, others prepare bills, while still others create software designs or advertising copy. We also found that when we approached any work done at Intel with this basic understanding in mind, the principles and discipline of production gave us a systematic way of managing it.

The output of a manager is the output of the organizational units under his or her supervision or influence.

One of the fundamental tenets of Intel’s managerial philosophy is the one-on-one meeting between a supervisor and a subordinate. Its main purposes are mutual education and the exchange of information.

You have to accept that no matter where you work, you are no an employee – you are in a business with one employee: yourself. You are in competition with millions of similar businesses.

If you want to work and continue to work, you must continually dedicate yourself to retaining your individual competitive advantage.

So it is key to find your own competitive advantage, your circle of competence and work with in it (but always looking to expand and enrich it).

Are you adding real value or merely passing information along? How do you add more value?

The Peter Principle is a concept in management theory in which the selection of a candidate for a position is based on the candidate’s performance in their current role, rather than on abilities related to the intended role. Thus, “managers rise to the level of their incompetence”.

Process, assembly, and test operations can be readily applied to other very different kind of productive work.

You should choose in-process tests over those that destroy the product.

More relevant in the case of hardware than software, remember Intel is a hardware company.

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.

To run your operation well, you will need a set of good indicators, or measurements.

Indicators ten to direct your attention toward what they are monitoring. It is like riding a bicycle: you will probably steer it where you are looking.

The first rule is that a measurements – any measurement – is better than none. But a genuinely effective indicator will cover the output of the work unit and not simply the activity involved.

Leading indicators give you one way to look inside the black box by showing you in advance what the future might look like.

For leading indicators to do you any good, you must believe in their validity.

Trend indicators. These show output measured against time and also against some standard or expected level. A display of trends forces you to look at the future as you are led to extrapolate almost automatically from the past.

Most companies recruit new college graduates to fill anticipated needs–rather than recruiting only when a need develops, which would be foolish because college graduates are turned out in a highly seasonal fashion.

If the manager examined everything his various subordinates did, he would be meddling, which for the most part would be a waste of his time. Even worse, his subordinates would become accustomed to not being responsible for their own work, knowing full well that their supervisor will check everything out closely.

The productivity of any function occurring within it [the black box] is the output divided by the labor required to generate the output.

We want to increase the ratio of output to activity, thereby increasing output even if the activity per employee-hour remains the same.

A very important way to increase productivity is to arrange the work flow inside our black box so that it will be characterize by high output per activity, which is to say high-leverage activities.

Automation is certainly one way to improve the leverage of all types of work.

The key definition here is that the output of a manager is a result achieve by a group either under her supervision or under her influence.

Reports also have another totally different function. As they are formulated and written, the author is force to be more precise than he might be verbally.

Information-gathering is the basis of all other managerial work, which is why I choose to spend so much of my day doing it.

To maximize the leverage of his activities, a manager must keep timeliness, which is often critical, firmly in his mind.

With the few hours’ work that a manager spends preparing and delivering the review, he can affect the work of its recipient enormously.

The lack of a decision is the same as a negative decision; no green light is a red light, and work can stop for a whole organization.

The negative leverage produced comes from the fact that after being exposes to may such instances, the subordinate will begin to take a much more restricted view of what is expected of him, showing less initiative in solving his own problems and referring them instead to his supervisor.

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 to ensure a result.

To gain better control of his time, the manager should use his calendar as a “production” planning tool, taking a firm initiative to schedule work that is not time-critical between those “limiting steps” in the day.

We should not be fighting their very existence, but rather using the time spent in them as efficiently as possible.

I feel that a one-on-one should last an hour at a minimum. Anything less, in my experience, tends to make the subordinate confine himself to simple things that can be handle quickly.

Both the supervisor and the subordinate should have a copy of the outline and both should takes notes on it, which serves a number of purposes. I take notes in just about all circumstances.

Determine the purpose of a meeting before committing your time and your company’s resources.

Remember, Peter Drucker said that if people spend more than 25 percent of their time in meetings, it is a sign of malorganization. I would put it another way: the real sign of malorganization is when people spend more than 25 percent of their time in ad hoc mission-oriented meetings.

An organization does not live by its members agreeing with one another at all times about everything. It lives instead by people committing to support the decisions and the moves of the business.

If we don’t link our engineers with our managers in such a way as to get good decisions, we can’t succeed in our industry.

One thing that paralyzes both knowledge and position power possessors is the fear of simply sounding dumb. For the senior person, this is likely to keep him from asking the questions he should ask. The same fear will make other participants merely think their thoughts privately rather than articulate them for all to hear; at best they will whisper what they have to say to a neighbor.

What decision needs to be made?

When does it have to be made?

Who will decide?

Who will need to be consulted prior to making the decision?

Who will ratify or veto the decision?

Who will need to be informed of the decision?

Employing consistent ways by which decisions are to be made has value beyond simply expediting the decision-making itself.

We should also be careful not to plan too frequently, allowing ourselves time to judge the impact of the decisions we made and to determine whether our decisions were on the right track or not.

“If you don’t know where you’re going, any road will get you there.”

If we try to focus on everything, we focus on nothing.

El que mucho abarca, poco aprieta.

To be useful, a key result must contain very specific wording and dates, so that when deadline time arrives, there is no room for ambiguity.

The game of management is a team game: a manager’s output is the output of the organizations under his supervision of influence. We now discover that management is not just a team game, it is a game in which we have to fashion a team of teams.

It occurred to us that perhaps security personnel should report jointly to the corporate security manager and to the local plant manager. The first would specify how the job ought to be done, and the second would monitor how it was being performed day by day.

We want the immediacy and the operating priorities coming from the general manager as well as a technical supervisory relationship. The solution is dual reporting.

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.

The single most important task of a manager is to elicit peak performance from his subordinates.

Perhaps the emergence of the new, humanistic approaches to motivation can be traced to the declines in the relative importance of manual labor and the corresponding rise in the importance of so-called knowledge workers.

Motivation is closely tied to the idea of needs, which cause people to have drives, which in turn result in motivation.

The person or group whose recognition you desire may mean nothing to someone else–esteem exists in the eyes of the beholder.

When the need to stretch is not spontaneous, management needs to create an environment to foster it.

Such goals-setting is extremely important if what you want is peak performance from yourself and your subordinates.

At the upper level of the need hierarchy, when one is self-actualized, money in itself is no longer a source of motivation but rather a measure of achievement.

Our role as managers is, first, to train the individuals, and, second, to bring them to the point where self-actualization motivates them.

First, an ideal coach takes no personal credit for the success of his team, and because of that his players trust him. Second, he is tough on his team. By being critical, he tries to get the best performance his team members can provide. Third, a good coach was likely a good player himself at one time. And having played the game well, he also understands it well.

The inevitable conclusion is that high output is associated with particular combinations of certain managers and certain group of workers.

Task-relevant maturity (TRM).

When the TRM is low, the most effective approach is one that offers very precise and detailed instructions.

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.

Regardless of what the TRM may be, the manager should always monitor a subordinates’ work closely enough to avoid surprises.

If the parent (or supervisor) imparted early on to the child (or subordinate) the right way to do things (the correct operational values), later the child would be likely to make decisions the way the parent would. Commonality of operational values, priorities, and preferences–how an organization works together–is a must if the progression in managerial style is to occur.

We tend to see ourselves more as communicators and delegators than we really are, certainly much more than do our subordinates.

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.

If performance matters in your operation, performance reviews are absolutely necessary.

To make an assessment less difficult, a supervisor should clarify in his own mind in advance what it is that he expects from a subordinate and then attempt to judge whether he performed to expectations.

At all times you should force yourself to assess performance, not potential. By “potential” I mean form rather than substance.

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.

Under no circumstances should you pretend that you and your subordinates are equal during performance reviews.

Merit-based compensation simply cannot work unless we understand that if someone is going to be first, somebody else has to be last.

We managers must be responsible and provide our subordinates with hones performance ratings and honest merit-based compensation

Most managers seem to feel that training employees is a job that should be left to others, perhaps to training specialists, I, on the other hand, strongly believe that the manager should do it himself.

Training must be done by a person who represents a suitable role model.

Some 2 percent to 4 percent of our employees’ time is spent in classroom learning, and much of the instruction is given by our own managerial staff.