Viewing entries tagged
High Output Management

Wisdom from the Grove - Part 3

For those of you just joining us, this is part 3 of a series inspired by Andy Grove's epic book, High Output Management. You can find Part I and II here and here, respectively. So far we've reviewed pages 1-100. This post will cover pages 101-150.

Intel Plant, Philippines, 2007

We'll start with the awkward stuff. One of the main business decisions in this section—whether or not to open an Intel plant in the Philippines, and if so, where—is showcased to highlight the efficacy of 1) the "mission-oriented" meeting structure, and 2) Intel's decision-making process.

That's all fine and good, especially if you were in Cavite circa 2002 and you hear that Intel is pumping almost $100MM into your local economy.

However—and this is the awkward part—Intel actually shut down the Philippines plant and laid of 1,800 workers only 7 years later. Admittedly, it was during the worst bear market in over 75 years, but its worth noting that even the best management teams can't forecast macro demand forces more than a few years out.

Notes from pp. 101-150 of High Output Management

Let's start with a few quotes to warm up the tires:

  • "We must realize—and act on the realization—that if we try to focus on everything, we focus on nothing."

  • "I have seen far too many people who 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."

  • "What do I have to do today to solve—or better, avoid—tomorrow's problem?"

  • "If you don't know where you're going, any road will get you there."

  • "It is entirely possible for a subordinate to perform well and be rated well even though he missed his specified objective." [Christopher Columbus analogy: he failed his Measurable Business Outcome (MBO)—find a new route to the Orient—but discovered the New World, thereby achieving Queen Isabella's objective: increase Spain's wealth]

Let this be a reminder that the DBT Ventures team members do not take ourselves too seriously. At times, while reading pp. 101-150 of High Output Management, it became fairly apparent that Andy Grove is ALL BUSINESS. Some levity would have helped lighten these dogmatic pages, but nevertheless he adeptly covers four topics:

  1. Planning: today's actions for tomorrow's output

  2. Hybrid organizations: a blend of mission-oriented and functional groups

  3. Dual reporting: when a individual contributor reports to two people

  4. Modes of control: different ways to make other people your bitch

With regards to Planning, most of the material presented is from the perspective of a manufacturer, specifically to forecast environmental demand, establishing current capacity, and creating a strategy to address the gap (or surplus). Andy doesn't do the work for you, but he provides a basic framework for thinking about planning.

Within Hybrid organizations Andy emphasizes something most of us already know: the vast majority of companies are "hybrid" orgs, meaning they have elements of both mission-oriented and functional organizations. No need to really rehash all that here.

Moving on to Dual reporting, we learn that at times it makes sense to have a single IC report to two different people simultaneously, especially if distance/region is a factor. That's about it.

Perhaps the most frustrating of the four, Modes of control delineates Andy's view of how to make other people your bitch. He of course doesn't write it this way, but that is exactly what the intended output is. He contends you can control people's behavior in the workplace via:

  • Free-market forces: price, as determined by counter parties operating under self-interest

  • Contractual obligations: written agreements with considerable overhead required

  • Cultural values: common set of values, objectives and methods

Andy then details the role of management in all of this, specifically how they 1) articulate and 2) embody cultural values. To identify the most appropriate mode of control, Andy presents the below chart along with a "CUA Factor" which stands for Complexity, Uncertainty, and Ambiguity to create a spectrum to reflect the nature of the environment for the worker.

The big takeaway here is: when the work environment is complex (high CUA) and individual motivation is based on self-interest, NO MODE OF CONTROL WILL WORK WELL. This is telling, because it is the representative of many of today's scenarios and illustrates just why management is so challenging.

 

Modes of Control, p. 149

Wisdom from the Grove - Part 2

This is Part II of a series inspired by Andy Grove's monumental business book, High Output Management. This series is designed for busy leaders seeking an edge on their day. Based on your feedback, we'll be breaking down Groves's 227 power-packed pages into 50-page summaries presented in actionable note format. But first, Dilbert.

If you're just joining us, be sure to read Wisdom from the Grove - Part I, the prelude to this post. 

Notes from pp. 51-100 of High Output Management

Before we jump in, its worth noting the structure of this book: 16 oddly-named chapters spanning four parts.

Part I: The Breakfast Factory

  • The basics of production: Delivering a Breakfast (or a College Graduate, or a Compiler, or a Convicted Criminal. . .)

  • Managing the breakfast factory

Part II: Management is a Team Game

  • Managerial leverage

  • Meetings—the medium of managerial work

  • Decisions, decisions

  • Planning: today's actions for tomorrow's output

Part III: Team of Teams

  • The breakfast factory goes national

  • Hybrid organizations

  • Dual reporting

  • Modes of control

Part IV: The Players

  • The sports analogy

  • Task-relevant maturity

  • Performance appraisal: manager as judge and jury

  • Two difficult task

  • Compensations as task-relevant feedback

  • Why training is the boss' job

The reason I've laid out the whole TOC is to 1) provide a lay of the land, and 2) share that this post will cover the last 3 bullet points of Part II which will put us about 50% through the book.

We'll start with a few quotes which highly Grove's prescient perspective:

  • "Beyond communicating facts, a manager must relay his objectives, preferences, and priorities". . .  [these are] "extremely important and a key part of delegation."

  • "How you handle your own time is the singly most important aspect of being a role model and leader."

  • "Because it is easier to monitor something with which you are familiar, you should delegate activities you know best."

  • "If people are spending more than 25% of their time in ad-hoc, mission-oriented meetings, you're likely facing malorganization [disfunction]."—which Grove attributes primarily to the ineffectiveness (or lack of) process-oriented meetings

  • "A meeting to make a decision should have at most 6-7 people, ideally less."

The premise of Part II is management is a team game. Andy supports this with best practices for getting shit done, i.e. humans working effectively with one another.

Wisdom from the Grove - Part 1

This is Part 1 of a series inspired by Andy Grove's monumental business book, High Output Management. This series is designed for busy leaders seeking an edge on their day. Based on your feedback, we'll be breaking down Groves's 227 power-packed pages into 50-page summaries presented in actionable note format.

Notes from the first 50 pages of High Output Management

We'll start with a few quotes to get the motor running:

  • "Let chaos reign, then rein in chaos." I don't even know what this quote means, but it somehow imparts a zen-like acceptance of business craziness with calm control.

  • "The output of a manager is the output of the organizational units under his or her supervision or influence." — Andy highlights this as the most important sentence in the book

  • "Activity is what we actually do and often seems trivial. Output is what we achieve and is significant and worthwhile."

  • "In the softer professions it becomes very hard to distinguish between activity and output. Aim to maximize output. Optimizing for activity can actually decrease productivity.

  • "Output and activity are by no means the same thing."

Andy is a big proponent of increasing managerial "leverage", i.e. focusing on activities with a multiplicative impact on your team's output. Andy later challenges the reader (the former President of Intel challenges YOU) with 13 opportunities to take action on increasing their managerial leverage.

Here are the best five:

  1. Define the three most important objectives for your organization for the next three months. Support them with key results. (For tech readers: yes, this is where OKRs originated from)

  2. Look at your calendar for the last two weeks. Classify your activities as LOW, MEDIUM or HIGH leverage. Generate a plan of action to do more of the HIGH-leverage category. Identify two activities you will commit to reduce.

  3. Define your output. What are the output elements of the organization you manage and influence? List them in order of importance.

  4. Conduct work simplification (reduction of steps) on your most tedious, time-consuming task. Eliminate at least 30 percent of the total number of steps involved.

  5. Walk around more. Andy was a big believer in taking "tours" of other teams and facilities to absorb their process, habits  and challenges. Similar to Steve Jobs, Andy seems to value serendipitous encounters which help encourage the flow of information.

Other select notes:

  • p. 14 - think of your work as production measured by throughput / output. What is your "limiting step" [dependency]? What is your "in-process check" [QA]?

  • p. 17 - for each indicator try to have a "pairing indicator" to measure both effect and counter effect, especially for administrative work, e.g. quantity AND quality

  • p. 24 - "the most valuable indicator of business trends that I've ever seen is a month-over-month 4-month stagger chart forecast [pictured below]

  • p. 28 - don't forget Parkinson's famous law that "work expands so as to fill the time available for its completion

  • p. 35 - "work simplification" entails reducing the number of steps in a given process, usually by 30-50% based on Andy's experience

  • p. 48 - writing reports may seem mundane, but are often an exercise—or medium—of self-discipline; the process enforces discipline, and the writing is often more important than reading them

  • p.49 - Grove advocates ad hoc in-person meetings as the most effective method to conduct managerial business

  • p. 50 - beyond communicating facts, a manager must relay his objectives, preferences, and priorities which is an extremely important and key part of delegation

Here's that 4-month stagger forecast that was mentioned on page 24:

In closing, its worth mentioning that Andy Grove applied many of Abraham Maslow's psychological concepts within the work environment. For that reason we've included the now-famous hierarchy of needs applied to employee engagement.

How would you evaluate your team?