High output management

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Andrew S. Grove

Started on 2021-12-15

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Introduction

• DRAM: dynamic random access memories

• xiv, Companies today basically have two choices: Adapt or die.

• xiv, 3rd, rules of the new environment:

  • First, everything happens faster.
  • Second, anything that can be done will be done, if not by you, then by someone else. Let there be no misunderstanding: These changes lead to a less kind, less gentle, and less predictable workplace.
  • xiv, 4th, as a manager in such a workplace, you need to develop a higher tolerance for disorder.

• xv, 2nd, The motto I’m advocating is “Let chaos reign, then rein in chaos.”

• xvi, 3rd, the single most important sentence of this book: The output of a manager is the output of the organizational units under his or her supervision or influence.

• xvii, 2nd, You need to plan the way a fire department plans. It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event.

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1 The Basics of Production: Delivering a Breakfast

• P6, Process, assembly, and test operations can be readily applied to other very different kinds of productive work.
• P10, first, equipment capacity, manpower, and inventory can be traded off against each other and then balanced against delivery time.
• P10, 2nd, Because each alternative costs money, your task is to find the most cost-effective way to deploy your resources—the key to optimizing all types of productive work.
• P11, 2nd, functional vs in-process test (e.g. simply insert a thermometer into the water so that the temperature could be easily and frequently checked. )
• P12, 2nd, incoming or receiving inspection: e.g. look at the eggs at the time of receipt,
• P12, 2nd, Besides the cost of the raw material and the cost of money, you should also try to gauge the opportunity at risk: what would it cost if you had to shut your egg machine down for a day? How many customers would you lose? How much would it cost to lure them back? Such questions define the opportunity at risk.

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2 Managing the Breakfast Factory

• P17, 2nd, pairing indicators, with what both effect and counter-effect are measured (e.g. inventory levels and the incidence of shortages).

• P17, 4th, Nowhere can indicators—and paired indicators—be of more help than in administrative work.

• P17, b, genuinely effective indicator will cover the output of the work unit and not simply the activity involved. It should be should be a physical, countable thing.

• By peering through the windows in the black box, we can get an idea of what the future output is likely to be.

• P20-22

  • Leading indicators: give you one way to look inside the black box by showing you in advance what the future might look like.
  • Linear indicators: A generally applicable example of a “window” cut into the black box; the linearity indicator flashes an early warning, allowing us time to take corrective action. Without it, we would discover that we had missed our target in June, when nothing can be done about it.
  • Trend indicators: These show output (breakfasts delivered, software modules completed, vouchers processed) measured against time (performance this month versus performance over a series of previous months), and also against some standard or expected level.

• P22, b, stagger chart: which forecasts an output over the next several months.

  • 

• P24, last, There are two ways to control the output of any factory. Some industries build to order; another is build to forecast, which is a contemplation of future orders

• P28, last, In the language of production, the lowest-value-point inspection where we inspect raw material is called incoming material inspection or receiving inspection.

  • If we again use a black box to represent our production process, inspections that occur at intervening points within it are called, logically enough, in-process inspections.
  • Finally, the last possible point of inspection, when the product is ready to be shipped to the customer, is called final inspection or outgoing quality inspection.

• P30, 3rd, There is a gate-like inspection and a monitoring step.

  • In the former, all material is held at the “gate” until the inspection tests are completed.
  • In the latter, a sample of the material is taken, and if it fails, a notation is made from which a failure rate is calculated. The bulk of the material is not held as the sample is taken but continues to move through the manufacturing process.

• P31, 2nd, Another way to lower the cost of quality assurance is to use variable inspections. Because quality levels vary over time, it is only common sense to vary how often we inspect.

• P33, 3rd, The productivity of any function occurring within it is the output divided by the labor required to generate the output.

• P35, 2nd, leverage, the output generated by a specific type of work activity.

  • An activity with high leverage will generate a high level of output; an activity with low leverage, a low level of output.
  • Automation is certainly one way to improve the leverage of all types of work. Having machines to help them, human beings can create more output. But in both widget manufacturing and administrative work, something else can also increase the productivity of the black box. This is called work simplification.

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3 Managerial Leverage

• P40,

• P40, 2nd, If the manager is a knowledge specialist, a know-how manager, his potential for influencing “neighboring” organizations is enormous.

• P47, 1st, Like a housewife’s, a manager’s work is never done. There is always more to be done, more that should be done, always more than can be done.

• P49, 2nd, To improve and maintain your capacity to get information, you have to understand the way it comes to you.

• P50, 2nd, transmitting objectives and preferred approaches constitutes a key to successful delegation.

• P51, 3rd, information-gathering is the basis of all other managerial work, which is why I choose to spend so much of my day doing it.

• P54, Managerial productivity—that is, the output of a manager per unit of time worked—can be increased in three ways:

  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.

• P54, high-leverage activities can be achieved in three basic ways:

  • When many people are affected by one manager.
  • When a person’s activity or behavior over a long period of time is affected by a manager’s brief, well-focused set of words or actions.
  • When a large group’s work is affected by an individual supplying a unique, key piece of knowledge or information.

• P58, The art of management lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them. For me, paying close attention to customer complaints constitutes a high-leverage activity.

• P60, 2nd, delegation without follow-through is abdication.

• P61, 1st, A second principle applies to the frequency with which you check your subordinates’ work.

  • How often you monitor should not be based on what you believe your subordinate can do in general, but on his experience with a specific task and his prior performance with it—his task-relevant maturity

• P62, 2nd, the most obvious way to increase managerial output is to increase the rate, or speed, of performing work.

• P64, 4th, 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.

• P65, 2nd-4th,

  • The next production principle you can apply is to allow slack—a bit of looseness in your scheduling.
  • Another production principle is very nearly the opposite.
  • A final principle. Most production practices follow well-established procedures and, rather than reinventing the wheel repeatedly, use a specific method that has been shown to work before.

• P66, 2nd, a manager should allocate about a half day per week to each of his subordinates. (Two days a week per subordinate would probably lead to meddling; an hour a week does not provide enough opportunity for monitoring.)

• P70, 2nd, channel the time needed to deal with them into organized, scheduled form by providing an alternative to interruption—a scheduled meeting or an office hour.

• P70, The point is to impose a pattern on the way a manager copes with problems. To make something regular that was once irregular is a fundamental production principle, and that’s how you should try to handle the interruptions that plague you.

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4 Meetings—The Medium of Managerial Work

• P71, 2nd, meeting is nothing less than the medium through which managerial work is performed.

• P72, 1st, The two basic managerial roles produce two basic kinds of meetings. In the first kind of meeting, called a process-oriented meeting, knowledge is shared and information is exchanged. Such meetings take place on a regularly scheduled basis. The purpose of the second kind of meeting is to solve a specific problem. Meetings of this sort, called mission-oriented, frequently produce a decision. They are ad hoc affairs, not scheduled long in advance, because they usually can’t be.

• P75, 2nd, A key point about a one-on-one: It should be regarded as the subordinate’s meeting, with its agenda and tone set by him.

• P75, 3rd, What should be covered in a one-on-one?

  • We can start with performance figures, indicators used by the subordinate, such as incoming order rates, production output, or project status.
  • The meeting should also cover anything important that has happened since the last meeting: current hiring problems, people problems in general, organizational problems and future plans, and—very, very important—potential problems.

• P76, 3rd, mechanical hints for effective one-on-one meetings.

  • First, both the supervisor and subordinate should have a copy of the outline and both should take notes on it, which serves a number of purposes.
  • The supervisor should also encourage the discussion of heart-to-heart issues during one-on-ones, because this is the perfect forum for getting at subtle and deep work-related problems affecting his subordinate.

• P77, 3rd, One-on-ones should be scheduled on a rolling basis—setting up the next one as the meeting taking place ends.

• P80, 3rd, Staff meetings should be mostly controlled, with an agenda issued far enough in advance that the subordinates will have had the chance to prepare their thoughts for the meeting. But it should also include an “open session”—a designated period of time for the staff to bring up anything they want.

• P80, 4th, A supervisor should never use staff meetings to pontificate, which is the surest way to undermine free discussion and hence the meeting’s basic purpose.

  • supervisor’s most important roles are being a meeting’s moderator and facilitator, and controller of its pace and thrust.

• P84, 3rd, for mission-oriented meetings, the chairman must have a clear understanding of the meeting’s objective—what needs to happen and what decision has to be made. The absolute truth is that if you don’t know what you want, you won’t get it. So before calling a meeting, ask yourself: What am I trying to accomplish? Then ask, is a meeting necessary? Or desirable? Or justifiable? Don’t call a meeting if all the answers aren’t yes.

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5 Decisions, Decisions

• P88, 2nd, authority (to make decisions) went with responsibility (position in the management hierarchy).

• P88, b, a rapid divergence 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.

• P89, 3rd, The key to success is again the middle manager, who not only is a link in the chain of command but also can see to it that the holders of the two types of power mesh smoothly.

• P90, The ideal decision-making process.

• P91, 3rd, 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. All a manager can expect is that the commitment to support is honestly present, and this is something he can and must get from everyone.

• P92, 2nd, Another desirable and important feature of the model is that any decision be worked out and reached at the lowest competent level.

  • ideally, decision-making should occur in the middle ground, between reliance on technical knowledge on the one hand, and on the bruises one has received from having tried to implement and apply such knowledge on the other.

• P93, 3rd, The most common problem is something we call the peer-group syndrome.

  • peer-plus-one approach is used to aid decision-making where we must. Peers tend to look for a more senior manager, even if he is not the most competent or knowledgeable person involved, to take over and shape a meeting.

• P95, 4th, One thing that paralyzes both knowledge and position power possessors is the fear of simply sounding dumb.

• P95, last, related phenomenon influences lower-level people present in the meeting. This group has to overcome the fear of being overruled, which might mean embarrassment: if the rest of the group or a senior-level manager vetoed a junior person or opposed a position he was advocating, the junior manager might lose face in front of his peers.

• P97, 2nd, If you either enter the decision-making stage too early or wait too long, you won’t derive the full benefit of open discussion. The criterion to follow is this: don’t push for a decision prematurely.

• P97, one of the manager’s key tasks is to settle six important questions in advance:

  • 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?

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

• P104, 3rd, difference analysis

  • the difference between what your environment demands from you now and what you expect it to demand from you a year from now.

• P105, last, difference between strategy and tactics

  • As you formulate in words what you plan to do, the most abstract and general summary of those actions meaningful to you is your strategy
  • What you’ll do to implement the strategy is your tactics.

• P109, 2nd, the true output of the planning process is the set of tasks it causes to be implemented.

• P110, 3rd, MBO: management by objectives

7 The Breakfast Factory Goes National

• P120, management is not just a team game, it is a game in which we have to fashion a team of teams, where the various individual teams exist in some suitable and mutually supportive relationship with each other.

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8 Hybrid Organizations

• P212, 3rd, Though most are mixed, organizations can come in two extreme forms: in totally mission-oriented form or in totally functional form.

  • The Breakfast Factory network organized in (a) totally mission-oriented and (b) totally functional forms.

• P123, 1st, Alfred Sloan summed up decades of experience at General Motors by saying, “Good management rests on a reconciliation of centralization and decentralization.” Or, we might say, on a balancing act to get the best combination of responsiveness and leverage.

• P126, 2nd, 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 units can stay in touch with the needs of their business or product areas and initiate changes rapidly when those needs change.

• P126, 3rd, no matter how many times we have examined possible organizational forms, we have always concluded that there is simply no alternative to the hybrid organizational structure.

  • P127, 4th, Here I would like to propose Grove’s Law: All large organizations with a common business purpose end up in a hybrid organizational form.

• P130, 2nd, For middle managers to succeed at this high-leverage task, two things are necessary.

  • First, they must accept the inevitability of the hybrid organizational form if they are to serve its workings.
  • Second, they must develop and master the practice through which a hybrid organization can be managed. This is dual reporting, the subject of our next chapter.

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9 Dual Reporting

• P134, 3rd, To make such a body work requires the voluntary surrender of individual decision-making to the group. Being a member means you no longer have complete freedom of individual action, because you must go along with the decisions of your peers in most instances.
• P140, Cindy’s name appears on two organization charts—coordinating groups are a means for know-how managers to increase their leverage.

10 Modes of Control

• P145, 2nd, our behavior in a work environment can be controlled by three invisible and pervasive means. These are:

  • free-market forces
  • contractual obligations
  • cultural values

• P148, 3rd, there is always a most appropriate mode of control, and there are two variables here: first, the nature of a person’s motivation; and second, the nature of the environment in which he works.

• P148, 3rd, CUA (complexity, uncertainty, and ambiguity) factor

• P150, 2nd, promotion from within tends to be the approach favored by corporations with strong corporate cultures. Bring young people in at relatively low-level, well-defined jobs with low CUA factors, and over time they will share experiences with their peers, supervisors, and subordinates and will learn the values, objectives, and methods of the organization. They will gradually accept, even flourish in, the complex world of multiple bosses and peer decision-making.

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11 The Sports Analogy

• P157, 3rd, 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.

• P158, The single most important task of a manager is to elicit peak performance from his subordinates.

• P158, 2nd, all a manager can do is create an environment in which motivated people can flourish.

• P159, 4th, Abraham Maslow’s theory of motivation

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

• P164, 2nd, self-actualization means: the need to achieve one’s utter personal best in a chosen field of endeavor.

• P164, 3rd, Two inner forces can drive a person to use all of his capabilities. He can be competence-driven or achievement-driven.

  • The former concerns itself with job or task mastery.
  • The latter refers to people moved by an abstract need to achieve in all that they do

• P165, 2nd, Researchers classified the three types of behavior.

  • gamblers, took high risks but exerted no influence on the outcome of events.
  • conservatives, were people who took very little risk
  • achievers, had to test the limits of what they could do, and with no prompting demonstrated the point of the experiment: namely, that some people simply must test themselves

• P165, 4th, if we want to cultivate achievement-driven motivation, we need to create an environment that values and emphasizes output.

• P167, 2nd, 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 is 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.

• P168, 1st, The most important form of such task-relevant feedback is the performance review every subordinate should receive from his supervisor. More about this later.

• P168, 3rd, You cannot stay in the self-actualized mode if you’re always worried about failure.

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12 Task-Relevant Maturity

• P173, 3rd, TRM: task relevant maturity

  • Some researchers in this field argue that there is a fundamental variable that tells you what the best management style is in a particular situation.
  • which is a combination of the degree of their achievement orientation and readiness to take responsibility, as well as their education, training, and experience.

• P174, 3rd, 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 effective management style changes again. Here 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.

• P175, 2nd, 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. What is “nice” or “not nice” should have no place in how you think or what you do. Remember, we are after what is most effective.

• P179, 2nd, We tend to see ourselves more as communicators and delegators than we really are, certainly much more than do our subordinates.

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13 Performance Appraisal: Manager as Judge and Jury

• P182, 5th, giving such reviews is the single most important form of task-relevant feedback we as supervisors can provide.

• P182, 6th, there is one that is more important purpose of review than any of the others: it is to improve the subordinate’s performance.

• P183, 1st, 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

• P184, 4th, 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. The biggest problem with most reviews is that we don’t usually define what it is we want from our subordinates, and, as noted earlier, if we don’t know what we want, we are surely not going to get it.

• P184, 5th, we can characterize performance by output measures and internal measures

• P187, 4th, the performance rating of a manager cannot be higher than the one we would accord to his organization!

• P188, 4th, There are three L’s to keep in mind when delivering a review: Level, listen, and leave yourself out.

• P190 -, three types of performance review

  • “On the One Hand…On the Other Hand…”: containing both positive and negative assessments.
  • The Blast: a major performance problem
  • Reviewing the Ace:

• P194, The stages of problem-solving: The transition from blaming others to assuming responsibility is an emotional step.

• P195, 3rd, To make things work, people do not need to side with you; you only need them to commit themselves to pursue a course of action that has been decided upon.

• P199, 2nd, In my experience, the best thing to do is to give your subordinate the written review sometime before the face-to-face discussion. He can then read the whole thing privately and digest it. He can react or overreact and then look at the “messages” again. By the time the two of you get together, he will be much more prepared, both emotionally and rationally.

• P200, performance report example

  • Output measure: good part
  • Output measure: lacking/not so good part
  • Statement supported by examples
  • Complements with examples
  • How to improve in the future

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14 Two Difficult Tasks

• P204, 3rd, The applicant should do 80 percent of the talking during the interview, and what he talks about should be your main concern.
• P206, 4 interview assessment categories
  1. Technical/Skills: describe some projects
  2. What He Did With Knowledge: past achievements/failures
  3. Discrepancies: what did you learn from failures; problems in current position
  4. Operational Values: why are you ready for new job; why should my company hire you

15 Compensation as Task-Relevant Feedback

• P215, 3rd, At one extreme, the dollar level is determined by experience only; at the other, by merit alone.

• P218, 3rd, Peter Principle, which says that when someone is good at his job, he is promoted; he keeps getting promoted until he reaches his level of incompetence and then stays there. Like all good caricatures, this one captures at least some of what really happens in a merit-based promotion system.

16 Why Training Is the Boss’s Job

• P224, 1st, training should be a process, not an event.

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Book completed on 2022-01-02