Top Takeaways from Andy Grove's High Output Management

Managers are responsible for increasing the output of their organizations and neighboring organizations they influence. Managers “leverage” ... GetstartedOpeninappIanTienSigninGetstarted485FollowersAboutGetstartedOpeninappIanTienJan25,2016·9minreadTopTakeawaysfromAndyGrove’sHighOutputManagement“StanfordBusinessSchoolorYCombinator?”BecauseIwentthroughboth,Igetthatquestionsometimes.“Applytoboth,”Ireply,“they’reeachamazing.YCisoutstandingpreparationforbuildinganearlystagecompany,andStanfordforleadingasanexecutiveandboardmember.Butifyou’remanagingacompany,doonemorething:readHIGHOUTPUTMANAGEMENT.”ThebookislegendaryinSiliconValley.It’sacrashcourseformiddlemanagersbyformerIntelCEOAndyGrove,withaforewordbyBenHorowitz,andpraisefromMarkZuckerberg,JohnDoerr,MarcAndresseen,andleadersacrossthetechindustry.ToquoteformerAppleboardmemberBillCampbell:“HighOutputManagementisabiblethateveryentrepreneurandeverymanagerinthecountryshouldlookat,readandunderstand.”Itcoststenbucks.Ittakesadaytocomplete.It’sprobablyworthseveralmilliondollarsinmistakesyou’llavoidduringyourcareer.Fora“blogpostversion”,belowarenotesbychapterthatIsharewithmanagersatmyowncompanyasareferencefordivingdeeper(Meetingswastingtime?Chapter4.Awkwardperformancereviews?Chapter13.Starachieverunderperforming?Chapter12&15).Oneideafromthebooktostart:Ifyou’remotivatedtobecomeabettermanager—andtoimprovetheoutputofyourorganization—thenthereisnothingmoreimportantthantrainingyourself.Fulldisclosure:IworkedforAndyasateachingassistantwhilehetaughtatStanfordandhelpedreleasethe2015editionofthisbook.HIGHOUTPUTMANAGEMENTOnOrganizationalOutput:(Chapter1)—Everythingisprocess.Whetheryou’recompilingcode,hiringstaff,ormakingbreakfast,everythingcanbemodeledasarepeatableproductionprocess.Understandingtheelementsofproduction—inputs,outputs,timing,limitingsteps,qualitycontrols,variability—letsuscreateandimprovethe“machinery”neededtofulfillourorganizationalgoals.Weallaimtoachievethesamething:highqualityresultsinlesstimewithleastwaste.(Chapter2)—Focusonvital,measurableindicatorsofoutput.Theoperationsofanorganizationarelikea“blackbox”inthatyoucan’tseeeverythingthat’shappeningonadailybasis.Indicatorsletyou“cutholes”intheblackboxtogetaviewonwhattheoutputoftheorganizationmightbeinfuture.Trainyourteamtoselectasmallnumberofobjective,quantifiablemeasuresofoutput,withleadingandtrendingindicators,thatcanberevieweddailyandhelptransformabusinessforthebetter.Avoidmeasuresofactivity,subjectivemeasuresandunquantifiablemeasures.Yourjobistoidentify,closelymonitorandeffectivelymanagethe“vitalfew”indicatorsofperformanceoverthe“compellingmany”.OnLeadingTeams:(Chapter3)—Managerialleveragedramaticallyimpactsorganizationaloutput.Managersareresponsibleforincreasingtheoutputoftheirorganizationsandneighboringorganizationstheyinfluence.Managers“leverage”theirtimebyspendingsmallamountstohavelargeimpactthroughthreeactivities:1)informationgathering,2)decisionmaking,3)“nudging”others.Doingitrightmeanspositivehighleverageactions:delegationwithsupervision,trainingandinfluencingprocesseswithuniqueskillsorknowledge.Doingitwrongmeansnegativehighleverageactions:delayingdecisions,meddling,abdication,andunnecessaryinterruption.(Chapter4)—Meetingsareamediumofwork.People’stimeishighlyvaluablesoallmeetingsshouldbepurposefulandwell-executedaccordingtotheirtype.Process-orientedmeetingsareheldregularlytoprocesssubstantivemattersinbatches,andcomeinthreesub-types:First,one-on-onemeetingsbetweenonemanagerandonestaffmember,areusedtoexchangeinformation,discuss“thorny”issues,uncoverproblemsandreviewimportantbutnoturgentitems.Second,therearestaffmeetingsamongamanagerandteamforstructuredfreediscussion,sharingofdifferentpointsofview,anddecisionmaking.Managersherebalancebeingleader,observer,expediter,questioneranddecision-maker—butavoidlecturingorweighingintoosoonortooheavilytobiasdecisionsthatshouldbeownedbytheteam.Third,thereareoperationalreviews,whereoneorganizationpresentstootherstoshareinformationandreceivequestionsandfeedback.Managersplayacriticalroleinkeepingtheseveryexpensivemeetingson-track.Finally,incontrasttoregularmeetings,therearemission-orientedmeetingscreatedad-hoctoreachadecision.Theseshouldberare(lessthan25%ofyourtime).Themeetingchairshouldbewellpreparedandensurethepeoplevitaltoreachingadecisionattendandarealsoprepared.Meetingsareamediumofwork,bothtoofewandtoomanymeetingscreatewaste.(Chapter5)—Decisionsaretheoutputofaprocessframedbysixquestions.Whatdecisionisneeded?Bywhen?Whoshouldbeconsulted?Whodecides?Whoratifiesorvetoes?Whoneedstobeinformed?Managersneedtobringtogethertherightmindsanddiscussionstogettoacleardecision,andensuresupportfortheoutput,evenfromdissenters.Decisionsshouldbemadeatthelowestcompetentlevelbysomeonewithbothdetailedtechnicalunderstandingandpastexperiences,bothgoodandbad,fromdifferentimplementationapproaches.Whennoonehasboth,createacompositeopinionfromthepeopleavailable.(Chapter6)—Manageshort-termobjectivesbasedonlong-termplans.Bethoughtfulaboutlongtermplans:1)sizeyourmarket,2)knowwhereyouare,3)findahypotheticalpathtomeetdemand.Movetowardslongtermplansusingshort-termObjectives(sub-goals)andcorrespondingKeyResults(clear,unambiguousmilestonestopaceprogress).Cascade“OKRs”acrossorganizations,soonemanager’skeyresultsmightmakeuptheobjectivesoftheirdirectreports,andsoon.Forexample,ifamanager’sobjectivewasto“keepafactoryexpansionplanonschedule”withonekeyresultbeing“obtainplantexpansiondecisionbyOctober”,shemightdelegatethatkeyresulttoastaffmemberasanobjective,andsoon.OKRsprovideclarityandalignment,buttheycan’tberunonauto-pilot.Ittakesjudgmentandcommonsensetoguideday-to-dayprioritiesbasedonOKRhierarchies.OnLeadingEnterprises:(Chapter7)—Asorganizationsgrowspeeddecreaseswhileleverageincreases.Businessesbecomemorecomplexastheygrow.Duplicationandredundancyincrease—multipleproductsmayleadtomultiplemarketingteams,forexample—anddecisionsareconstantlybeingmadeonwhethertocentralizefunctionsforconsistencyandgreaterleverageortokeepthemdecentralizedforgreaterspeed.(Chapter8)—Functionalteamsincreaseleverage,mission-orientedteamsincreasespeed.Functionalorganizations(e.g.“Recruiting”,“Finance”,“HumanResources”)offerleveragebycentralizingservicestodeliverbenefitstoanentireenterprise,ratherthanasubset.Thetrade-offisincreasedcomplexityanddelayinmanagingrequestsfrombusinessunits.Incontrast,mission-orientedorganizations(e.g.“ComponentBusinessGroup”,“SystemsBusinessGroup”)aredecentralizedandpursueobjectiveslargelyindependentofotherpartsoftheenterprise,trading-offleverageforspeed(closerproximitytocustomersandfastertimetoreact).Speedistheonlybenefittomission-orientedorganizations,inallothercasesfunctionalorganizationsaresuperior.Theexceptionisconglomerates,whenhighdiversityinbusinessgoalsmakesfunctionalteamsimpractical.(Chapter9)—Dualreportingincreasesbothleverageandspeed.InventedatNASAas“matrixmanagement”individualsindualreportingstructureshavemanagersinbothmission-orientedandfunctionalteams(e.g.AfinancialcontrollerreportstoboththeDivisionManagerandtheDirectorofFinance).Whilethissolutioncreatescomplexity,thecostofcomplexityisoutweighedbythebenefitsofoperatinginbothfunctionalandmission-orientedteams.OnLeadingPeople:(Chapter10)—Manageteamsbysettingexpectationsandculturalvalues.WhenComplexity,UncertaintyandAmbiguity(“CUA”),islow,ateam’sperformanceisinfluencedbyexpectations(viaroledefinitions,settingobjectives,checking-inandreviewingperformance).WhenCUAishigh,behaviorisinfluencedbyculturalvalues(asarticulatedandexemplifiedbythemanager).Managersneedtochoosewhichmodetousedependingoncontext.Thismodelassumesindividualssharegroupinterests,ifindividualsaretoohighlyself-interestedtheirbehaviorwillbeinfluencedverydifferently.InlowCUAsituationsthey’llbehavebasedonincentives(a.k.a“freemarketforces”,likecommissionrewardsforsellingcertainproducts).InhighCUAsituationsindividualswithhighself-interestandlowgroup-interestwillbeunmanageable,likepeoplepanickingonasinkingship.People’smixofself-interestandgroup-interestcanshiftovertime.It’samanager’sresponsibilitytoalignteammemberstogroupinterests.(Chapter11)—Motivateemployeesby“shapingthefield”basedonwhatdrivesthem.Increasingmotivationandtrainingaretheonlywaysamanagercanincreaseindividualperformance.Toincreasemotivation,understandanindividual’shighestlevelneeds,whetherit’sincreasingcompetenceorachievement,andpreferredmeasure,whethercomparedtoothersorobjectivebenchmarks.Then,likeacoachmotivatingathletes,“shapethefield”tocreatethemotivationtogrowteammemberstothelimitoftheirabilities.(Chapter12)—Manageinthecontextoftask-relevantmaturity.Whenyou’remanagingaskilledsalespersonwithhightask-relevantmaturityyourinvolvementshouldbeminimal,focusedonlyonsettingandmonitoringhigh-levelobjectives.Transferthatsamepersonintoaplantmanagementrole,wherethey’llinitiallyhavelowtask-relevantmaturity,andyou’remoreeffectivewithalower-level,task-orientedmanagementstyle,focusedon“what”,“when”,and“how”ofoperations.Gettingthisrightisdifficultbecauseit’shardformanagerstoassesstask-relevantmaturityandit’shardtooverridepersonalpreferencesinmanagementstyle.(Chapter13)—Useperformancereviewstoimproveperformance.Therearemanymotivations,emotionsandmistakesassociatedwithperformancereviews,butimprovingperformance—byprovidingcleartask-relevantfeedbackandintensifyingmotivation—isparamount.Developinganeffectiveassessmentandmessageforanemployeerequiresbothincludingwhat’simportantandleavingoutwhatisnotimportant.(Whetheryou’rewritingyourfirstperformancereview,oryourhundredth,Ihighlyrecommendreadingthischaptercarefullyforitsdetailandexamples.)(Chapter14)—Whenanemployeequits,it’sthemanager’sfault.Thisdoesn’tincludepeopleleavingformoneyorperks,butwhensomeoneisdedicatedandloyalandfeelstheirworkisunappreciateditisthefailureofthemanagerwhentheydecidetoleave.Mostoftenemployeesbringupleavingataninconvenient,highlybusytime.Regardless,itshouldbehighpriorityforamanagertomakesuretheemployeefeelsheardandvalued,toaddresstheirissuesandretainthemortransferthemtoanotherteamwithintheenterprisethatmeetstheirneeds.(Chapter15)—Recyclehighachieverswhoareover-promoted.Asachieversarepromotedtheytypicallycyclebetween“exceedsexpectations”attheircurrentleveland“meetsexpectations”intheirfirstreviewaftertakingongreaterresponsibility.Managementshouldbecarefulnottopromotesomeonetooquicklyandhavingthem“belowexpectations”atthehigherlevelfortoolong.It’sanembarrassingsituationformanagementandtheemployee.However,insteadofejectingthemfromthecompanyforlow-performance,asiscommon,it’smoreusefultorecycletheemployeeintoamoreappropriaterole,despitethecomplexity,emotionsandawkwardnessthatmaybecaused.(Chapter16)—Trainingisthemanager’sjob.Trainingisthehighestleverageactivityamanagercandotoincreasetheoutputofanorganization.Ifamanagerspends12hourspreparingtrainingfor10teammembersthatincreasestheiroutputby1%onaverage,theresultis200hoursofincreasedoutputfromthe10employees(eachworksabout2000hoursayear).Don’tleavetrainingtooutsiders,doityourself.(FinalChapter)—Assessyourownoutput.Thefinalchapteroffersasetof“homework”assignmentstoapplytheideasinthebook.Andysetstheexpectationthatifyoucompleteatleast100pointsofthetotalpossible320pointsofferedintheassignments,you’llbeabettermanager.Nobetterwaytoendabookaboutmanagingoutputthanmeasuringtheoutputofthebookitselfonthereader.Sothosearemytakeaways.BenHorowitzhasablogpostaboutthebookandWashingtonPosthasawrite-upaswell.IfyouwanttolearnmoreabouthowSiliconValleyviewsAndyGrove,checkoutthisvideofromthe2015ChurchillAwards.Thankssomuchforreadingthisfar.Questions,commentsorfeedbackarehighlywelcomeincommentsbelow.ThankstoDavidRogierforfeedbackonearlydrafts.IanTienCEOandco-founderofMattermost.com.YC,GSB,WaterlooalumFollow3K53K 3K5ManagementLeadershipEntrepreneurshipMorefromIanTienFollowCEOandco-founderofMattermost.com.YC,GSB,Waterlooalum