High Output Managemeny by Andy Grove Book Summary

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High Output Management

    • Result of globalization? Everyone competes with everyone else.

 

  • High managerial productivity depends on choosing high leverage activities.

 

    • Output of manager is output of organization under his or her control or influence
    • Fundamental tenet of intelligent management is one-on-one meeting
    • Managing your own career? Must continually dedicate to maintaining your own competitive advantage.

 

  • As manager, every minute should be spent increasing value and output of your people.

 

    • Making breakfast, training salesforce, building compiler are all operations:
      • Process – boiling egg
      • Assembly – put egg, coffee, bread together
      • Test – check
    • Common rule: detect and fix problems of lowest-value stage (raw egg, cooked egg, breakfast)
      • Better to fix raw egg
    • To run operation well, you need indicators as measurements
    • 5 metrics
      • Sales forecast and variance
      • Raw material inventory
      • Equipment
      • Manpower
      • Quality

 

  • Pairing metrics works well

 

      • Inventory AND shortage
    • Good measurements measures OUTPUT, not activity
    • Any measurement is better than none
    • For janitor, pairing quality with # of square feet cleaned
    • Leading indicator
    • Variable inspection
      • Randomly digging deep into specific activities
    • High leverage activities generate high levels of output
    • Manager’s output is not:
      • Decisions, judgment, budgets, etc.

 

  • Manager’s output = output of organization and output of neighboring organizations under his or her influence

 

    • P. 45-46 – typical Andy Grove day
    • Manager should invest time where he or she has max leverage
    • P. 48: Information most useful comes from quick, casual conversations
    • Visiting somewhere and observing is underutilized management tool
    • 2 kinds of decisions
      • forward looking
      • Respond to developing problem or crisis
        • Technical
        • or People
    • Decisionmaking depends on comprehending facts
    • This makes information gathering so important
    • Other activities (conveying, decisionmaking, role modeling) governed by base of information you have
    • Information gathering is basis of all other management work
    • Nudging happens 10X more than decisions
      • comments
      • advocating
      • suggestions
    • We are role models for subordinates, peers, and supervisors
    • P. 53 – how you manage time is single most important aspect of being a leader

 

  • 2/3 of Grove’s time is in meetings
  • Which activities could be outside a meeting?
  • Information gathering. Information giving. Decision making. Nudging. Being a role model…
  • High Leverage Activities
  • Many people affected by one manager
  • A single person is impacted over a long period of time

 

      • Large group affected by individual supplying key knowledge
    • Management output = output of org = L(1) * A(1) + L(2) * A(2) … where A = Activity manager does and L extend to which output is increased by leverage
    • P. 34 – Example – Man pushing gear – no leverage … Man pushing 2 gears – leverage
    • Management productivity = output of manager per unit of time is increased in 3 ways
      • Rate of work
      • Increase leverage of existing
      • Shift from lower leverage to higher leverage
    • When?
      • Large meeting? Prepare in advance.
      • Employee quit? immediate.
    • P. 55 Therefore, timelines is incredibly important

 

  • Negative leverage?
  • Example: key participant arrives at meeting unprepared

 

        • 1) Wastes time of people in meeting
        • 2) Lose opportunity for people to do something else

 

  • 2 hours of orientation
  • High leverage on communicating general way of doing things, when people are most impressionable

 

    • Another leverage
      • Manager taking short time, but impacting person’s performance over long time – example:
        • Performance reviews
    • Waffling (putting off a decision that impacts others) is negative leverage

 

  • Managerial meddling is negative leverage (eg. manager assuming command instead of allowing subordinates to work out)

 

    • Another high leverage management activity – applying unique skills and knowledge

 

  • Art of management? Select from many activities of seemingly comparable significant the 1 or 2 or 3 that provide leverage beyond others and concentrate on them

 

      • For him: customer complaints
    • Delegation as leverage
      • Delegater and delegatee must have common information base and set of operational ideas
    • Delegation without follow through is abdication. You can never wash your hands of a task.
    • Mastering delegated task is only practical way to ensure a result
    • mastering results of delegation resembles monitoring in QA…monitor lowest value stage (eg. rough drafts)
    • Frequency of checking? Variable

 

  • Time management?
  • Identify “limiting” steps
  • Batch work – (because processes have set up time)

 

    • Difference between job shop (anyone cna walk in) and factory is work can be forecast

 

  • Most management work can be forecast
  • Medium of forecast? Calendar

 

    • Managers should not use calendars to take orders

 

  • Managers should use calendar for production planning

 

    • 2 calendar management ideas
      • Fill non-critical, but essential work

 

  • say no at outset for work beyond your capacity
  • Another production principle: allow slack or looseness in schedule
  • Manager should carry raw material “inventory” of projects

 

      • (not to be confused with WIP inventory)
    • Managers where work is supervision should have 6-8 subordinates
      • 3-4 — too few → meddling
    • Manager should allocate 1/2 day / week per subordinate
    • Coordinating/consulting/committee = subordinate time
    • Another production concept → Regularity

 

  • Our management work should take characteristics of factory, not job shop

 

    • We should do everything possible to stop little stops and starts throughout the day
    • Most common problem at Intel? uncontrolled interruptions
    • Most interruptions – come from outside organization where work is impacted
    • 2 concepts to handle interruptions
      • standard responses to problem categories
      • batching → Can batch questions and problems at standard times

 

  • Point is to impose a pattern

 

    • Fundamental production principle: make something regular that was once irregular
    • 2 meeting types
      • process oriented – knowledge shared and information exchanged on regular basis
      • mission oriented – ad hoc and cannot be scheduled in advance

 

  • 3 kinds of process meetings at Intel
  • 1:1s
  • staff meetings
  • operations review
  • 1:1 between supervisor “subordinate” and principal way to maintain business relationship
  • Purpose? teaching and exchange of information

 

      • Q: How often 1:1s? job-task-relevant maturity of subordinates

 

  • 1:1 should last a minimum of an hour
  • Anything less on subordinate only brings up simple things that can be resolved quickly

 

      • 1:1 is subordinate’s meeting
      • Q: What’s covered?
        • Performance figures
        • Current hiring/people problems
        • Future plans
        • Potential problems
      • Supervisor role?
        • Learn and coach
    • Grove: principle of didactic management: Ask 1 more question

 

  • Take notes in all circumstances

 

    • Heart to heart issues
    • Leverage of 1:1 example?
      • 90 minute investment every other week
      • Influence 80 hours of work and help manager to learn
      • 1:1s work in personal life

 

  • Staff meeting

 

      • Interactions and decision making as peers – not easy

 

  • better understand issues by watching 2 opposing views interact rather than 1 view

 

      • Q: What to discuss? Anything that impacts > 2 people
      • Combination of mostly prepared and some open time
      • Supervisors most important role = moderator and facilitator

 

  • Operations Review
  • Managers describe work to other managers

 

      • Keep teaching and learning across organization
    • Mission Oriented Meeting
      • A lot up to chairperson

 

  • “It is criminal to allow people to be late and waste everyone’s time”

 

    • Decision making

 

  • Free discussion → Clear decision → full Support (if wrong, then start over)

 

      • organization doesn’t live by all members agreeing all the time …. instead it lives by supporting the decision
      • decisionmaking needs mix of managers and senior with everyone acting as equals in meeting
      • Things that withhold people sharing their views?
        • subordinate – fear of being overruled
        • manager – fear of sounding dumb

 

  • don’t push for decision prematurely … hear real issues

 

      • Once everyone has shared views – push for decision
      • decisionmaking out? == decisions
    • 6 decisions questions
      • what decision to be made? when? who/ Who needs to be consulted? who will ratify or veto? Who to confirm?
    • Key method for controlling output is forecasting demand and building a forecast
      • Determine demand
      • determine what factory will produce
      • reconcile by adjusting production schedule
    • Look at your own group as a company with customers, competitors, etc.
    • Determine customer expectations and perception of your performance
    • Forecast –
      • what do customers want now?
      • what do they want 1 year from now?
    • Will every project be completed?
      • NO – in manufacturing, 80% of materials get finished. OK to factor “loss” in management work

 

  • MBO – Management by Objectives
  • Where do I want to go? (Objectives)
  • How will I pace myself to see if I am getting there? (Key Metrics)

 

    • Manager’s Objectives tied to supervising objectives
    • Team of teams
      • Organizations come in 2 extreme forms
        • mission oriented (BU1, BU2, BU3, etc.)
        • Functional (Merchandising, personnel, real estate, etc.)
      • giving branch manager autonomy leads to mission-oriented organization
      • Take advantage of economy of scale → functional organization and leverage expertise
      • Good management is reconciling centralization and decentralization
      • Hybrid?
        • business divising mission
        • functional group?  internal subcontractors
      • Only advantage of mission oriented? Individual units can stay in touch with needs of business and initiate change rapidly
      • hybrid is only approach
      • coordinating groups are a way for “know how” managers to increase their leverage
      • P. 141 operating task and planning are two planes – different organizational charts
      • Subordinate / supervisory relationship could be reversed in different planes (eg. president reports to chairman of planning committee, controller.)

 

  • Multi-plane organization allows participation without being in charge of everything

 

      • “transitory teams” can solve problems
    • Work behavior goverened by:
      • free market forces
      • contractual obligations
      • cultural values
    • If person is not doing their job, either
      • he or she does not want to do it (motivation)
      • he or she can’t do it (skills)
    • Job of manager is to elicit peak performance from subordinates
    • Two methods:
      • Training
      • Motivation
    • Manager cannot motivate a subordinate because motivation comes from within
    • Manager can help create environment where motivated people flourish
    • Some people are competence driven, others are achievment driven
    • Achievers stretch themselves to test limits
    • MBOs should be 50% achieved
    • To create achievement oriented motivation, create environment that values output

 

  • Once in self-actualization mode, person needs to gauge progress and achievement
  • Most important measure? Feedback on performance

 

    • Grove suggest endowing work with characteristics of competitive sports (eg. maintenance competition.)
    • Task-relevant maturity?

 

  • Best management style dependent on Task-Relevant Maturity OR education, training, skills, experience of person in task

 

    • The presence of monitoring subordinate’s task is difference between abdication and delegation

 

TRM Effective Management Style

Low Structured, task oriented

Medium Individual oriented, 2-way communications support

High Minimal management involvement | Establish objectives and monitor

 

      • As supervisor, should try raising TRM as quickly as possible
    • Giving performance reviews is single most important of task-relevant feedback

 

  • Performance reviews are one of manager’s highest leverage activities

 

      • Purpose of review is to improve subordinate’s performance
      • Review process is most formal type of institutional leadership
      • If performance matters to your organization, performance reviews are necessary
      • One pitfall to avoid is always assess performance, and not potential
      • No action communicates values more clearly than who gets promoted
      • 3 Ls when delivering review
        • Level – be frank
        • Listen – remember more complex the issue, the more prone to communication being lost
        • Leave yourself out

 

  • To make things work, people don’t need to agree with you. They only need to commit to decided course.

 

      • Example: Andy made subordinate write a more thoughtful review of his subordinate, even if the person didn’t want to.

 

  • Supervisors tend to invest more time in improving performance of low perofrmers, but this may be reversed. Investing time in mproving performance of high performers leads to more leverage because high performers do more work

 

    • preparing and delivering performance assessment is one of manager’s hardest tasks.

 

  • Each year, Grove reads and comments on 100 reviews

 

    • Interview purpose?
      • select a good performer
      • Educate candidate on you and company
      • Determine if mutual match exists
      • Sell candidate on job
    • P. 205 Sample questions
      • Describe a highly regarded project
      • Weaknesses? how are you eliminating?
      • Why should we have you?
      • Most significant failure?
    • When someone valued is quitting, your initial reaction is critical
      • Likely they are quitting because you did not appreciate
      • Ask why – don’t argue
    • As supervisor, need to be sensitive to money needs of subordinates
    • Insufficiently trained employees create inefficiencies, excess cost, unhappy customers, etc.
      • Most managers feel training should be left to others
      • Grove believes strongly managers should do their own training

 

  • Manager job = increase output of team
  • How?
  • increase motivation
  • Increase capability → Training
  • Training is one of highest leverage activities a manager can perform
  • for training to be effective, needs to be reliable and consistent – not solving problems in the moment

 

    • At Intel – 2-4% of time is classroom training
    • 2 training tasks
      • About company
      • Ideas, principles, skills, etc.
    • Steps?
      • 1) list things subordinate should be trianed on
      • 2) Take inventory of instruction and materials
      • 3) Prioritize
      • 1st time you teach – throwaway
      • after that – ask for anonymous feedback

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The Hard Thing about Hard Things by Ben Horowitz Book Summary

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The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers

  •         Don’t judge by their surface
  •         Colin Powell: Leadership is to get someone to follow you even just out of curiosity
  •         Diverse perspective
    • Football and Math
  •         Facts vs. alternative narrative explanations
  •         2 types of friends
    • Excited for you
    • Go to with big problems
  •         Stanford Business Schools grads gave presentation and he asked, “Did I ask for this?” = War Time CEO
  •         He took responsibility for success of company
  •         Michael Orvitz
    • “I believe in artificial deadlines.”
    • “I believe in playing 1 against another.”
  •         To get shit done, Ben called a daily meeting to remove obstacles
  •        Figuring out the right product is the innovator’s job – not the customer’s
  •        Sometimes, only the founder has the courage to ignore the data
  •        All decisions are objective until 1st line of code….Then all decisions are emotional
  •        Conventional wisdom DOES NOT equal truth
  •        Efficient market hypothesis is deceptive
  •        Market efficiently converge on solution – often the wrong one
  •        Bushido Warrior keeps death in mind and lives each day like it is his last
  •        CEO should tell it like it is –
    • Ben’s biggest improvement – stopped being so positive
  •        1) Trust
  •        2) More brains working on problem
  •        Once deciding to lay off
    • Execute quickly
  •        Bad advice…hire someone “bigger” than required. Hire the right person for your company context over next 12-18 months.
  •        Q: How to demote a friend?
    • A: Move to another part of company
    • Use appropriate language, “I decided”
    • Acknowledge contributions
    • Admit reality
    • You could couple demotion with salary increase…
  •        Best way to deal with emotions is to leave emotion out of ity
  •        Take care of:
    • People
    • Product
    • Profits (in that order)
  •        2 most important positions in software
    • VP of Engineering
    • VP of Sales
  •        Training is the manager’s job
    • Andy Grove – high output management
    • Training is highest leverage work a manager can do
  •        P. 132 – measuring cost acquisition – OK … cust retention – not good
  •        Companies execute well when
    • Everyone is on same page
    • Everyone is constantly improving
  •        If an executive is complaining about performance of another executive, the situation has gone too far
  •        Tech startups are in furious race against time
  •        Q: outside vs. internal promotion?
    • What do you value more?
    • Outside knowledge or inside knowledge?
  •        One way to raise your standard is interview experts in field and ask, “What do yo look for?”
  •        P. 176-177 – one on one meetings – employee meetings
    • Stuff that doesn’t fit in status report
  •        Primary thing a startup must do is build something 10x better than what is out there
  •        #2 take the market
    • Cultures do not make the company
  •        Culture
    • Distinguish from competition
    • Ensure operating values
  •  Delight customers
  •  Make beautiful products
    • Identify employees that fit mission
    • P. 182 – $10 / minute
  •        CEO Job
    • Knowing what to do
    • Getting the company to do it
  •        Things cause no problems when small become big problems when you grow
    • Communication
    • Common knowledge
    • Decision making
  •        Scale techniques
    • Specialization (build, test, ops)
    • Org design
  •        Rule of org design
    • All are bad tradeoffs in communication
  •        Org design
    • Communication architecture of company
  •        Further away in org  = less communication
  •        Steps
    • 1. Figure what to communicate
    • 2. What decision
    • 3. Communication and decision paths – do we want engineers thinking of customers?
    • 4. Who runs group?
    • 5. Identify paths not optimized
    • 6. Build plan to mitigate
  •        Process
    • Purpose is communication
    • When communication spans boundaries – process
  •        Q: Process design?
    • What are process outcomes/goals? (eg. Interview process = great employees)
    • How do you know if you are success of each step?
  •  Enough candidates?
  •  Right candidates?
  •  Right …?
  •  Accept
  •  Product
  •  Retain?
    • Accountability
  •        Good to anticipate growth … bad to over-anticipate growth
  •        No such thing as great executive – only great exec for specific company at a specific time
  •        Make judgment of executive relative (eg. For this company at this point in time, is there better executive I can hire?)
  •        Predicting if executive can scale corrupts ability to manage
  •        Herb Allen invested in:
    • Courage
    • Determination
  •        2 CEO mistakes
    • Taking things personally
    • Not personal enough
  •        Ideal:
    • Urgent, but not insane
  •        2 key characteristics
    • Brilliance
    • Courage – much harder
  •        CEOs possess different data, knowledge, and perspective
  •        If smart people take other side, on 54-46% decision, very hard tst of CEO courage
  •        P. 212 – expected social reward for crowd-influenced decision si high
  •        Hard, correct decisions = courage
  •        Wrong, easy decisions= not
  •        Succession planning – internal candidates > external because of knowledge
  •        Ones – set direction
  •        Twos – get company to perform at highest level
  •        CEOs must be Ones and Twos
  •        Twos act as Ones for their function
  •        Most oerganizations run by Ones with functional Twos
  •        Define leader
    • Quantity, quality, and diversity of people who want to follow
  •        1) Activate vision
  •        2) Right ambition
  •        3) Achieve vision
  •        Truly great leaders create environment where employees feel leader cares mor about employees than herself
  •        Peacetime CEO – steadily growing market – building on strength
  •        Wartime CEO – facing an existential threat
  •        Most management books describe peacetime, not wartime
  •        Classic peacetime – never publicly humiliate employees
  •        P. 230 – Feedback
    • Constantly giving feedback is precisely what a CEO must do
    • As CEO, have an opinion on everything
  •        Does CEO know what to do?
  •        Can CEO get company to do what she knows?
  •        Did CEO achieve results against appropriate objectives?
  •        Personal, financing, product strategy goals, selling, marketing – In good companies….Story = strategy
  •        CEO creates context – why work here? Why buy?
  •        Clear story = clear context
  •        CEO doesn’t have to create story or vision – but keep it
  •        2) Decisionmaking
    • Speed and quality of decisions
    • Elite mix of intelligence, logic, and courage
  •        Most difficult decisions are often not popular with constituencies – employees, board, customers
  •        Never enough time to gather all information
  •        Must systematically gather information on ongoing basis
    • Competitors
    • Technically possible in what time frame
    • True organizational capability
    • Financial
    • Product architecture
    • Employee sentiment
  •        To executive braod set of decisions
    • 1) Capacity (right people)
    • 2) employees have context, motivation to accomplish them
  •        Great CEOs constantly assess whether they are building the best team
  •        How easy is it for contributor to get job done?
  •        The first task in measuring results is setting objectives correctly
  •        CEO shold be evaluated on company opportunity
  •        Accountability vs. creativity paradox
    • Accountability for effort – check
    • Accountability for results
    • Reply to e-mail = easy
  •        Engineering schedule depending on solving hard CS problem = harder
  •        1) Sr. People should forecast more accurately
  •        2) Degree of difficulty
    • Sales #s with inferior product = hard
  •        3) amount of stupid risk
  •        Difference between mediocre + magic is difference between taking creative risk and holding team too tightly accountable
  •        Accountability = important, but not only thing
  •        Freaky Friday management – 2 warring roles – change functions
  •        As CEO, you do little employee development that happens at functions below you
  •        #1 reason executives fail – continuing to do old job instead of new one
  •        Loyalty must go to employees
  •        If you are early in a large market, that has a chance to be #1 , then remain standalone
  •        Andreeson Horowitz
    • Tech founders or innovator running the business
    • Skill gap between tech and professional CEO
  •  CEO skillset
  •  Network
    • Network
  •  Large companies
  •  Executives
  •  Engineers
  •  Press and analysts
  •  Investors and acquirers
    • Marx quote: “life is struggle.” … embrace the struggle
    • Embrace your weirdness, background, and instinct

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