Book: High Output Management

"High Output Management" by Andrew S. Grove

  • "managerial leverage, which measures the impact of what managers do to increase the output of their teams."
  • Requirements of production: "These are to build and deliver products in response to the demands of the customer at a scheduled delivery time, at an acceptable quality level, and at the lowest possible cost. Production’s charter cannot be to deliver whatever the customer wants whenever he wants it, for this would require an infite production capacity or the equivalent–very large, ready-to-deliver inventories."
  • "A common rule we should always tro to hed is to detect and fix any problem in a production process at the lowest-value stage possible." "And we should also try to find any performance problem at the time of the unit test of the pieces that make up a compiler rather than in the course of the test of the final product itself."
  • "Measuring the completion date of each software unit against its capability is one example. Watching this pair of indicators should help us to avoid working on the perfect compiler that will never be ready, and also to avoid rushing to finish one that is inadequate."
  • "But a genuinely effective indicator will cover the output of the work unit and not simply the activity involved. Obviously, you measure a saleman by the orders he gets (output), not by the calls he makes (activity)."
  • "The second criterion for a good indictor is that what you measure should be a physical, countable thing."
  • "Because those listed here are all quantity our output indictors, their paired counterparts should stress the quality of work."
  • "Leading indicators give you one way to look inide the black box by showing you in advance what the future might look like. And because they give you time to take corective action, they make it possible for you to avoid problems."
  • "Also valuable are 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."
  • "Another sound way to anticipate the future is through the use of the stagger chart, which forecasts an output over the next several months. The chart is updated monthly, so that each month you will have an updated version of the then-current forecast information as compared to several prior forecasts. You can readily see the variaation of one forecast from the next, which can help you anticipate future trends better than if you used a simple trend chart."
  • "Such a chart shows not only your outlook for business month by month but also how your outlook varied from one month to the next. This way of looking at incoming business, of course, make whoever does the forecasting take his task very seriously, because he knows that his forecast for any given month will be routinely compared with future forecasts and eventually with the actual result."
  • "Because neither the sales flow nor the manufacturing flow is completely predictable, we should deliberately build a reasonable amount of ‘slack’ into the system."
  • "By repeatedly observing the variance of one forecast from another, you will continually pin down the causes of inacuracy and improve your abaility to forecast both orders and the availability of product."
  • "Wihtout rigor, the staffing of administrative units would always be left at its highest level and, given parkinson’s famous law, people would find ways to let whatever they’re doing fill the time available for its completion."
  • "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. The smoothness of the flow is maintained, but if, for example, three successive samples fail the monitoring test, we can stop the line."
  • variable inspections: "For instance, if for weeks we don’t find problems, it would seem logical to check less often. But if problems begin to develop, we can test ever more frequently until quality again returns to the previous high levels."
  • "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 beome accustomed to not being responsible for their own work, knowing full well that their supervisor will check everythign out closely."
  • "We want to increase the ratio of output to activity, thereby ncreasing output even if the activity per employee-hour remains the same. As the slogan has it, we want to ‘work smarter, not harder.’"
  • "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 simplifcation."
  • "And as noted, sress output is the key to improve productivity, while looking to increase activity can result in just the opposite."
  • "A manager’s output = The output of his organization + The output of thie neighboring organizations under his influence"
  • "Let’s call it ‘nudging’ because through it you nudge an individual or a meeting in the direction you would like. This is an immensely important managerial activity in which we engage all the time, and it should be carefully distinguished from decision-making that results in firm, clear directives. In reality, for every unambiguous decision we make, we probably nudge things a dozen times."
  • "Values and behavioral norms are simply not transmitted easily by talk or memo, but are conveyed very effectively by doing and doing visibly."
  • "How you handle your own time is, in my view, the single most important aspect of being a role model and leader."
  • "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."
  • "As a rule of thumb, a manager whose work is largely supervisory should have six to eight subordinates; three or four are too few and ten are too many."
  • "Thus I will assert again that a meeting is nothing less than the medium through which managerial work is performed. That means we should not be fighting their very existence, but rather using the tiem spent in them as efficiently as possible."
  • "In the first kind of meeting, called a process-oriented meeting, knowledge is shared and infomration 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 prodcue a decision."
  • "What should be discussed at a staff meeting? Anything that affects more than two of the people present."
  • Peer-group syndrome: "One of the reasons why people are reluctant to come out with an opinion in the presence of their peers is the fear of going against the group by stating an opinion that is different from that of the group. Consequently, the group as a whole wanders around for a while, feeling each other out, waiting for a consensus to develop before anyone risks taking a position."
  • "You can overcome the peer-group syndrome if each of the members has self-confidence, which stems in part from being familiar with the issue under consideration and from experience."
  • "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. Make sure you have heard and considered the real issues rather than the superficial comments that often dominate the early part of a meeting."
  • "Sometimes free discussion goes on in an unending search for consensus. But, if that happens, people can drift away from the near consensu when they are close to being right, diminishing the chances of reaching the correct decision."
  • "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?"
  • "Alfred Sloan summed up decades of experience at General Motors by saying, ‘Good management rests on reconciliation of centralization and decentralization.’ Or, we might say, on a balancing act to get the best combination of responsiveness and leverage."
  • "All large organizations with a common business purpose end up in a hybrid organizational form."
  • "We have seen that all kinds of organizations evolve into a hybrid organizational form. They must also develop a system of dual reporting."
  • Example: "So we see that Cindy’s name appears on two organization charts that serve two searate purposes–one to operate the production plant, the other to coordinate the efforts of various plants."
  • "for Maslow, motivation is closely tied to the idea of needs, which cause people to have drives, which in turn rsult in motivation."
  • "That title of a movie about athletes, Personal best, captures what self-actualization means: the need to achieve one’s utter personal best in a chosen field of endeavor."
  • "You cannot stay in the self-actualized mode if you’re always worried about failure."
  • "The inevitable conclusion is that high output is associated with particular combinations of certain managers and certain groups of workers. This also suggests that a given managerial approach is not equally effective under all conditions."
  • If task-relevant maturity of subordinate is low, then the characteristic of effective menagement style is "Structure; task-oriented; tell ‘what,’ when,’ ‘how’"
  • If task-relevant maturity of subordinate is medium, then the characteristic of effective managment style is "Individual-oriented; emphasis on two-way communcation, support, mutual reasoning"
  • If task-relevant maturity of subordinate is high, , then the characteristic of effective managment style is "involvement by manager minimal: establishing objectives and monitoring"
  • "A similar kind of trade-off also has to be considered here: weighing long-term-orieneted against short-term-oriented performance." "Which is more signifiant? A way to help weight questions like this is the idea of ‘present value’ used in finance: how much will the future-oriented activity pay back over time? And how much is that worth today?"
  • "The subordinate’s output during the review period may have all, some, or nothing to do with his activities during the same period."
  • "At all times you should force yourself to assess performance, not potential."
  • "the performance rating of a manager cannot be higher than the one we would acord to his organization!"
  • "It is very important to assess actual performance, not appearances; real outout, not good form."
  • "You must level with your subordinate–the credibility and integrity of the entire system depend on your being totally frank."
  • "To make sure you’re ben heard, you should watch the person you are talking to."
  • "If his responses–verbal and nonverbal–do not completely assure you that what you’ve said has gotten through, it is your responsibility to keep at it until you are satisfied that you ahve been heard and understood."
  • "It is very important for you to understand that the performance review is about and for your subordinate. So your own insecurities, anxieties, guilt, or whatever should be kept out of it."
  • "If it becomes clear that you are not goign to get your subordinate past the blame-others stage, you will have to assume the formal role of the supervisor, endowed with position power, and say, ‘This is what I, as your boss, am instructing you to do. I understand that you do see it my way. You may be right or I may be right. But I am not only empowered, I am required by the organization for which we both work to give you instructions, and this is what I want you todo…’ And proceed to secure your subordinate’s commitment to clurse of action you want and thereafter monitor his performance against that commitment."
  • "I think we have our priorities reversed. Shouldn’t we spend more time trying to improve the performance of our stars? After all, these people account for a disproportionately large share of the work in any organization."
  • "In my experience, the best to do is to give your subordinate the writen review soemtime befor ethe face-to-face discussion. He can then read the whole theing privately and digest it. He can react or reverreact and tehn look at the "messages" again. By the time they two of you get together, he will be much more prepared, both emotionally and rationally."
  • "If we are going to consider promotions, we have to consider the 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."

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