High Output Management

By Andy Grove

https://archive.org/details/dli.ernet.213936/mode/1up?view=theater

Related

• My Years at GM
• Only the Paranoid Survive

Money as Task-Relevant Feedback

• How to design a company so that promotion and demotion are normal? As should in times of less bounty or death. Simple: you get 50% of the value you generate as a worker. As management, you get a ridiculous salary such as $100k + 10% of $50k per employee, or $100k + $5k per person who operates to spec. Ie, about $100k per cohort, if you do the actual work. $200k. You can coast on that, but incentive is to up the productivity by automation. When you get to $250-300k, you qualify for campus leadership. If you run a franchise, you pay something like 10%, with coordination to $50B, at which point we Solve All Pressing World Issues. Propel get promoted and demoted as needed. For stgnTion, we call it that, and demote people etc or settle them on a different status relevant to their Integrated Human level. The Integrated Human OSE World Player must be carefully defined for their spec - definitely teh 10 year and Solving Pressing World Issues track. Think about this.
• 218 Peter Principle is a lack of sophistication on continued learning. We need to redefine this. At least make this a negotiable situation - not the inevitable
• Promotions decided by management seem to be a lack of clear and transparent metrics and their reporting. These should be approved only, the agent should propose and demonstrate competency. Here, value creation data is required - which is possible only in an integrated, transparent enterprise.
• Ideally, integrated performance (multiple role fractal organization) of design-build-enterprise can always be connected to money - esp if extreme production makes great pay, and the great performance can be attributed to open-collaborative-teaching - True Learning where you get exposed to real buildsble state of art tech - not forced to reinvent the wheel or propagate inferior tech.
• As a supervisor, you have to be very sensitive toward the various money needs of your subor¬ dinates and show^ empathy toward them.

Performance Reviews

• 201 'Meets Requirements' is shown in a negative light. How to reconcile with Meets Spec? By affirming sublime criteria in the spec. Or simply adding criteria to Meets Spec.
• What about asking your subordinate to evaluate your performance as his supervisor? I think this might be a good idea. But you should make it clear to your subordi¬ nate that it’s your job to assess his performance, while his assessment of you has only advisory status.
• I think we have our priorities reversed. Shouldn’t we spend more time trying to improve the performance of our stars? - yes - help the stars help me improve helping the lowliest
• i am required by the organization for which we both work to...
• 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 to do ...” And proceed to secure your subordinate’s commitment to the course of action you want and thereafter monitor his performance against that commitment.
• you will never convince me, but why do you insist on wanting to convince me? I’ve already said I will do what you say.” I shut up, embarrassed, not knowing why. It took me a long time before I realized I was embarrassed because my insistence had a lot to do with making me feel better and little to do with the running of the business.
• So up to a point you should try to get your subordinate to agree wfith you. But if you can’t, accept his commitment to change and go on. Don’t confuse emotional comfort with operational need.
• I feel very strongly that any outcome that includes a commitment to action is acceptable
• 194 stages of problemsolving - graph
• Blast review - Progress of some sort is made when the subordinate actively denies the existence of a problem rather than ignoring it passively, as before
• Types of review - 1 on the one hand, 2 the blast
• Tips - your subordinate has only a finite capacity to deal with facts. ask your¬ self if your subordinate will be able to remember all of the messages you have chosen to deliver. MJ sez - wtf? What about taking notes?
• 3 L's - level, listen, leave
• 188 We must recognize that no action communicates a manager’s values to an organiza¬ tion more clearly and loudly than his choice of whom he promotes.
• the peTfomiaTice rating of a manager cannot be higher than the one we would accord to his organization!
• Perhaps avoid test for a manager - if they did not exist, what would performance be like?
• Be careful about time offset between results and review period - The out¬ put indicators merely represented work done years ago— the light from distant stars, as it were—^which was still holding up..
• we can characterize performance by output measures and internal measures
• 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.
• The long and short of it: if performance matters in your operation, performance re¬ views are absolutely necessary.
• 183 Among friends and peers you are not supposed to discuss politics, religion, or anything that might possibly produce a difference of opinion and a conflict. Football scores, gardening, and the weather are oka
• The review process also represents the most formal type of institutionalized leadership.
• High motivation yields higher output for same skill set! See graph p158
• Most important aspect of review: to improve the subordinate's performance
• the review will influence a subordi¬ nate’s performance—^positively or negatively—^for a long time, which makes the appraisal one of the manager’s highest-leverage activities.
• The fact is that giving such reviews is the single most important form of task-relevant feedback we as supervisors can provide.
• Crappy process:

review comments too general mixed messages (inconsistent with rating or dollar raise)

no indication of how to improve negatives avoided supervisor didn’t know my work only recent performance considered surprises

• Why? assess the subordinate’s work to improve performance to motivate

to provide feedback to a subordinate

to justify raises

to reward performance

to provide discipline

to provide work direction

to reinforce the company culture

Task Relevant Maturity (cont)

• test might be to imagine your¬ self delivering a tough performance review to your friend. Do you cringe at the thought? If so, don’t make friends at work.
• If the subordinate is a personal friend, the supervi¬ sor can move into a communicating management style quite easily, but the what-when-how mode becomes harder to revert to when necessary
• There is a huge distinction between a social relationship and a communicating maifiagement style, which is a caring involvement in the work of the subordinate.
• Some 90 percent of the supervisors saw their style as more com¬ municating or delegating than their subordinates’ view
• 179 In other words, we want either to be fully immersed in the work of our subordinates, making their decisions, or to leave them completely alone, not wanting to be bothered.
• 178 Even if we achieve it, if things suddenly change we have to revert quickly to the what-when-how mode. That mode is one that we don’t think an enlightened manager should use. As a result, we often don’t take it up until it is too late and events overwhelm us.

Exercises

Production

Identify the operations in your work most like process, assembly, and test production. lo

For a project you are working on, identify the limiting step and map out the flow of work around it. lo

Define the proper places for the equivalents of receiving inspection, in-process inspec¬ tion, and final inspection in your work. De¬ cide whether these inspections should be monitoring steps or gate-like. Identify the conditions under which you can relax things and move to a variable inspection scheme.

Identify half a dozen new indicators for yi>ur group’s output, rhcy should measure both the quantity and quality of the output. lo

Install these new indicators as a routine in your work area, and establish their regular review in your staff meetings. 20

What is the most important strategy (plan of action) you are pursing now? Describe the environmental demand that prompted it and your current status or momentum. Is your strategy likely to result in a satisfactory state of affairs for you or your organization if suc¬ cessfully implemented?

Leverage

Conduct work simplification on your most te¬ dious, time-consuming task. Kliminate at least 30 percent of the total number of steps in¬ volved. 10

Define your output: What are the output ele¬ ments of the organization you manage and the organizations you can influence? List them in order of importance. 10

Analyze your information- and knowledgegathering system. Is it properly balanced among “headlines,” “newspaper articles,” and “weekly news magazines”? Is redun¬ dancy built in? 10

Take a “tour.” Afterward, list the transac¬ tions you got involved in during its course.

Create a once-a-month “excuse” for a toun 10

Describe how you will monitor the next proj¬ ect you delegate to a subordinate. What will you look for? How? How frequently? 10

Generate an inventory of projects on which

you can work at discretionary times. 10

Hold a scheduled one-on-one with each of your subordinates. (Explain to them in ad¬ vance what a one-on-one is about. Have them prepare for it.) 20

Look at your calendar for the last week. Clas¬ sify your activities as low-/medium-/high-leverage. Generate a plan of action to do more of the high-leverage category. (What activi¬ ties will you reduce?) 10

Forecast the demand on your time for the next week. What portion of your time is likely to be spent in meetings? Which of these are process-oriented meetings? Mission-oriented meetings? If the latter are over 25 percent of your total time, what should you do to reduce them? 10

Define the three most important objectives for your organization for the next three months. Support them with key results. 20

Have your subordinates do the same for themselves, after a thorough discussion of the set generated above. 20

Generate an inventory of pending decisions you are responsible for. Take three and struc¬ ture the decision-making process for them, using the six-question approach.

Performance

rformance Points

Evaluate your own motivational state in terms of the Maslow hierarchy. Do the same for each of your subordinates. lo

Give your subordinates a racetrack: define a

set of performance indicators for each. 20

List the various forms of task-relevant feed¬ back your subordinates receive. How well can they gauge their progress through them? 10

Classify the task-relevant maturity of each of your subordinates as low, medium, or high.

Evaluate the management style that would be most appropriate for each. Compare what your own style is with what it should be. 10

Evaluate the last performance review you re¬ ceived and also the last set of reviews you gave to your subordinates as a means of deliv¬ ering task-relevant feedback. How well did the reviews do to improve performance?

What was the nature of the communication process during the delivery of each? 20

Redo one of these reviews as it should have been done.

Task Relevant Maturity

• It's personal maturity vs TRM
• Shift is typically from detailed to encouraging personally to minimal with mutual agreed objectives. bUT: presence or absence of monitoring is difference between delegating and abdicating
  • From structured to communication-oriented to minimal / monitoring
• What by when and how - what-when-how mode
• Management bias is mode 1 and 3 - not the medium. Because under ok time, we tend to avoid bc we don't think it is needed?
• Oddly enough, their work rela¬ tionship remained distant, their personal fiiendship hav¬ ing no effect on it.
• Become friends with inferiors? Depends on if both càn handle it. If yes, that is better. Would require high personal maturity.

2 Difficult Tasks

• Bottom line: critical flaws are extremely difficult to spot. But: what about an actual operational task that proves how competent one is? And if they collaborate etc? A complex task such as build-document-add value to open enterprise. A task that tests one's tangible contribution? Possible with relevant, paradigm-shifting operations - not point technologies. Just simple contributions that are learnable in an hour.
• Admiral Rickover interviewed on 3 legged chair to see how A falling candidate would respond. Or a badly plugged toilet. Think: what is a trick that could produce critical, undisputable insight to most important questions on chara get or other topic?
• Ask the candidate what he would like to know about you, company, job
• Interview Questions on p 205
• Your task is to listen. Key is what they talk about.
• Set the rules: to be interrupted, apology in advance. Time is precious.
• 203 The purpose of the interview is to:

• select a good performer - yes but no shit

• educate him as to who you and the company are - reading assignment and i ask questions on culture

• determine if a mutual match exists - yes! Really to the point of competing for who will benefit more - if each side says it is they, then it is a win.

• sell him on the job. Not really. Ideally it's a soft sell, our advantages are out of the ballpark - either they identify or not. Yes, but this would be only enlightened people. But no, our trick is to get them young - when they are still open to a collaborative abundance culture - one based on high performance and pressing world issues.

Self-Actualization

• The role of the manager here is also clear: it is that of the coach. First, an ideal coach takes no personal credit for the success of his team, and because of that his play¬ ers trust him. Second, he is tough on his team. By being critical, he tries to get the best performance his team members can provide. Third, a good coach was likely a good player himself. give jerseys to our people
• Because people are motivated in sports - turn jobs sports like. We then initiated a program in which each building’s upkeep was periodically scored by a resident senior manager, dubbed a “building czar.” The score was then compared with those given the other buildings. The condition of all of them dramatically improved almost immediately
• Thus, our role as managers is, first, to train the individuals (to move them along the horizontal axis shown in the illustration on page 158), and, second, to bring them to the point where self-actualization moti¬ vates them, because once there, their motivation will be self-sustaining and limitless.
  • Note avg per capital income is $14k - so we need 7x more to be happy on average. This does not address distribution, either.
• Achievement (as in high achiever) vs competence (performance). But, achievement seems to not be grounded in universal purpose, but more in selfish purpose
• Once in the self-actualization mode, a person needs measures to gauge his progress and achievement. The most important type of measure is feedback on his per¬ formance. For the self-actualized person driven to im¬ prove his competence, the feedback mechanism lies within that individual himself
• 167 A simple test can be used to determine where some¬ one 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 moti¬ vated by esteem/recognition or self-actualization, be¬ cause in this case money is clearly a measure.
• money as a measure of achievement will motivate without limit
• So it appears that at the upper level of the need hierarchy, when one is self-actualized, money in itself is no longer a source of motivation but rather a measure of achievement.
• The Ph.D. in computer science who knows an answer in the abstract, yet does not apply it to create some tangible output, gets little recognition, but a junior engineer who produces results is highly valued and es¬ teemed.
• Moreover, if we want to cultivate achievement-driven motivation, we need to create an environment that val¬ ues and emphasizes output.
• 165 When the need to stretch is not spontaneous, manage¬ ment needs to create an environment to foster it.
• Competence, and achieving at all they do abstractly, are two ways of self-actualization. Missing for me is purpose-based achievement
• Two inner forces can drive a person to use all of his capabilities. He can be -driven or achievement-driven.
• Once someone’s source of motivation is self-actualization, his drive to perform has no limit.
• All of the sources of motivation we’ve talked about so far are self-limiting.
• 163 The physiological, safety/security, and social needs all can motivate us to show up for work, but other needs— esteem and self-actualization—make us perform once we are there.
• For Maslow, motivation is closely tied to the idea of needs, which cause people to have drives, which in turn result in motivation - thus there must be a persitent need that is unfilled
• because moti¬ vation has to come from within somebody. Accordingly, all a manager can do is create an environment in which motivated people can flourish.
• So if two things limit high output, a manager has two ways to tackle the issue: through training and motivation.
• The single most important task of a manager is to elicit peak performance from his subordinates
• 164 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.
• 139 Another Wrinkle: The Two-Plane Organization

Whenever a person becomes involved in coordination— something not part of his regular daily work—we en¬ counter a subtle variation of dual reporting

• OSE - 80/20 Dual Reporting. Functional units provide remixable or AI generators. Mission groups or business units do the adaptation. Central org provides the 'internal subcontracting'. Profits go to central, with profit sharing with divisions/biz units/mission groups.
• Hybrid organizations and the accom¬ panying dual reporting principle, like a democracy, are not great in and of themselves. They just happen to be the best way for any business to be organized.
• 135 The point is that a strong and posi¬ tive corporate culture is absolutely essential if dual re¬ porting and decision-making by peers are to work.
• 131 An unintended consequence of the moon shot was the development of a new organizational approach: matrix management.
• 127 Grove’s Law: All large organizations with a common business purpos
• 126 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. That is it.
• Mission groups vs functional groups. Functional groups vs business units.
• The functional groups can be viewed as if they were internal subcontractors
• 123 Alfred Sloan summed up decades of experience at General Motors by saying, “Good manage¬ ment rests on a reconciliation of centralization and de¬ centralization.” (hybrid org)
• The idea behind MBO is extremely simple: If you don’t know where you’re going, you will not get there. Or, as an old Indian saying puts it, “If you don’t know where you’re going, any road will get you there.”
  • Where am I going?
  • How do I pace myself to get there?
• 110 idea that planners can be people apart from those implementing the plan simply does not work
• 109 as you plan you must answer the question: What do I have to do today to solve—or better, avoid— tomorrow’s problem?
• Development engineer vs production engineer vs product engineer - latter wants more documentation
• one of the man¬ ager’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?
• 100 Employing consistent ways by which decisions are to be made has value beyond simply expediting the deci¬ sion-making itself.
• Address the peer group syndrome by 'You can overcome the peer-group syndrome if each of the members has self-confidence, which stems in part from developing balls
• Will I have to deal with this? Make it no: '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 differ¬ ent from that of the group.'
• 93 pride, ambition, fear, and insecurity must be dealt with
• 92 decisions made at lowest competent level. This includes both tech and judgment
• Allocate hlf a day per week to subordinates. Only 6-8 subordinates per manager?
• Value of procedure is in the thinking that led to the procedure - the procedure must be examined critically
• Carry slack, or you can jam. Carry inventory of projects - which can be done in slack time, otherwise manger would meddle in other biz
• Leverage of manager comes from - number of people; focusing people with key direction (brief well focused words or actions (role model)); priorities; key enabling info or tools
• 50. Cul*ture obviates rules and regulations. Part of high Output.
• 2 minute kernel takes a half hour meeting. To avoid this, visit company locations in action.
• 49 reports are a medium of self-discipline and not necessarily of communicating information
• 35 One way to attain the work leverage is by work simplification
• Good indicators - measure output, not activity. Measure a tangible, not quality. Paired indi ators - second of pair can measure quality
• 7 - Pairing indicators - measure one and related negAtive other in a counterbalancing pair