Andy Grove's High Output Management
Recap of the High Output Management book
I finally managed to pick up some long standing items from my reading list over the holidays. Here’s a few notes from Andy Grove’s “High Output Management”. My expectations were set pretty high as the book was advertised by several people to me as the ultimate management bible. However, I have to admit that I was not completely blown away – maybe that’s a good sign though, as many of the key concepts probably have just made it into common management wisdom. So I guess that people who just started out into their management career might have more aha moments when reading the book.
Key concept: Managerial leverage
The book itself states the key take-away conveniently already in the introduction in a very clear way:
“The output of a manager is the output of the organizational units under his or her supervision or influence”
So the whole book makes a case about what a manager can do to increase the output of their teams. And having read Marty Cagan’s “INSPIRED”, I would argue that “output” here probably should have been replaced by “outcome” instead. But the message stays the same: How can managers make sure that they are engaging in those activities that have the most leverage on the productivity of their teams and organizations.
Basics: Indicators and metrics
To start off, Grove talks about picking the right indicators to measure the output/outcomes. While this topic could fill a book on its own, he has some handy tips:
- Any measurement is better than none
- Pairing of indicators makes sense: measure the thing, and measure the (possible) negative effect in parallel (e.g. stock levels & number of supply shortage events)
- Try measuring the output, rather than the activity (pretty much in line with Cagan’s output vs. outcome discussion)
- Come up with leading indicators wherever possible
High leverage management activities
The more meaty part of the book is spent on different ways to look a high leverage activities a manager should (or should not) engage in.
Fully understanding why things are done the way they are done is vital. Grove puts the idea out there that any process one takes a deeper look at can be made 30-50% more efficient in the first pass by questioning the why of every step and eliminating unnecessary activities.
Information gathering and nudging
Good judgment and good decision making depend on how well one comprehends the facts about a business. Interestingly, Grove emphasizes that the most up-to-date (and thus most relevant) information often comes from informal verbal exchanges, rather than written reports (according to Grove, writing reports is still an important task to force people into properly thinking about a topic; but the value is in writing reports, not so much in reading them).
While delegation can be a high leverage activity, Grove points out some important caveats. Firstly, the “delegator” and the “delegatee” need to share a common base of information and a common understanding about how to go about solving certain problems. He points out that this is frequently no the case, and thus delegation does often no work as expected. Also, it needs to be clear that a manager is still responsible for the accomplishment of a task, even after they delegated it: Mangers needs to follow-through on the results of delegation. And the only way to achieve this is proper monitoring. Also, Grove recommends to delegate those kinds of activities that you know best (because monitoring and guidance is much easier to achieve). The frequency and diligence of monitoring results should depend on the task-related capabilities of the delegatee. Grove recommends to still go deep into detail now and then (just like samples taken at the end of a production line).
Grove introduces an idealized decision making model, consisting of three steps: free discussion of a problem, clear decision, and full support of the decision (where support does not necessarily mean agreement). He also points out that finding decisions among peers can be especially hard as nobody wants to speak up early on with an opinion that might lose out in the end. He recommends to have the peer most affected by the decision to step up into a chairman role (or engage a more senior manager to take that role). It’s generally important to hear everyone’s opinions out and take some time for the discussion part to really get to the heart of the arguments (as in the beginning of a meeting often times there’s a lot of superficial comments made). But pushing for consensus after that (and, if that fails, ultimately making a clear decision) is equally important. He cites Alfred Sloan: “Group decisions do not always come easily. There is a strong temptation for the leading officers to make decisions themselves without the sometimes onerous process of discussion”
Managing by objectives
Again, this could probably fill a whole book on its own. Grove is convinced that MBO is a good method, and it especially helps in providing focus to everyone. He’s not so much concerned about the different between strategy and tactics of objectives (“this difference rarely matters in practice”). However, MBO only works well if the number of objectives is kept very small. And if nobody tries to game the system by sticking rigidly to what has been recorded as objectives and key results: “So it’s entirely possible for a subordinate to perform well and be rated well even though he missed his specified objective. (..) If the supervisor mechanically relies on the MBO system to evaluate his subordinate’s performance, or if the subordinate uses it rigidly and forgoes taking advantage of an emerging opportunity because it was not a specified objective or key result, then both are behaving in a petty and unprofessional fashion”
Negative leverage activities
There are also negative leverage activities. One that stands out is managerial meddling (micro management). The negative leverage comes from the fact that after being exposed to managerial meddling many times, “the subordinate will begin to take a much more restricted view of what is expected of him, showing less initiative in solving his own problems and referring them instead to his supervisor”.
A word on meetings
Meetings have a bad reputation. according to Grove, that’s not justified as they are “nothing less than a medium through with managerial work is performed”. So it’s not about getting rid of meetings, it’s making them as effective as possible.
Grove suggests to separate different kinds of meetings for best efficacy: - One on one meetings with subordinates: their frequency should depend on the task-related maturity of the subordinate. The content should be performance figures, indicators that signal trouble ahead, and potential problems. It should be the subordinate’s meeting, with the agenda and tone set by them. - Staff meetings: should include all subordinates. Contents should be anything that affects 2 or more people present. Ideal for decision-making. - Mission oriented meetings: They are different in that there is a clear objective and a chairman who makes sure the necessary decisions are made, recorded, and follow-up actions are taken
Hybrid organizations & Dual reporting
Most bigger organizations end up being a mix of mission-oriented and functional - a mix called “hybrid organization” in the book. For Grove, this seems to be the optimal form of organization: “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”.
The one practice that make such organizations manageable is dual reporting, i.e. employees report into two manager: The first would specify how the job ought to be done, and the second would monitor how it was being performed day by day.
Individual and team performance
Grove draws some sports analogies, stating that a team will only perform as well as the individuals on the team. So the manager’s task is ultimately to make sure that each individual is at their peak performance. And there are two components to this: The individuals capability to perform (“skill”) and their motivation (“will”). This can be addressed with training on the skill level. The motivation however cannot be influenced directly – it has to come from within, so all a manager can do is to create an environment “in which motivated people flourish”.
The book draws an interesting link to Maslow’s pyramid of needs: Once a need is satisfied, it stops being a source of motivation. That is true for all needs except for one: the self-actualization need. So the wish to “become one’s personal best” (often referred to as “mastery” in engineering contexts) is the ultimate goal to instill, as it provides continuous motivation.
Management methods and task-relevant maturity
Another interesting insight is that there is no single “best” way to manage a subordinate. Indeed, it turned out from rotating managers within Intel that “neither the managers nor the groups [that have been rotated] maintain the characteristic of being either high-producing or low-producing as the managers are switched around. The inevitable conclusion is that high output is associated with a particular combination of certain managers and certain groups of workers”.
Grove concludes, that different management styles are needed depending on the task-related maturity of the subordinate for the task at hand:
- Low maturity requires a more structured, task-oriented style (telling the what, when, how)
- Medium maturity requires a style more oriented to the individual, supporting them, with mutual reasoning
- High maturity requires only minimal involvement and it’s enough to establish objectives and monitor them
It’s important to state that neither of the approaches is good or bad. Especially a more structured (“tell”) style has a bad reputation, and is consequently only applied much tool late when things have good already overwhelmingly wrong - because personal preferences of managers for a more “minimal involvement” management style often override the objective need for a more structured approach.
Improving the individual’s performance is a high leverage activity as well, and improving the performance should be the solve purpose of a performance appraisal. A prerequisite is that the expectations towards a subordinate have been clearly articulated. And even then, the process is not objective by any means (because there simply is no way to assess performance in a knowledge worker environment objectively). As a guidance, the performance of a manager should be judged on both: his individual performance as well as the performance of their teams. And it’s important to only assess performance, not potential. Focusing on a few key points helps (“there is only so much a person can absorb at once”). And Grove recommends to deliver the written feedback before the face to face meeting, so people have a chance to digest it and react to with a clearer mind in a conversation.
Lastly, Grove reminds us that it’s worth to also focus on the improvement of those who already perform very well: investing into the “Stars” of the team is indeed a high-leverage activity, as they are the ones who reflect a lot of that back into the organizations and drive a lot of output.
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