High Output Management



The fundamentals of management. Drive results from a team much like you would drive output from a factory. A matter-of-fact, profound yet simple must-read for managers.


30 second summary


Coming soon!


2 more minutes of summary


Coming soon!


So far I only have a collection of quotes and notes. Will break out into a series of posts at some point!

As a micro CEO, you can improve your own and your group’s performance and productivity, whether or not the rest of the company follows suit.

This book contains three basic ideas. The first is an output-oriented approach to management. That is to say, we apply some of the principles and the discipline of the most output-oriented of endeavors—manufacturing—to other forms of business enterprise, including most emphatically the work of managers. 

The second idea is that the work of a business, of a government bureacracy, of most forms of human activity, is something pursued not by individuals but by teams. This idea is summed up in what I regard as the single most important sentence of this book: The output of a manager is the output of the organizational units under his or her supervision or influence. The question then becomes, what can managers do to…

…to perform tasks that possess high leverage….

…team will perform well only if peak performance is elicited from the individuals in it.  

Are you trying new ideas, new techniques, and new technologies, and I mean personally trying them, not just reading about them? Or are you waiting for others to figure out how they can re-engineer your workplace—and you out of that workplace.

A manager’s output = the output of his organization + the output of the neighboring organizations under his influence.

All you can do to improve the output of an employee is motivate and train. There is nothing else. 

A common rule we should always try to heed is to detect and fix any problem in a production process at the lowest-value stage possible.

Indicators tend to direct your attention toward what they are monitoring. It is like riding a bicycle: you will probably steer it where you are looking. If, for example, you start measuring your inventory levels carefully, you are likely to take action to drive your inventory levels down, which is good up to a point. But your inventories could become so lean that you can’t react to changes in demand without creating shortages. So because indicators direct one’s activities, you should guard against overreacting. This you can do by pairing indicators, so that together both effect and counter-effect are measured. Thus, in the inventory example, you need to monitor both inventory levels and the incidence of shortages. A rise in the latter will obviously lead you to do things to keep inventories from becoming too low.

Leading indicators give you one way to look inside the black box by showing you in advance what the future might look like. 

As we have said, manufacturing’s charter is to deliver product at a quality level acceptable to the customer at minimum cost.

There is a gate-like inspection and a monitoring step.

…variable inspections. Because quality levels vary over time, it is only common sense to vary how often we inspect.

Here I’d like to introduce the concept of leverage, which is the output generated by a specific type of work activity.

As we will see, in the work of the soft professions, it becomes very difficult to distinguish between output and activity. 

We can sum matters up with the proposition that: A manager’s output = The output of his organization + The output of the neighboring organizations under his influence Why? Because business and education and even surgery represent work done by teams. 

But the key definition here is that the output of a manager is a result achieved by a group either under her supervision or under her influence.

What they do is constitute an archive of data, help to validate ad hoc inputs, and catch, in safety-net fashion, anything you may have missed. But reports also have another totally different function. As they are formulated and written, the author is forced to be more precise than he might be verbally. Hence their value stems from the discipline and the thinking the writer is forced to impose upon himself as he identifies and deals with trouble spots in his presentation. Reports are more a medium of self-discipline than a way to communicate information. Writing the report is important; reading it often is not.

There are many parallels to this. As we will see later, the preparation of an annual plan is in itself the end, not the resulting bound volume. Similarly, our capital authorization process itself is important, not the authorization itself. To prepare and justify a capital spending request, people go through a lot of soul-searching analysis and juggling, and it is this mental exercise that is valuable. The formal authorization is useful only because it enforces the discipline of the process. 

There is an especially efficient way to get information, much neglected by most managers. That is to visit a particular place in the company and observe what’s going on there. Why should you do this? Think of what happens when somebody comes to see a manager in his office. A certain stop-and-start dynamics occurs when the visitor sits down, something socially dictated. While a two-minute kernel of information is exchanged, the meeting often takes a half hour. But if a manager walks through an area and sees a person with whom he has a two-minute concern, he can simply stop, cover it, and be on his way. Ditto for the subordinate when he initiates conversation. Accordingly, such visits are an extremely effective and efficient way to transact managerial business. 

It’s obvious that your decision-making depends finally on how well you comprehend the facts and issues facing your business. This is why information-gathering is so important in a manager’s life. Other activities—conveying information, making decisions, and being a role model for your subordinates—are all governed by the base of information that you, the manager, have about the tasks, the issues, the needs, and the problems facing your organization. In short, information-gathering is the basis of all other managerial work, which is why I choose to spend so much of my day doing it.

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. 

Before you are horrified by how much time I spend in meetings, answer a question: which of the activities—information-gathering, information-giving, decision-making, nudging, and being a role model—could I have performed outside a meeting? The answer is practically none. Meetings provide an occasion for managerial activities. Getting together with others is not, of course, an activity—it is a medium. You as a manager can do your work in a meeting, in a memo, or through a loudspeaker for that matter. But you must choose the most effective medium for what you want to accomplish, and that is the one that gives you the greatest leverage. More about meetings later. 

Managerial productivity—that is, the output of a manager per unit of time worked—can be increased in three ways: 1.  Increasing the rate with which a manager performs his activities, speeding up his work. 2.  Increasing the leverage associated with the various managerial activities. 3.  Shifting the mix of a manager’s activities from those with lower to those with higher leverage.

HIGH-LEVERAGE ACTIVITIES 

These can be achieved in three basic ways:  When many people are affected by one manager.  When a person’s activity or behavior over a long period of time is affected by a manager’s brief, well-focused set of words or actions.  When a large group’s work is affected by an individual supplying a unique, key piece of knowledge or information. 

A manager can also exert high leverage by engaging in an activity that takes him only a short time, but that affects another person’s performance over a long time. A performance review represents a good example of this. With the few hours’ work that a manager spends preparing and delivering the review, he can affect the work of its recipient enormously. Here too a manager can exert either positive or negative leverage. A subordinate can be motivated and even redirected in his efforts, or the review can discourage and demoralize him for who knows how long.

Examples of high negative leverage abound. 

Given a choice, should you delegate activities that are familiar to you or those that aren’t? Before answering, consider the following principle: delegation without follow-through is abdication. You can never wash your hands of a task.

Monitoring the results of delegation resembles the monitoring used in quality assurance. 

Forecasting and planning your time around key events are literally like running an efficient factory.

To use your calendar as a production-planning tool, you must accept responsibility for two things: 1.  You should move toward the active use of your calendar, taking the initiative to fill the holes between the time-critical events with non-time-critical though necessary activities. 2.  You should say “no” at the outset to work beyond your capacity to handle. 

A manager should carry a raw material inventory in terms of projects.

…the value of an administrative procedure is contained not in formal statements but in…

the real thinking that led to its establishment. 

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. This range comes from a guideline that a manager should allocate about a half day per week to each of his subordinates. (Two days a week per subordinate would probably lead to meddling; an hour a week does not provide enough opportunity for monitoring.) 

About twenty middle managers at Intel were once asked to be part of an experiment. After pairing up, they tried some role-playing in which one manager was to define the problem most limiting his output and the other was to be a consultant who would analyze the problem and propose solutions. 

But there is another way to regard meetings. Earlier we said that a big part of a middle manager’s work is to supply information and know-how, and to impart a sense of the preferred method of handling things to the groups under his control and influence. A manager also makes and helps to make decisions. Both kinds of basic managerial tasks can only occur during face-to-face encounters, and therefore only during meetings. 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 time spent in them as efficiently as possible.

ONE-ON-ONES

…key point about a one-on-one: It should be regarded as the subordinate’s meeting,

What should be covered in a one-on-one?

and—very, very important—potential problems.

…take notes in just about all circumstances, and most often end up never looking at them again. I do it to keep my mind from drifting and also to help me digest the information I hear and see.

Once the meeting is over, the chairman must nail down exactly what happened by sending out minutes that summarize the discussion that occurred, the decision made, and the actions to be taken. And it’s very important that attendees get the minutes quickly, before they forget what happened. The minutes should also be as clear and as specific as possible, telling the reader what is to be done, who is to do it, and when. All this may seem like too much trouble, but if the meeting was worth calling in the first place, the work needed to produce the minutes is a small additional investment (an activity with high leverage) to ensure that the full benefit is obtained from what was done.

Thus, ideally, decision-making should occur in the middle ground, between reliance on technical knowledge on the one hand, and on the bruises one has received from having tried to implement and apply such knowledge on the other.

Peers tend to look for a more senior manager, even if he is not the most competent or knowledgeable person involved, to take over and shape a meeting. Why? Because most people are afraid to stick their necks…

A related phenomenon influences lower-level people present in the meeting. This group has to overcome the fear of being overruled,

Basically, like other things managers do, decision-making has an output associated with it, which in this case is the decision itself. Like other managerial processes, decision-making is likelier to generate high-quality output in a timely fashion if we say clearly at the outset that we expect exactly that. In other words, one of the manager’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?

Your general planning process should consist of analogous thinking. Step 1 is to establish projected need or demand: What will the environment demand from you, your business, or your organization? Step 2 is to establish your present status: What are you producing now? What will you be producing as your projects in the pipeline are completed? Put another way, where will your business be if you do nothing different from what you are now doing? Step 3 is to compare and reconcile steps 1 and 2. Namely, what more (or less) do you need to do to produce what your environment will demand?

The single most important task of a manager is to elicit peak performance from his subordinates. So if two things limit high output, a manager has two ways to tackle the issue: through training and motivation. Each, as we see in the next figure, can improve a person’s performance. In this chapter, our concern is motivation.

The Sports Analogy

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 players 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 at one time. And having played the game well, he also understands it well.

At Intel we frequently rotate middle managers from one group to another in order to broaden their experience.

The conclusion is that varying management styles are needed as task-relevant maturity varies. Specifically, when the TRM is low, the most effective approach is one that offers very precise and detailed instructions, wherein the supervisor tells the subordinate what needs to be done, when, and how: in other words, a highly structured approach. As the TRM of the subordinate grows, the most effective style moves from the structured to one more given to communication, emotional support, and encouragement, in which the manager pays more attention to the subordinate as an individual than to the task at hand. As the TRM becomes even greater, the effective management style changes again. Here the manager’s involvement should be kept to a minimum, and should primarily consist of making sure that the objectives toward which the subordinate is working are mutually agreed upon. But regardless of what the TRM may be, the manager should always monitor a subordinate’s work closely enough to avoid surprises. The presence or absence of monitoring, as we’ve said before, is the difference between a supervisor’s delegating a task and abdicating it. The characteristics of the effective management style for the supervisor given the varying degrees of TRM are summarized in the table below.

The fundamental variable that determines the effective management style is the task-relevant maturity of the subordinate.

As we saw earlier, the review will influence a subordinate’s performance—positively or negatively—for a long time, which makes the appraisal one of the manager’s highest-leverage activities. In short, the review is an extremely powerful mechanism, and it is little wonder that opinions and feelings about it are strong and diverse. But what is its fundamental purpose? Though all of the responses given to my questions are correct, there is one that is more important than any of the others: it is to improve the subordinate’s performance. The review is usually dedicated to two things: first, the skill level of the subordinate, to determine what skills are missing and to find ways to remedy that lack; and second, to intensify the subordinate’s motivation in order to get him on a higher performance curve for the same skill level (see the illustration on this page). The review…

Anybody who supervises professionals, therefore, walks a tightrope: he needs to be objective, but must not be afraid of using his judgment, even though judgment is by definition subjective.

This cut no ice with me because the performance rating of a manager cannot be higher than the one we would accord to his organization! It is very important to assess actual performance, not appearances; real output, not good form. Had the manager been given a high rating, Intel would have signaled to all at the company that to do well, you must “act” like a good manager, talk like one, and emulate one—but you don’t need to perform like one.

We must recognize that no action communicates a manager’s values to an organization more clearly and loudly than his choice of whom he promotes. By elevating someone, we are, in effect, creating role models for others in our organization.

performance. So here less may very well be more. How can you target a few key areas? First, consider as many aspects of your subordinate’s performance as possible. You should scan material…

The stages of problem-solving: The transition from blaming others to assuming responsibility is an emotional step.

It is the reviewer’s job to get the subordinate to move through all of the stages to that of assuming responsibility, though finding the solution should be a shared task. 

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. Put another way, concentrating on the stars is a high-leverage activity: if they get better, the impact on group output is very great indeed.

In my experience, the best thing to do is to give your subordinate the written review sometime before the face-to-face discussion. He can then read the whole thing privately and digest it. He can react or overreact and then look at the “messages” again. By the time the two of you get together, he will be much more prepared, both emotionally and rationally. 

I read something like a hundred evaluations, all of those written by my own subordinates and a random selection from throughout Intel. I comment on them and send them back for rewrites or with a complimentary note. I do this with as much noise and visibility as I can, because I want to reiterate and reaffirm the significance the system has and should have for every Intel employee. Anything less would not be appropriate for the most important kind of task-relevant feedback we can give our subordinates.

A manager’s own productivity thus depends on eliciting more output from his team. A manager generally has two ways to raise the level of individual performance of his subordinates: by increasing motivation, the desire of each person to do his job well, and by increasing individual capability, which is where training comes in. It is generally accepted that motivating employees is a key task of all managers, one that can’t be delegated to someone else. Why shouldn’t the same be true for the other principal means at a manager’s disposal for increasing output?

Training is, quite simply, one of the highest-leverage activities a manager can perform.

For training to be effective, it has to be closely tied to how things are actually done in your

organization.

My own training repertoire includes a course on preparing and delivering performance reviews, on conducting productive meetings, and a three-hour-long introduction to Intel, in which I describe our history, objectives, organization, and management practices.