Book Summary: High Output Management

Book: High Output Management

Author: Andy Grove

Key takeaways: I was surprised by how much I liked this book. Despite knowing that Andy Grove founded, led, and then transformed Intel into what it is today,  I had erroneously assumed that the book would be a list of simplified air-brushed lessons from his inarguably substantial accomplishments (I had clearly thought that even those simplistic takes would be worth it). But, the book is something very different and quite profound, and you begin to get a glimpse of that as you read Ben Horowitz’s foreword where he tells you that the book has been considered a classic in the Silicon Valley since forever.

This anecdote by Horowitz confirmed that this would be a great book: Grove was not surprised that the tech CEOs did not see the tech bust coming. He said “CEOs always act on leading indicators of good news, but only act on lagging indicators of bad news.” This is because “In order to build something great, you have to be an optimist, because by definition you’re trying to do something that most consider impossible. Optimists most certainly would not listen to leading indicators of bad news.”

 

BASIC ROLES OF MANAGEMENT

How to staff: No amount of formal planning can anticipate changes, which is why an efficient team is needed too to respond to basic as well as unanticipated events. Further, a company should have few levels of managers because with the advent of email, one of the basic roles of management—disseminating information—is no longer as important a function as it used to be.

Measurement: Any measurement is better than none, but a genuinely effective measurement will cover the output of the work vs. simply the activity involved.

Leading Indicators: For leading indicators to do you any good, you must believe in their validity. To take big, costly, or worrisome steps when you are not sure you have a problem yet is hard. Which is why unless you are prepared to act on what the leading indicators are telling you, all you will get from monitoring them is anxiety.

Inventory Management: Inventory should be kept at the lowest-value stage (raw eggs vs. omelettes at a breakfast factory) to attain maximum production flexibility for a given inventory cost.

Inspection: The right way for a manager to do inspection is variable inspection; if a manager inspected everything a subordinate did, it would be meddling/waste of manager’s time/subordinates would not feel responsible for their work.

 

MEETINGS

One-on-one meetings: Andy Grove is a big proponent for one-on-one meetings. Managers should have one-on-one meetings with inexperienced subordinated frequently (say, weekly) and occasionally (say, every couple of months) with an experienced veteran. He says that these meetings should be regarded as subordinate’s meetings, with its agenda and tone set by the subordinate. The subordinate should send an outline before the meeting; during the meeting, both the manager and subordinate should have a copy of the outline and both should take notes on it, and these meetings should be scheduled on a rolling basis (setting up the next one as the current one ends).

Interestingly, Grove adds that one-on-one meetings can help one at family life as well as it allows one to take each other seriously, and allow subtle and complicated matters to come up.

Group meetings: A supervisor should never use staff meetings to pontificate as it undermines free discussion and hence, the meeting’s basic purpose. Supervisor’s most important roles are being a meeting’s moderator/facilitator, and controller of its pace and thrust.

 

SELF-ACTUALIZATION

Once someone’s source of motivation is self-actualization, there is no limit to his/her drive to perform.

 

PERFORMANCE APPRAISAL

Grove says that giving performance reviews is the single-most important form of take-relevant feedback that the supervisors can provide. The focus of the review should be: it is to improve subordinate’s performance.

Well-meaning assessment is often focused on the subpar performers, but as much effort should be put on the stars (shouldn’t we be spending more time trying to improve the performance of our stars?)

When delivering the assessment, one should consider the three L’s: level (with the subordinate), listen, and leave yourself out.

At the end of the assessment, the subordinate can (a) accept it and commits to change, (b) disagrees with the assessment and commits to change, and (c) disagrees with the assessment and refuses to change. Grove says that as long as the subordinate commits to change, that is satisfactory (agreement with the assessment is not necessary; complex issues do not lend themselves to universal agreement).

 

I QUIT!

When a highly-valued subordinate announces that (s)he is quitting: the initial reaction is absolutely crucial. As a human, it is natural to escape this bad news to another meeting and mumble something about sitting down to talk things over, but this is the wrong move. In almost all cases, the employee is quitting because (s)he feels that the person is not important to you. If you say you will discuss this later, you will confirm his/her feelings and the outcome is inevitable. So, drop what you’re doing; sit the person down and ask why the person is quitting.

If your subordinate says that (s)he has already accepted a job someplace else and can’t back out. At that stage, you should remind the employee that (s)he has made two commitments: one to the potential employer who is only vaguely known, and second to you and to the people (s)he has been working with on a daily basis, and that the 2nd commitment is far stronger than the one made to a causal new acquaintance.