High Output Management
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High Output Management is equally appropriate for sales managers and teachers, as well as CEOs and startup founders. Grove covers techniques for creating highly productive teams and demonstrating methods of motivation that lead to peak performance. Throughout, High Output Management is a practical handbook for navigating real-life business scenarios. Plus, it is a powerful management manifesto with the ability to revolutionize the way we work.
Andrew Grove’s Perspective
Andrew Grove was a Hungarian-born American businessman, engineer, author, and a pioneer in the semiconductor industry. He escaped from Communist-controlled Hungary at the age of 20. He moved to the United States, where he finished his education. He was the third employee and eventual third CEO of Intel. He helped transform the company into the world’s largest manufacturer of semiconductors. In 1997, Time magazine chose him as “Man of the Year.”
Chapter One – The Basics of Production
Andrew Grove describes every part of a business as a production process. Crucially, these processes are repeatable. So, you must understand the multiple elements of production. The elements of production are:
- Limiting steps
- Quality Controls
Suppose you can master these elements by creating and improving the machinery within your business. In that case, you will achieve high-quality results in less time and with less waste.
Chapter Two – Managing the Breakfast Factory
The author uses making breakfast as an example of the production process found in businesses. So, he offers advice on how you can start managing your breakfast factory. Grove compared the organization to a “black box.” With a black box, the contents are generally hidden. Similarly, within your organization, you will not be able to see everything happening daily. Despite this, you can cut holes in the black box by using specific indicators. These indicators provide you with a view of what your organization’s future output might look like.
Grove suggests you train your employees to identify objective measures of output. These measures should be linked with both leading and trending indicators. Plus, these indicators must be reviewed daily. As a manager, your goal is not to track your employees’ activity. Measures of activity are often subjective and offer little indication of performance. So, choose to closely monitor and manage the vital few indicators of performance.
Chapter Three – Managerial Leverage
“Here I’d like to introduce the concept of leverage, which is the output generated by a specific type of work activity. An activity with high leverage will generate a high level of output; an activity with low leverage, a low level of output.” – Andrew Grove
Grove explains that managers leverage their time. They spend small amounts of time engaging with three specific activities that maximize production:
- Information Gathering
- Decision Making
- Nudging Others
Each of these activities contribute to a manager’s primary role, which is increasing the output of their organization. So, managers should engage with positive high leverage actions. For example, delegation with supervision and influencing processes through unique skills or knowledge. That said, negative high leverage actions can creep in. Grove explains that delaying decisions and unnecessary interruptions are examples of high impact actions that will negatively influence your organization.
Chapter Four – Meetings
Meetings will often take up a large proportion of all organizations’ time. Though, your employees’ time is highly valuable. So, your meetings should always be purposeful and well-executed according to the meeting’s specific goals. Grove describes different meeting types that must be approached in different ways.
Process-oriented meetings are your regular meetings. These meetings aim to process substantive matters in batches, and there are three sub-types.
A one-on-one meeting should always be between one manager and one staff member. Within these meetings, you should encourage the exchange of information that the staff member may struggle to raise elsewhere. You can use these meetings as an opportunity to uncover problems and notice areas that need immediate review.
Staff meetings should be a time for free discussion between one manager and their team. Within these discussions, everybody should be encouraged to share their different points of view. Based on these discussions, decisions should be made as a collective. Your role as a manager should be to balance your role between leading, observing, questioning, and making decisions. You must avoid lecturing or over-emphasizing your position. The decisions you finalize after a staff meeting must feel like a collective decision rather than one you have pushed others to agree with.
In operational reviews, one organization will present information to another organization and receive questions and feedback. These meetings are often highly expensive. So, managers must keep these meetings on-track and prevent time from being wasted.
In contrast to process-oriented meetings, mission-oriented ones are created with a particular mission in mind. By the end of the meeting, you must have made a decision. These meetings should be very rare. Specifically, Grove recommends these meetings being less than 25% of your meeting time. The meeting chair should be well-prepared and ensure the people vital to reaching a decision attend and are also prepared.
Chapter Five – Decisions
All your decisions should be the output of a process framed by six questions. These six questions are:
- What decision is needed?
- By when?
- Who should be consulted?
- Who decides?
- Who ratifies or vetoes?
- Who needs to be informed?
As a manager, you need to collect the best minds and discussions together to answer these questions. If you can effectively answer these questions, then you will have a clear decision. Plus, when making a decision, you must have everybody on board with the output you strive for. Managers often lack some technical knowledge related to the lower levels. So, decisions should be made at the lowest competency level by someone with technical understanding and experience of several approaches. If you cannot find a single person who offers this, you must build a group of people who collectively offer this.
Chapter Six – Planning
Planning your short-term objectives should be based on your long-term plans. So, you should always be thoughtful when considering long-term plans. Grove describes three factors that are crucial when establishing long-term plans:
- Size your market.
- Know where you are.
- Find a hypothetical path to meet demand.
Your short-term objectives are sub-goals that help move you toward long-term plans. The author recommends setting up cascades of what he calls OKRs (objectives and key results). These cascades should exist across organizations, meaning one manager’s key results make up the objectives of their direct reports. Then, the manager can delegate key results to a staff member as an objective. The author highlights that OKRs can provide clarity. That said, you should be careful that OKRs are not ruined by autopilot in your organization. Instead, prioritize daily use of common sense and personal judgment based on OKR hierarchies.
Chapter Seven – The Breakfast Factory Goes National
If your organization is growing, it is likely it will become more complex. This complexity will increase your leverage, which can potentially lower your growth speed. For example, duplication and redundancy are increasingly likely as your organization starts to grow. This chapter does not offer advice but instead explains the process you will experience if your organization grows quickly. Growth will likely force you to establish multiple marketing teams to get your multiple products out there. Plus, you will have to decide whether you will centralize your functions to increase leverage or keep them decentralized to increase speed.
Chapter Eight – Hybrid Organizations
As just explained, growth will require you to decide whether you want to prioritize centralization or decentralization. That said, Grove recommends you try to establish a hybrid organization. Your hybridized organization should centralize services that deliver benefits to an entire enterprise, like recruiting, finance, and human resources. Then, to prevent over-complication and slowing of speed, you should decentralize the parts of your organization that are independent. By being a hybrid organization, you are gaining the benefits of both functional- and mission-oriented organizations.
Chapter Nine – Dual Reporting
Dual reporting organizations have managers in both mission-oriented and functional teams. The author offers the example of a financial controller reporting to both the division manager and the director of finance. This approach will increase both leverage and speed. Dual reporting was first introduced by NASA as matrix management to considerable success despite the increased complexity.
Chapter Ten – Modes of Control
Managers need to choose which mode of control to use depending on context. Grove explains that a team’s performance is influenced by expectations when complexity, uncertainty, and ambiguity (CUA) are low. Comparatively, your organization’s behavior will be influenced by cultural values when your CUA is high. Your organization’s cultural values should be articulated and showcased by you as the manager.
Chapter Eleven – The Sports Analogy
The sports analogy is that you should motivate your employees by shaping the field based on what drives them. Increasing motivation and training your employees are the most effective activities a manager can engage with. Motivation relies on your ability to understand your employees’ highest-level needs. You must then understand whether these needs increase competence and their likelihood of achieving your preferred outcomes compared to objective benchmarks. Finally, shape the field to create motivation levels that grow team members to the limit of their abilities.
Chapter Twelve – Task-Relevant Maturity
“The old saying has it that when we promote our best salesman and make him a manager, we ruin a good salesman and get a bad manager. But if we think about it, we see we have no choice but to promote the good salesman. Should our worst salesman get the job? When we promote our best, we are saying to our subordinates that performance is what counts.” – Andrew Grove
You should minimize your input if you are managing a skilled individual with task-relevant maturity. Instead, only focus on setting and monitoring high-level objectives for these individuals. Being able to assess task-relevant maturity is a unique talent that significantly impacts an organization’s likelihood of success. As a manager, you have to override your personal preferences in management style and focus on task-relevant maturity.
Chapter Thirteen – Performance Appraisals
Performance reviews can be crucial in improving your organization’s performance. So, use performance reviews to improve performance. That said, you must also be careful when using performance reviews. There are several motivations, emotions, and mistakes associated with them. So, provide clear task-relevant feedback and ensure your team remains motivated.
To effectively assess and offer guidance to employees, you must include what is important and leave out what is unimportant. Your appraisal will be ineffective if you do not follow both of these pieces of guidance.
Chapter Fourteen – Two Difficult Tasks
If a loyal employee leaves because they feel their work is unappreciated, this is the manager’s failure. Generally, employees will bring up leaving at an inconvenient time. For example, when the organization is particularly busy. To prevent this from happening in the first place, you must ensure your employees feel heard and valued. If you neglect them, you also need to respond to them bringing up leaving by addressing their issues. Do not blame the employee and seek to find a solution for them. This might include transferring them to a team within your organization that better meets their needs.
Chapter Fifteen – Compensation as Task-Relevant Feedback
High achievers will generally transition from overachievers to meeting expectations when given greater responsibility. So, management should always be careful that they do not promote someone too quickly and too far. That said, a high performer performing below expectations should not be ejected from the organization. Instead, recycle this employee into a more appropriate role.
Chapter Sixteen – Why Training Is the Boss’ Job
Training is the highest leverage activity a manager can do to increase the output of an organization. If a manager spends 12 hours preparing training for ten team members, that increases their output by 1% on average. So, don’t leave training to outsiders, do it yourself.
“We must recognize that no amount of formal planning can anticipate changes such as globalization and the information revolution we’ve referred to above. Does that mean that you shouldn’t plan? Not at all. You need to plan the way a fire department plans. It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event.” – Andrew Grove
The key to success within any organization is effective management. This book inspired Mark Zuckerberg’s managing style but is applicable to managers of organizations of any size. Grove recommends a hybrid approach to management that balances leverage and speed based on the relevant part of your organization. Plus, he suggests respecting your employees’ opinions, promoting them at the right time to the right level, and minimizing the time they spend in meetings.
We rate this book 4.7/5.
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