• Author: Andrew S. Grove
  • Full Title: High Output Management
  • Tags: #Inbox #books

Highlights

  • We did all this because under this strong attack, we learned that we must lead with our strength. Being second best in a tough environment is just not good enough. (Location 93)
  • Again, as a manager in such a workplace, you need to develop a higher tolerance for disorder. (Location 157)
  • Now, you should still not accept disorder. In fact, you should do your (Location 158)
  • best to drive what’s around you to order. (Location 158)
  • You need to try to do the impossible, to anticipate the unexpected. And when the unexpected happens, you should double your efforts to make order from the disorder it creates in your life. The motto I’m advocating is “Let chaos reign, then rein in chaos.” (Location 163)
  • This book contains three basic ideas. (Location 170)
  • The first is an output-oriented approach to management. That (Location 170)
  • 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. (Location 181)
  • The question then becomes, what can managers do to increase the output of their teams? (Location 184)
  • High managerial productivity, I argue, depends largely on choosing to perform tasks that possess high leverage. (Location 187)
  • A team will perform well only if peak performance is elicited from the individuals in it. This is the third idea of the book. (Location 188)
  • 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. (Location 193)
  • As a general rule, you have to accept that no matter where you work, you are not an employee—you are in a business with one employee: yourself. (Location 216)
  • In principle, every hour of your day should be spent increasing the output or the value of the output of the people whom you’re responsible for. (Location 234)
  • Are you plugged into what’s happening around you? And that includes what’s happening inside your company as well as inside your industry as a whole. (Location 236)
  • 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? (Location 238)
  • From my own experience at Intel, I strongly believe that applying the methods of production, exercising managerial leverage, and eliciting an athlete’s desire for peak performance can help nearly everyone—lawyers, teachers, engineers, supervisors, even book editors; in short, middle managers of all kinds—to work more productively. (Location 245)
  • A manager’s output = the output of his organization + the output of the neighboring organizations under his influence. (Location 288)
  • Finally, he reiterates his thesis that there are only two ways in which a manager can impact an employee’s output: motivation and training. If you are not training, then you are basically neglecting half the job. (Location 332)
  • 1 The Basics of Production: Delivering a Breakfast (Location 370)
  • The task here encompasses the basic requirements of production. These are to build and deliver products in response to the demands of the customer at a scheduled delivery time, at an acceptable quality level, and at the lowest possible cost. Production’s charter cannot be to deliver whatever the customer wants whenever he wants it, for this would require an infinite production capacity or the equivalent—very large, ready-to-deliver inventories. (Location 376)
  • a manufacturer should accept the responsibility of delivering a product at the time committed to—in this case, by implication, about five to ten minutes after the customer arrives at our breakfast establishment. (Location 383)
  • The key idea is that we construct our production flow by starting with the longest (or most difficult, or most sensitive, or most expensive) step and work our way back. (Location 396)
  • Because each alternative costs money, your task is to find the most cost-effective way to deploy your resources—the key to optimizing all types of productive work. Bear in mind that in this and in other such situations there is a right answer, the one that can give you the best delivery time and product quality at the lowest possible cost. To find that right answer, you must develop a clear understanding of the trade-offs between the various factors—manpower, capacity, and inventory—and you must reduce the understanding to a quantifiable set of relationships. (Location 464)
  • The point is that whenever possible, you should choose in-process tests over those that destroy product. (Location 489)
  • Besides the cost of the raw material and the cost of money, you should also try to gauge the opportunity at risk: what would it cost if you had to shut your egg machine down for a day? How many customers would you lose? How much would it cost to lure them back? Such questions define the opportunity at risk. (Location 496)
  • 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. (Location 505)
  • 2 Managing the Breakfast Factory (Location 530)
  • Just to get a fix on your output, you need a number of indicators; to get efficiency and high output, you need even more of them. (Location 536)
  • to know your sales forecast (Location 542)
  • the variance between your plan and the actual delivery of breakfasts for the preceding day. (Location 544)
  • Your next key indicator is raw material inventory. (Location 545)
  • Another important piece of information is the condition of your equipment. (Location 547)
  • You also must get a fix on your manpower. If two waiters are out sick, you will have to come up with something if you are still going to meet the demand forecasted. (Location 548)
  • Finally, you want to have some kind of quality indicator. (Location 551)
  • 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. (Location 560)
  • But a genuinely effective indicator will cover the output of the work unit and not simply the activity involved. (Location 568)
  • The second criterion for a good indicator is that what you measure should be a physical, countable thing. (Location 570)
  • Because those listed here are all quantity or output indicators, their paired counterparts should stress the quality of work. (Location 572)
  • Leading indicators give you one way to look inside the black box by showing you in advance what the future might look like. And because they give you time to take corrective action, they make it possible for you to avoid problems. (Location 610)
  • Of course, for leading indicators to do you any good, you must believe in their validity. While this may seem obvious, in practice, confidence is not as easy to come by as it sounds. (Location 612)
  • But unless you are prepared to act on what your leading indicators are telling you, all you will get from monitoring them is anxiety. Thus, the indicators you choose should be credible, so that you will, in fact, act whenever they flash warning signals. (Location 614)
  • If you do not systematically collect and maintain an archive of indicators, you will have to do an awful lot of quick research to get the information you need, and by the time you have it, the problem is likely to have gotten worse. (Location 655)
  • Controlling Future Output (Location 657)
  • In short, you will have to build to forecast, which is a contemplation of future orders. To do this, the manufacturer sets up his activities around a reasoned speculation that orders will materialize for specific products within a certain time. (Location 665)
  • The ideal is rarely found in the real world. More often, customer orders don’t develop in time or the customer changes his mind. (Location 690)
  • Because neither the sales flow nor the manufacturing flow is completely predictable, we should deliberately build a reasonable amount of “slack” into the system. (Location 691)
  • Ideally, inventory should be kept at the lowest-value stage, as we’ve learned before, like raw eggs kept at the breakfast factory. Also, the lower the value, the more production flexibility we obtain for a given inventory cost. (Location 694)
  • But if we have carefully chosen indicators that characterize an administrative unit and watch them closely, we are ready to apply the methods of factory control to administrative work. (Location 703)
  • Without rigor, the staffing of administrative units would always be left at its highest level and, given Parkinson’s famous law, people would find ways to let whatever they’re doing fill the time available for its completion. (Location 707)
  • Later, when we examine managerial productivity, we’ll see that when a manager digs deeply into a specific activity under his jurisdiction, he’s applying the principle of variable inspection. If the manager examined everything his various subordinates did, he would be meddling, which for the most part would be a waste of his time. Even worse, his subordinates would become accustomed to not being responsible for their own work, knowing full well that their supervisor will check everything out closely. (Location 774)
  • The productivity of any function occurring within it is the output divided by the labor required to generate the output. (Location 780)
  • 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. (Location 794)
  • something else can also increase the productivity of the black box. This is called work simplification. (Location 803)
  • To get leverage this way, you first need to create a flow chart of the production process as it exists. Every single step must be shown on it; no step should be omitted in order to pretty things up on paper. Second, count the number of steps in the flow chart so that you know how many you started with. Third, set a rough target for reduction of the number of steps. In the first round of work simplification, our experience shows that you can reasonably expect a 30 to 50 percent reduction. (Location 804)
  • As we will see, in the work of the soft professions, it becomes very difficult to distinguish between output and activity. (Location 816)
  • And as noted, stressing output is the key to improving productivity, while looking to increase activity can result in just the opposite. (Location 817)
  • II Management Is a Team Game (Location 819)
  • 3 Managerial Leverage (Location 822)
  • A manager’s output = The output of his organization + The output of the neighboring organizations under his influence (Location 836)
  • Why? Because business and education and even surgery represent work done by teams. (Location 838)
  • If the manager is a knowledge specialist, a know-how manager, his potential for influencing “neighboring” organizations is enormous. (Location 841)
  • Thus, the definition of “manager” should be broadened: individual contributors who gather and disseminate know-how and information should also be seen as middle managers, because they exert great power within the organization. (Location 846)
  • 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. (Location 848)
  • Let’s refer again to our black box. If the machinery within an organization can be compared to a series of gears, we can visualize how a middle manager affects output. In times of crisis, he provides power to the organization. When things aren’t working as smoothly as they should, he applies a bit of oil. And, of course, he provides intelligence to the machine to direct its purpose. (Location 868)
  • I was a role model not only in communicating the importance we place on training, but also, by my handling of questions and comments, in representing, in living form, some of the values of the company. (Location 919)
  • My day always ends when I’m tired and ready to go home, not when I’m done. I am never done. Like a housewife’s, a manager’s work is never done. There is always more to be done, more that should be done, always more than can be done. (Location 937)
  • A manager must keep many balls in the air at the same time and shift his energy and attention to activities that will most increase the output of his organization. In other words, he should move to the point where his leverage will be the greatest. (Location 939)
  • So why are written reports necessary at all? They obviously can’t provide timely information. 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. (Location 950)
  • But reports also have another totally different function. As they are formulated and written, the author (Location 952)
  • 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. (Location 952)
  • 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. (Location 955)
  • information-gathering is the basis of all other managerial work, which is why I choose to spend so much of my day doing (Location 995)
  • In reality, for every unambiguous decision we make, we probably nudge things a dozen times. (Location 1002)
  • Finally, something more subtle pervades the day of all managers. While we move about, doing what we regard as our jobs, we are role models for people in our organization—our subordinates, our peers, and even our supervisors. (Location 1003)
  • Values and behavioral norms are simply not transmitted easily by talk or memo, but are conveyed very effectively by doing and doing visibly. (Location 1006)
  • Some of us feel comfortable dealing with large groups and talking about our feelings and values openly in that fashion. Others prefer working one-on-one with people in a quieter, more intellectual environment. These and other styles of leadership will work, but only if we recognize and consciously stress the need for us to be role models for people in our organization. (Location 1008)
  • A great deal of a manager’s work has to do with allocating resources: manpower, money, and capital. But the single most important resource that we allocate from one day to the next is our own time. (Location 1015)
  • How you handle your own time is, in my view, the single most important aspect of being a role model and leader. (Location 1018)
  • 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. (Location 1021)
  • Getting together with others is not, of course, an activity—it is a medium. (Location 1023)
  • Leverage of Managerial Activity (Location 1026)
  • Leverage is the measure of the output generated by any given managerial activity. (Location 1028)
  • Clearly the key to high output means being sensitive to the leverage of what you do during the day. (Location 1038)
  • Managerial productivity—that is, the output of a manager per unit of time worked—can be increased in three ways: (Location 1039)
  • 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. (Location 1040)
  • HIGH-LEVERAGE ACTIVITIES (Location 1044)
  • When a large group’s work is affected by an individual supplying a unique, key piece of knowledge or information. (Location 1048)
  • Another example of leverage that depends on timely action is what you do when you learn that a valued subordinate has decided to quit. In such a case, you must direct yourself to the situation immediately if you want to change the person’s mind. If you put it off, all your chances are lost. Thus to maximize the leverage of his activities, a manager must keep timeliness, which is often critical, firmly in mind. (Location 1057)
  • Some managerial activities can reduce the output of an organization. I mean something very simple. Suppose I am a key participant at a meeting and I arrive unprepared. Not only do I waste the time of the people attending the meeting because of my lack of preparation—a (Location 1060)
  • Each time a manager imparts his knowledge, skills, or values to a group, his leverage is high, as members of the group will carry what they learn to many others. (Location 1064)
  • 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. (Location 1075)
  • the lack of a decision is the same as a negative decision; no green light is a red light, and work can stop for a whole organization. (Location 1085)
  • Both the depressed and the waffling manager can have virtually unlimited negative leverage. (Location 1086)
  • the negative leverage produced by depression and waffling is very hard to counter because their impact on an organization is both so pervasive and so elusive. (Location 1087)
  • Managerial meddling is also an example of negative leverage. This occurs when a supervisor uses his superior knowledge and experience of a subordinate’s responsibilities to assume command of a situation rather than letting the subordinate work things through himself. (Location 1089)
  • In general, meddling stems from a supervisor exploiting too much superior work knowledge (real or imagined). (Location 1092)
  • The third kind of managerial activity with high leverage is exercised by a person with unique skills and knowledge. (Location 1096)
  • The art of management lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them. (Location 1105)
  • DELEGATION AS LEVERAGE (Location 1112)
  • Unless both parties share the relevant common base, the delegatee can become an effective proxy only with specific instructions. As in meddling, where specific activities are prescribed in detail, this produces low managerial leverage. (Location 1114)
    • Note: Proxy vs delegate
  • delegation without follow-through is abdication. (Location 1123)
  • Even after you delegate it, you are still responsible for its accomplishment, and monitoring the delegated task is the only practical way for you to ensure a result. (Location 1123)
  • Monitoring is not meddling, but means checking to make sure an activity is proceeding in line with expectations. (Location 1124)
  • Because it is easier to monitor something with which you are familiar, if you have a choice you should delegate those activities you know best. (Location 1125)
  • But recall the pencil experiment and understand before the fact that this will very likely go against your emotional grain. (Location 1126)
  • We should apply quality assurance principles and monitor at the lowest-added-value stage of the process. For example, review rough drafts of reports that you have delegated; don’t wait until your subordinates have spent time polishing them into final form (Location 1133)
  • How often you monitor should not be based on what you believe your subordinate can do in general, but on his experience with a specific task and his prior performance with it—his task-relevant maturity, (Location 1138)
  • the manager should only go into details randomly, (Location 1141)
  • Making certain types of decisions is something managers frequently delegate to subordinates. How is this best done? By monitoring their decision-making process. (Location 1143)
  • And to monitor how good his thinking is, we ask him quite specific questions about his request during a review meeting. If he answers them convincingly, we’ll approve what he wants. This technique allows us to find out how good the thinking is without having to go through it ourselves. (Location 1146)
  • Increasing Managerial Activity Rate: Speeding Up the Line (Location 1148)
  • if we determine what is immovable and manipulate the more yielding activities around it, we can work more efficiently. (Location 1159)
  • A second production principle we can apply to managerial work is batching similar tasks. (Location 1160)
  • From my experience a large portion of managerial work can be forecasted. (Location 1171)
  • Accordingly, forecasting those things you can and setting yourself up to do them is only common sense and an important way to minimize the feeling and the reality of fragmentation experienced in managerial work. (Location 1172)
  • What is the medium of a manager’s forecast? It is something very simple: his calendar. Most people use their calendars as a repository of “orders” that come in. Someone throws an order to a manager for his time, and it automatically shows up on his calendar. This is mindless passivity. To gain better control of his time, the manager should use his calendar as a “production” planning tool, taking a firm initiative to schedule work that is not time-critical between those “limiting steps” in the day. (Location 1174)
  • 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. (Location 1184)
  • It is important to say “no” earlier rather than later because we’ve learned that to wait until something reaches a higher value stage and then abort due to lack of capacity means losing more money and time. (Location 1188)
  • The next production principle you can apply is to allow slack—a bit of looseness in your scheduling. (Location 1192)
  • Another production principle is very nearly the opposite. A manager should carry a raw material inventory in terms of projects. (Location 1197)
  • Instead this inventory should consist of things you need to do but don’t need to finish right away—discretionary projects, the kind the manager can work on to increase his group’s productivity over the long term. Without such an inventory of projects, a manager will most probably use his free time meddling in his subordinates’ work. (Location 1199)
  • even as we try to standardize what we do, we should continue to think critically about what we do and the approaches we use. (Location 1206)
  • Built-In Leverage: How Many Subordinates Should You Have… (Location 1207)
  • 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. (Location 1209)
  • an hour a week does not provide enough opportunity for monitoring.) (Location 1212)
  • So as a rule of thumb, if a manager is both a hierarchical supervisor and a supplier of know-how, he should try to have a total of six to eight subordinates or their equivalent. (Location 1216)
  • Interruptions—The Plague of Managerial Work (Location 1227)
  • we should always be looking for sources of future high-priority trouble by cutting windows into the black box of our organization. (Location 1233)
  • Recognizing you’ve got a time bomb on your hands means you can address a problem when you want to, not after the bomb has gone off. (Location 1234)
  • a manager can reduce time spent handling interruptions using standard responses. (Location 1251)
  • many interruptions that come from your subordinates can be accumulated and handled not randomly, but at staff and at one-on-one meetings, (Location 1253)
  • instead of going into hiding, a manager can hang a sign on his door that says, “I am doing individual work. Please don’t interrupt me unless it really can’t wait until 2:00.” (Location 1261)
  • understand that interrupters have legitimate problems that need to be handled. (Location 1263)
  • impose a pattern on the way a manager copes with problems. To make something regular that was once irregular is a fundamental production principle, (Location 1266)
  • 4 Meetings—The Medium of Managerial Work (Location 1269)
  • Peter Drucker once said that spending more than 25 percent of his time in meetings is a sign of a manager’s malorganization, and William H. Whyte, Jr., in his book The Organization Man, described meetings as “non-contributory labor” that managers must endure. (Location 1272)
  • 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. (Location 1277)
  • In the first kind of meeting, called a process-oriented meeting, knowledge is shared and information is exchanged. Such meetings take place on a regularly scheduled basis. (Location 1279)
  • The purpose of the second kind of meeting is to solve a specific problem. Meetings of this sort, called mission-oriented, frequently produce a decision. They are ad hoc affairs, not scheduled long in advance, because they usually can’t be. (Location 1281)
  • Process-Oriented Meetings (Location 1283)
  • To make the most of this kind of meeting, we should aim to infuse it with regularity. In other words, the people attending should know how the meeting is run, what kinds of substantive matters are discussed, and what is to be accomplished. (Location 1283)
  • At Intel we use three kinds of process-oriented meetings: the one-on-one, the staff meeting, and the operation review. (Location 1289)
  • ONE-ON-ONES (Location 1290)
  • Its main purpose is mutual teaching and exchange of information. (Location 1291)
  • Accordingly, you should have one-on-ones frequently (for example, once a week) with a subordinate who is inexperienced in a specific situation and less frequently (perhaps once every few weeks) with an experienced veteran. (Location 1309)
  • Another consideration here is how quickly things change in a job area. (Location 1311)
  • not. I feel that a one-on-one should last an hour at a minimum. Anything less, in my experience, tends to make the subordinate confine himself to simple things that can be handled quickly. (Location 1316)
  • Moreover, with an outline, the supervisor knows at the outset what is to be covered and can therefore help to set the pace of the meeting according to the “meatiness” of the items on the agenda. (Location 1325)
  • What should be covered in a one-on-one? (Location 1328)
  • We can start with performance figures, indicators used by the subordinate, such as incoming order rates, production output, or project status. Emphasis should be on indicators that signal trouble. (Location 1328)
  • current hiring problems, people problems in general, organizational problems and future plans, and—very, very important—potential problems. (Location 1330)
  • Even when a problem isn’t tangible, even if it’s only an intuition that something’s wrong, a subordinate owes it to his supervisor to tell him, because it triggers a look into the organizational black box. (Location 1331)
  • What is the role of the supervisor in a one-on-one? He should facilitate the subordinate’s expression of what’s going on and what’s bothering him. The supervisor is there to learn and to coach. Peter Drucker sums up the supervisor’s job here very nicely: “The good time users among managers do not talk to their subordinates about their problems but they know how to make the subordinates talk about theirs.” (Location 1334)
  • “Ask one more question!” (Location 1338)
  • When the supervisor thinks the subordinate has said all he wants to about a subject, he should ask another question. He should try to keep the flow of thoughts coming by prompting the subordinate with queries until both feel satisfied that they have gotten to the bottom of a problem. (Location 1338)
  • What is the leverage of the one-on-one? (Location 1362)
  • minutes of your time can enhance the quality of your subordinate’s work for two weeks, or for some eighty-plus hours, and also upgrade your understanding of what he’s doing. (Location 1363)
  • At the same time, the subordinate teaches the supervisor, and what is learned is absolutely essential if the supervisor is to make good decisions. (Location 1367)
  • substantial leverage: the Intel sales manager affected all the other managers who reported to me. (Location 1376)
  • To digress a bit, I also think that one-on-ones at home can help family life. (Location 1377)
  • STAFF MEETINGS (Location 1382)
  • What should be discussed at a staff meeting? Anything that affects more than two of the people present. (Location 1395)
  • What is the role of the supervisor in the staff meeting—a leader, observer, expediter, questioner, decision-maker? The answer, of course, is all of them. (Location 1402)
  • A supervisor should never use staff meetings to pontificate, which is the surest way to undermine free discussion and hence the meeting’s basic purpose. The (Location 1403)
  • moderator and facilitator, and controller of its pace and thrust. (Location 1405)
  • OPERATION REVIEWS (Location 1415)
  • Mission-Oriented Meetings (Location 1449)
  • Ideally, a manager should never have to call an ad hoc, mission-oriented meeting, because if all runs smoothly, everything is taken care of in regularly scheduled, process-oriented meetings. In practice, however, if all goes well, routine meetings will take care of maybe 80 percent of the problems and issues; the remaining 20 percent will still have to be dealt with in mission-oriented meetings. (Location 1505)
  • 5 Decisions, Decisions (Location 1510)
  • Ideal Model (Location 1532)
  • an ideal model of decision-making in a know-how business. The first stage should be free discussion, in which all points of view and all aspects of an issue are openly welcomed and debated. The (Location 1534)
  • The next stage is reaching a clear decision. (Location 1546)
  • Again, the greater the disagreement about the issue, the more important becomes the word clear. (Location 1547)
  • This does not necessarily mean agreement: so long as the participants commit to back the decision, that is a satisfactory outcome. (Location 1551)
  • an organization does not live by its members agreeing with one another at all times about everything. It lives instead by people committing to support the decisions and the moves of the business. (Location 1554)
  • 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. (Location 1568)
  • The Peer-Group Syndrome (Location 1579)
  • anybody who makes a business decision also possesses emotions such as pride, ambition, fear, and insecurity. (Location 1580)
  • 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. (Location 1592)
  • in the end self-confidence mostly comes from a gut-level realization that nobody has ever died from making a wrong business decision, or taking inappropriate action, or being overruled. And everyone in your operation should be made to understand this. (Location 1605)
    • Note: love this
  • if you feel that you have already heard everything, that all sides of the issue have been raised, it is time to push for a consensus—and failing that, to step in and make a decision. (Location 1637)
  • moving on to make the decision at the right time is crucial. (Location 1640)
  • 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? (Location 1643)
  • Who will ratify or veto the decision? (Location 1669)
  • People invest a great deal of energy and emotion in coming up with a decision. (Location 1682)
  • This, of course, will frustrate and demoralize the people who may have been working on it for a long time. (Location 1684)
  • 6 Planning: Today’s Actions for Tomorrow’s Output (Location 1700)
  • 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? (Location 1715)
  • STEP 1—ENVIRONMENTAL DEMAND (Location 1720)
  • look at your own group within an organization as if it were a stand-alone company, you see that your environment is made up of other such groups that directly influence what you do. (Location 1721)
  • You need to focus on the difference between what your environment demands from you now and what you expect it to demand from you a year from now. (Location 1732)
  • Such a difference analysis is crucial, because if your current activities satisfy the current demands placed on your business, anything more and new should be undertaken to match this difference. How you react to this difference is in fact the key outcome of the planning process. (Location 1733)
  • STEP 2—PRESENT STATUS (Location 1739)
  • You do this by listing your present capabilities and the projects you have in the works. (Location 1740)
  • As you account for them, be sure to use the same terms, or “currency,” in which you stated demand. For instance, if your demand is listed in terms of completed product designs, your work-in-process should be listed as partially completed product designs. (Location 1741)
  • STEP 3—WHAT TO DO TO CLOSE THE GAP (Location 1747)
  • The first question is, What do you need to do to close the gap? The second is, What can you do to close the gap? Consider each question separately, and then decide what you actually will do, evaluating what effect your actions will have on narrowing the gap, and when. The set of actions you decide upon is your strategy. (Location 1749)
  • Much confusion exists between what is strategy and what is tactics. Although the distinction is rarely of practical significance, here’s one that might be useful. As you formulate in words what you plan to do, the most abstract and general summary of those actions meaningful to you is your strategy. What you’ll do to implement the strategy is your tactics. (Location 1751)
  • But today’s gap represents a failure of planning sometime in the past. (Location 1796)
  • remember that as you plan you must answer the question: What do I have to do today to solve—or better, avoid—tomorrow’s problem? (Location 1798)
  • the true output of the planning process is the set of tasks it causes to be implemented. (Location 1799)
  • People who plan have to have the guts, honesty, and discipline to drop projects as well as to initiate them, to shake their heads “no” as well as to smile “yes.” (Location 1815)
  • Management by Objectives: The Planning Process Applied to Daily Work (Location 1817)
  • A successful MBO system needs only to answer two questions: 1.  Where do I want to go? (The answer provides the objective.) 2.  How will I pace myself to see if I am getting there? (The answer gives us milestones, or key results.) (Location 1822)
  • In MBO terms, the Queen defined her own objective (increase Spain’s wealth); Columbus and the Queen then agreed upon his objective (find a new route to the Orient). (Location 1847)
  • Columbus then went on to formulate the key results by which he would pace himself, which included obtaining several ships, training crews, conducting a shakedown cruise, setting sail, and so forth, with each possessing a specific deadline. (Location 1848)
  • And we see a nesting hierarchy of objectives: if the subordinate’s objectives are met, the supervisor’s will be as well. (Location 1852)
  • The MBO system is meant to pace a person—to put a stopwatch in his own hand so he can gauge his own performance. (Location 1857)
  • III Team of Teams (Location 1877)
  • 7 The Breakfast Factory Goes National (Location 1880)
  • 8 Hybrid Organizations (Location 1931)
  • Though most are mixed, organizations can come in two extreme forms: in totally mission-oriented form or in totally functional form. (Location 1936)
  • In the mission-oriented organization (a), which is completely decentralized, each individual business unit pursues what it does—its mission—with little tie-in to other units. (Location 1938)
  • At the other extreme is the totally functional organization (b), which is completely centralized. (Location 1945)
  • Our hybrid nature comes from the fact that the form of the overall corporate organization results from a mix of the business divisions, which are mission-oriented, and the functional groups. (Location 1955)
  • 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. All other considerations favor the functional-type of organization. But the business of any business is to respond to the demands and needs of its environment, and the need to be responsive is so important that it always leads to much of any organization being grouped in mission-oriented units. (Location 1985)
  • Here I would like to propose Grove’s Law: All large organizations with a common business purpose end up in a hybrid organizational form. (Location 2006)
  • 9 Dual Reporting (Location 2048)
  • An unintended consequence of the moon shot was the development of a new organizational approach: matrix management. (Location 2050)
  • the core idea was that a project manager, somebody outside any of the contractors involved, could wield as much influence on the work of units within a given company as could the company management itself. (Location 2055)
  • The first would specify how the job ought to be done, (Location 2069)
  • and the second would monitor how it was being performed day by day. (Location 2070)
  • the hybrid organizational form is the inevitable consequence of enjoying the benefits of being part of a large organization—a (Location 2154)
  • 10 Modes of Control (Location 2206)
  • Similarly, our behavior in a work environment can be controlled by three invisible and pervasive means. These are: •  free-market forces •  contractual obligations •  cultural values (Location 2220)
  • Free-Market Forces (Location 2224)
  • The free market can easily establish a price for something as simple as tires. But for much else that changes hands in a work or business environment, value is hard to establish. (Location 2230)
  • Contractual Obligations (Location 2232)
  • Cultural Values (Location 2254)
  • words come into play—words like trust—because you are surrendering to the group your ability to protect yourself. And for this to happen, you must believe that you all share a common set of values, a common set of objectives, and a common set of methods. These, in turn, can only be developed by a great deal of common, shared experience. (Location 2258)
  • As for cultural values, management has to develop and nurture the common set of values, objectives, and methods essential for (Location 2264)
  • the existence of trust. How do we do that? One way is by articulation, by spelling out these values, objectives, and methods. The other, even more important, way is by example. (Location 2264)
  • The Most Appropriate Mode of Control (Location 2267)
  • Accordingly, given a certain set of conditions, there is always a most appropriate mode of control, which we as managers should find and use. (Location 2270)
  • And finally, when the CUA factor is high and individual motivation is based on self-interest, no mode of control will work well. This situation, like every man for himself on a sinking ship, can only produce chaos. (Location 2288)
  • If he does well, he will begin to feel more at home, worry less about himself, and start to care more about his team. He learns that if he is on a boat and wants to get ahead, it is better for him to help row than to run to the bow. (Location 2291)
  • IV The Players (Location 2332)
  • 11 The Sports Analogy (Location 2335)
  • The means a manager has at his disposal to elicit peak individual performance are what the rest of this book is about. (Location 2340)
  • 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. (Location 2341)
  • 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. (Location 2346)
  • put, if we are to create and maintain a high degree of motivation, we must keep some needs unsatisfied at all times. (Location 2368)
  • 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. (Location 2409)
  • Esteem/Recognition Needs (Location 2411)
  • Self-Actualization Needs (Location 2422)
  • self-actualization stems from a personal realization that “what I can be, I must be.” (Location 2423)
  • self-actualization means: the need to achieve one’s utter personal best in a chosen field of endeavor. (Location 2424)
  • Once someone’s source of motivation is self-actualization, his drive to perform has no limit. (Location 2425)
  • Two inner forces can drive a person to use all of his capabilities. He can be competence-driven or achievement-driven. (Location 2427)
  • The third group, termed achievers, had to test the limits of what they could do, and with no prompting demonstrated the point of the experiment: namely, that some people simply must test themselves. (Location 2439)
  • The point is that both competence- and achievement-oriented people spontaneously try to test the outer limits of their abilities. (Location 2442)
  • In an MBO system, for example, objectives should be set at a point high enough so that even if the individual (or organization) pushes himself hard, he will still only have a fifty-fifty chance of making them. (Location 2444)
  • Output will tend to be greater when everybody strives for a level of achievement beyond his immediate grasp, even though trying means failure half the time. Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates. (Location 2445)
  • if we want to cultivate achievement-driven motivation, we need to create an environment that values and emphasizes output. (Location 2447)
  • 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. Money in the physiological- and security-driven modes only motivates until the need is satisfied, but money as a measure of achievement will motivate without limit. (Location 2461)
  • A simple test can be used to determine where someone 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 motivated by esteem/recognition or self-actualization, because in this case money is clearly a measure. (Location 2466)
  • 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 performance. (Location 2469)
  • Does fear have a place in the esteem or self-actualized modes? It does, but here it becomes the fear of failure. (Location 2483)
  • Thus, our role as managers is, first, to train the individuals (to move them along the horizontal axis shown in the illustration on this page), and, second, to bring them to the point where self-actualization motivates them, (Location 2493)
  • Why does a person who is not terribly interested in his work at the office stretch himself to the limit running a marathon? What makes him run? He is trying to beat other people or the stopwatch. (Location 2496)
  • the best way to get that spirit into the workplace is to establish some rules of the game and ways for employees to measure themselves. (Location 2509)
  • 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. (Location 2525)
  • 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. (Location 2526)
  • 12 Task-Relevant Maturity (Location 2530)
  • inevitable conclusion is that high output is associated with particular combinations of certain managers and certain groups of workers. This also suggests that a given managerial approach is not equally effective under all conditions. (Location 2546)
  • Some researchers in this field argue that there is a fundamental variable that tells you what the best management style is in a particular situation. That variable is the task-relevant maturity (TRM) of the subordinates, which is a combination of the degree of their achievement orientation and readiness to take responsibility, as well as their education, training, and experience. (Location 2548)
  • we confused the manager’s general competence and maturity with his task-relevant maturity. (Location 2558)
  • The conclusion is that varying management styles are needed as task-relevant maturity varies. (Location 2562)
  • 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. (Location 2563)
  • 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. (Location 2564)
  • 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. (Location 2566)
  • the manager should always monitor a subordinate’s work closely enough to avoid surprises. (Location 2568)
  • TASK-RELEVANT MATURITY OF SUBORDINATE CHARACTERISTICS OF THE EFFECTIVE MANAGEMENT STYLE low Structured; task-oriented; tell “what,” “when,” “how” medium Individual-oriented; emphasis on two-way communication, support, mutual reasoning high Involvement by manager minimal: establishing objectives and monitoring (Location 2583)
  • The responsibility for teaching the subordinate must be assumed by his supervisor, and not paid for by the customers of his organization, internal or external. (Location 2604)
  • We managers must learn to fight such prejudices and regard any management mode not as either good or bad but rather as effective or not effective, given the TRM of our subordinates within a specific working environment. (Location 2623)
  • It’s Not Easy to Be a Good Manager (Location 2626)
  • even if a manager knows what the TRM is, his personal preferences tend to override the logical and proper choice of management style. (Location 2627)
  • managers think of themselves as perfect delegators. But also, sometimes a manager throws out suggestions to a subordinate who receives them as marching orders—furthering the difference in perceptions. (Location 2635)
  • 13 Performance Appraisal: Manager as Judge and Jury (Location 2653)
  • giving performance reviews is a very complicated and difficult business and that we, managers, don’t do an especially good job at it. (Location 2672)
  • 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. (Location 2675)
  • But what is its fundamental purpose? (Location 2678)
  • it is to improve the subordinate’s performance. (Location 2679)
  • 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). (Location 2680)
  • Assessing Performance (Location 2698)
  • To make an assessment less difficult, a supervisor should clarify in his own mind in advance what it is that he expects from a subordinate and then attempt to judge whether he performed to expectations. (Location 2704)
  • 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. (Location 2705)
  • we can characterize performance by output measures and internal measures. (Location 2707)
  • Finally, as you review a manager, should you be judging his performance or the performance of the group under his supervision? You should be doing both. (Location 2741)
  • Ultimately what you are after is the performance of the group, but the manager is there to add value in some way. (Location 2742)
  • At all times you should force yourself to assess performance, not potential. (Location 2746)
  • 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. (Location 2755)
  • When we promote our best, we are saying to our subordinates that performance is what counts. (Location 2758)
  • No matter how well a subordinate has done his job, we can always find ways to suggest improvement, something about which a manager need not feel embarrassed. (Location 2760)
  • Delivering the Assessment (Location 2762)
  • There are three L’s to keep in mind when delivering a review: Level, listen, and leave yourself out. (Location 2763)
  • How then can you be sure you are being truly heard? (Location 2774)
  • What you must do is employ all of your sensory capabilities. To make sure you’re being heard, you should watch the person you are talking to. Remember, the more complex the issue, the more prone communication is to being lost. (Location 2775)
  • If his responses—verbal and nonverbal—do not completely assure you that what you’ve said has gotten through, it is your responsibility to keep at it until you are satisfied that you have been heard and understood. (Location 2777)
  • This is what I mean by listening: employing your entire arsenal of sensory capabilities to make certain your points are being properly interpreted by your subordinate’s brain. All the intelligence and good faith used to prepare your review will produce nothing unless this occurs. Your tool, to say it again, is total listening. (Location 2779)
  • How can you target a few key areas? First, consider as many aspects of your subordinate’s performance as possible. (Location 2802)
  • As you consider your subordinate’s performance, write everything down on the paper. (Location 2804)
  • Once your list of messages has been compiled, ask yourself if your subordinate will be able to remember all of the messages you have chosen to deliver. If not, you must delete the less important ones. Remember, what you couldn’t include in this review, you can probably take up in the next one. (Location 2811)
  • Preferably, a review should not contain any surprises, but if you uncover one, swallow hard and bring it up. (Location 2830)
  • The Blast With a little soul-searching, you may come to realize that you have a major performance problem on your hands. (Location 2834)
  • A poor performer has a strong tendency to ignore his problem. Here a manager needs facts and examples so that he can demonstrate its reality. (Location 2839)
  • The stages of problem-solving: The transition from blaming others to assuming responsibility is an emotional step. (Location 2851)
  • In the end, there are three possible outcomes. One, the subordinate accepts your assessment and your recommended cure, and commits himself to take it. Two, he may disagree completely with your assessment but still accepts your cure. Three, the subordinate disagrees with your assessment and does not commit himself to do what you’ve recommended. As the supervisor, which of these three should you consider acceptable resolutions to the problem? (Location 2857)
  • any outcome that includes a commitment to action is acceptable. (Location 2860)
  • If it becomes clear that you are not going to get your subordinate past the blame-others stage, you will have to assume the formal role of the supervisor, endowed with position power, and say, “This is what I, as your boss, am instructing you to do. I understand that you do not see it my way. 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. (Location 2872)
  • Reviewing the Ace (Location 2885)
  • I think we have our priorities reversed. Shouldn’t we spend more time trying to improve the performance of our stars? (Location 2895)
  • 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. (Location 2896)
  • Don’t hesitate to use the 20/20 hindsight provided by the review to show anyone, even an ace, how he might have done better. (Location 2900)
  • 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. (Location 2923)
  • Preparing and delivering a performance assessment is one of the hardest tasks you’ll have to perform as a manager. (Location 2926)
  • 14 Two Difficult Tasks (Location 2938)
  • There are two other emotionally charged tasks a manager must perform. They are interviewing a potential employee and trying to talk a valued employee out of quitting. (Location 2939)
  • The purpose of the interview is to: •  select a good performer •  educate him as to who you and the company are •  determine if a mutual match exists •  sell him on the job (Location 2941)
  • When you ask a question, a garrulous or nervous person might go on and on with his answer long after you’ve lost interest. Most of us will sit and listen until the end out of courtesy. Instead, you should interrupt and stop him, because if you don’t, you are wasting your only asset—the interview time, in which you have to get as much information and insight as possible. (Location 2956)
  • Apologize if you like, and say, “I would like to change the subject to X, Y, or Z.” The interview is yours to control, and if you don’t, you have only yourself to blame. (Location 2959)
  • What are the subjects that you should bring up during an interview? (Location 2964)
  • technical knowledge: (Location 2976)
  • assess how this person performed in an earlier job using his skills and technical knowledge; (Location 2978)
  • And finally, you are trying to get a feel for his set of operational values, those that would guide him on the job. (Location 2981)
  • The candidate can tell you a great deal about his capabilities, skills, and values by asking you questions. (Location 3008)
  • The questions he asks will tell you what he already knows about the company, what he would like to know more about, and how well prepared he is for the interview. (Location 3010)
  • “I Quit!” (Location 3030)
  • This is what I most dread as a manager: a subordinate, highly valued and esteemed, decides to quit. (Location 3031)
  • an employee who is dedicated and loyal yet feels his work is not appreciated. (Location 3032)
  • his decision to leave reflects on you. (Location 3033)
  • If he feels his efforts have gone unrecognized, you have not done your job and have failed as his manager. (Location 3034)
  • Your initial reaction to his announcement is absolutely crucial. (Location 3037)
  • But in almost all such cases, the employee is quitting because he feels he is not important to you. If you do not deal with the situation right at the first mention, you’ll confirm his feelings and the outcome is inevitable. (Location 3038)
  • Drop what you are doing. Sit him down and ask him why he is quitting. Let him talk—don’t argue about anything with him. Believe me, he’s rehearsed his speech countless times during more than one sleepless night. After he’s finished going through all his reasons for wanting to leave (they won’t be good ones), ask him more questions. Make him talk, because after the prepared points are delivered, the real issues may come out. Don’t argue, don’t lecture, and don’t panic. Remember, this is only the opening skirmish, not the war. And you cannot win the war here—but you can lose it! (Location 3040)
  • Don’t try to change his mind at this point, but buy time. After he’s said all he has to say, ask for whatever time you feel is necessary to prepare yourself for the next round. But know that you must follow through on whatever you’ve committed yourself to do. (Location 3045)
  • There is a basic principle involved: you owe it to your employer to save an employee for the company. (Location 3055)
  • You might say something like, “You did not blackmail us into doing anything we shouldn’t have done anyway. When you almost quit, you shook us up and made us aware of the error of our ways. We are just doing what we should have done without any of this happening.” (Location 3062)
  • 15 Compensation as Task-Relevant Feedback (Location 3072)
  • Money has significance at all levels of Maslow’s motivation hierarchy. (Location 3074)
  • But compromises can be set up. We can base a portion of a middle manager’s compensation on his performance. (Location 3089)
  • Thus, for a highly paid senior manager, for whom the absolute dollars make relatively little difference, the performance bonus should be as high as 50 percent, while a middle manager should receive more in the range of 10 to 25 percent of his total compensation this way. (Location 3091)
  • any merit-based system requires a competitive, comparative evaluation of individuals. (Location 3133)
  • Merit-based compensation simply cannot work unless we understand that if someone is going to be first, somebody else has to be last. (Location 3133)
  • Peter Principle, which says that when someone is good at his job, he is promoted; he keeps getting promoted until he reaches his level of incompetence and then stays there. (Location 3142)
  • There are times when a person is promoted into a position so much over his head that he performs in a below-average fashion for too long a time. The solution is to recycle him: to put him back into the job he did well before he was promoted. (Location 3164)
  • management ought to face up to its own error in judgment and take forthright and deliberate steps to place the person into a job he can do. (Location 3170)
  • 16 Why Training Is the Boss’s Job (Location 3177)
  • In my view a manager’s output is the output of his organization—no more, no less. A manager’s own productivity thus depends on eliciting more output from his team. (Location 3198)
  • 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. (Location 3199)
  • Training is, quite simply, one of the highest-leverage activities a manager can perform. (Location 3203)
  • Employees should be able to count on something systematic and scheduled, not a rescue effort summoned to solve the problem of the moment. In other words, training should be a process, not an event. (Location 3215)
  • Training must be done by a person who represents a suitable role model. (Location 3222)
  • At Intel we distinguish between two different training tasks. The first task is teaching new members of our organization the skills needed to perform their jobs. The second task is teaching new ideas, principles, or skills to the present members of our organization. (Location 3234)
  • Ask the people working for you what they feel they need. They are likely to surprise you by telling you of needs you never knew existed. (Location 3246)
  • Much deeper knowledge of a task is required to teach that task than simply to do it. (Location 3270)
  • You will find that when the training process goes well, it is nothing short of exhilarating. And even this exhilaration is dwarfed by the warm feeling you’ll get when you see a subordinate practice something you have taught him. Relish the exhilaration and warmth—it’ll help you to arm yourself for tackling the second course. (Location 3273)
  • You have trusted me enough to buy my book and read it. Now let me say a final thing: if you do at least 100 points worth of what you find here, you’ll be a distinctly better manager for it. (Location 3280)
  • Look at your calendar for the last week. Classify your activities as low-/medium-/high-leverage. Generate a plan of action to do more of the high-leverage category. (What activities will you reduce?) (Location 3318)