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High Output Management

Andy Grove, one of modern technology's most influential men, shared his thoughts on how to run your company smoothly.

Last year, after reading Ben Horowitz’s comments on Andy Grove’s High Output Management I decided to read the book. The concepts were the foundations of some of Silicon Valley’s management principles. While the book was first published in 1983 it remains incredibly valuable.

Change

  • “Let chaos reign, then reign in chaos.” When undertaking a major change in a company chaos is unavoidable. You will have to face it, you will have to accept it, and ultimately work through it until you manage to return to a level of clarity.
  • "A team will perform well only if peak performance is elicited from the individuals in it."
  • Reacting to the unexpected is similar to a way fire fighters are trained. First you have to train your team to become energetic and responsive, then they will be able to thrive in both expected and unforeseen circumstances.
  • “Enhance your value, hone your competitive advantage, learn, adapt.” Bring value to the company by passing information quickly, trying new ideas, trying new techniques, discarding those not working and reiterating the process.

Production

  • Whether you’re recruiting, making a compiler, or training a sales force production is divided into three fundamental areas: process, assemble, test. Process converts raw material into a more elaborate component. Assembly joins several components together. Testing evaluates if the end result is meets the requirements determined. The lower down the value chain you spot defects the less money will be lost by the company.
  • “The first rule is that a measurement–any measurement–is better than none.” It’s essential to use indicators to evaluate production compared to your operational goal. Often one indicator isn’t enough. If, for instance, you aim at reducing inventory of your company you have to add a second indicator: occurrences of shortage.
  • “The stagger chart [is] the best means of getting a feel for the future business trends.”The stagger chart shows the forecast for the two succeeding months and is put in perspective with past forecasts. When comparing the improvement or degradation of past forecast you can learn a lot about business trends especially if your business is recurring.
  • Middle managers are expected to perform based on their forecasts.
  • Parkinson’s law tell you to keep short time cycles. The more time you have the more time you’re likely to waste.
  • It’s crucial to build some “slack” into your predictions.
  • Keep monitoring and add variable inspections to your process.

Work

  • Work harder AND work smarter. A manager can learn to leverage her skills to produce more.
  • First: create an exact flow chart of steps under your process. Second: count the number of steps. Third: work on removing unnecessary steps by questioning why they exist. You can expect a 30% to 50% reduction of the number of steps.
  • Key roles of a manager: information gathering, nudge her subordinates, and decision-making. A manager’s job is never finished and can never be finished. There’s always more to do, there’s always more than could be done.
  • A manager "should move to the point where his leverage will be the greatest."
  • Reports aren’t inherently useful to its readers. They are mostly helpful to the manager writing them as they’re a self-disciplined to think and deal with issues that emerged.
  • Seek several information sources to verify you’ve learned the information in question.
  • A manager is a role model for her subordinates. You should act accordingly.
  • A manager’s leverage could be defined as an activity that takes a short amount of her time but has a long term event on its subject.
  • A high leverage activity is listening to customers.
  • By batching similar tasks a manager can work more effectively.

Meetings

  • A manager who spends more than 25% of her time in a meeting it’s sign of bad organization.
  • One-on-ones between supervisor and subordinate is the best way to exchange business information and know-how.
  • There are two types of meetings:
    • Process oriented - for exchanging information
    • Mission oriented - for decision-making
  • Frequency of one-on-ones depends on the acquaintance of the subordinate to the execution a specific mission. The less acquainted she is the more frequently the meeting should happen.
  • The manager should try to keep the flow of thoughts going by asking “one more question.”
  • "Determine the purpose of a meeting before committing your time and your company’s resources.”
  • A meeting should have no more than 8 persons.
  • The chairman has the responsibility of describing exactly what happened. Attendees should receive the minutes before forgetting what happened.
  • Minutes should be as clear and specific as possible

The polymath

We often consider specialization positively. The common belief is one should narrow down her path to excel in an area and one only.
Today, though, the polymath has a place in the entrepreneurial world.

Problem of specializing

Specialization is seen as a positive path as a person grows to become an expert in an area developing a deep knowledge. The problem here is that when one concentrates so much a tunnel vision inevitably removes all potential to think about unusual scenarios. That person effectively loses the ability to reason with creativity. With specialization it seems creativity is applied to details but the bigger picture is lost.

Perceived problem of the polymath

The polymath on the other hand could quickly be considered as a person with no particular skill. A jack of all trade and master of none. It's easy to imagine someone switching frantically between tasks never achieving much in anything.

Benefits of becoming a polymath

If you were to develop an expertise in a field, then move to another, and so on you would have a capacity to solve problems much wider. You would effectively think "outside the box". Leonardo Da Vinci was an obvious example. He thought of devices, tools, and machine that would be built only decades later but he also came up with some useful for his time.

Counter-intuition

Being counter-intuitive is an interesting concept. Why? Probably because when we do follow our intuition we end up doing less than we can. Have you ever felt like not doing anything?

Generally that's a sign that it's worth just start. As Seth Godin explains in "Go for a walk":

The best time is when you don't feel like it.

Going for a walk when you don't feel like it will change your mood, transform your posture and get you moving.

And if you don't feel like talking with someone, bring them with you on the walk.

Broad or focused

One thing has recently come to my attention.

After spending three months of intensively learning Javascript along with key programming concepts it's time to change methodology. This change also applies to other areas of life.

With Javascript I was quickly tackling all aspects a full-stack engineer would with the intention of developing a web app. The broad cover has its utility. It's an effective way to get an overview of a topic but it's important to rapidly focus on a single specific aspect.

Once the three months passed I decided to switch to other aspects of programming by following the Stanford Machine Learning course taught by Andrew Ng. It was a mistake.

Instead what would have been more valuable was setting up a learning strategy.

After gathering superficial knowledge on a programming language - or any topic for that matter - focus by diving in specific subjects and fully internalizing all of its aspect would be more effective. But why? The idea refers back to something Josh Waitzkin, former Chess Grand Master, once said. A martial artist performs better by deeply internalizing a few techniques and knowing how to precisely apply them than to learn a lot of techniques superficially.

Back to programming. After learning the basics you might want to focus on a specific domain. For instance, deeply studying and implementing Node.js or an MVC framework like AngularJS would serve better than tackling a bit of everything.

Now the same can be applied to other areas of your life. For example, it would be more useful to deeply dive in a few books than reading many on various subjects, even though this may seem exciting. We could even say it would be more valuable to read the same book many times.

Let's take a look at some of the most successful entrepreneurs like Bill Gates, Jeff Bezos, or Elon Musk. What made them so successful at first was their deep focus in a specific area. They stuck to it, learned all they had to, and applied the knowledge effectively.

Elon Musk even stated in a Reddit Q&A session the following:

I think most people can learn a lot more than they think they can. They sell themselves short without trying.

One bit of advice: it is important to view knowledge as sort of a semantic tree -- make sure you understand the fundamental principles, ie the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.

Changing context will have unfavourable consequences to your learning ability. To continue with the tree metaphor, another Reddit user explains the analogy further:

Storing new information not related to anything you know takes a lot of energy to store (planting a new tree)

  • Growing leaves is easy once your roots are deep in the ground.

  • The more trees you grow, the stronger the forest is and the easier it is to expand it further. (There may be an upper bound here, don't think there's anyone out there who has learned everything yet)

  • Bonus feature: trying to glue oak leaves on a pine tree won't work. Information that fundamentally conflicts with your understanding of a subject won't stick, the brain will discard it as irrelevant noise. You have to plant a new tree and help it grow stronger than the old one.