A top 5 takeaways summary of High Output Management

“If you're wrong, you will die. But most companies don't die because they are wrong; most die because they don't commit themselves. They fritter away their valuable resources while attempting to make a decision. The greatest danger is in Standing still.”

-- Andrew S. Grove

When I first read High Output Management, I had just become a manager and was going through the "Everything I am doing is wrong" phase of that process. I had little experience, very little knowledge and a lot of energy that was being wasted in the most incredibly misguided ways. If I had gone on without reading it, I'd have taken a lot more time to understand what I was doing wrong.

High Output Management has an almost legendary status. It's not a new book, but somehow has survived the test of time as one of the most recommended management books and is present in almost any list I looked for references. To quote Ben Horowitz:

"Over the years, I have come to consider High Output Management a true masterpiece, and there are at least three core aspects to its genius. First, in as little as one sentence, it lucidly explains concepts that require entire books from lesser writers. Second, it consistently uncovers brand-new management ideas or finds new insights in old standards. Finally, while most management books attempt to teach basic competency, High Output Management teaches the reader how to be great."

It's a book that is pleasurable, insightful and rich in substance while also being very fast to read. I took great value from this book, and that's why I took the time to organize what were the key takeaways for me as a manager which I hope can help you become a better manager like they helped me :)

Takeaway one: Everything is a process

Whether you're building software, hiring, making breakfast, creating toys, everything can be modeled as a production process. After all, we're always trying 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 lowest possible cost.

Understanding the basis of production will enable you to achieve that goal and Andrew provides us with some of those key elements:

  1. Limiting Step: The step in the overall shape of the production flow that will determine the overall shape of a company’s operations. Start with the longest/most challenging/most expensive/most sensitive step and work your way back;
  2. Objectives and Milestones: Where you want to go and how to know you've reached there. What key pieces of data show your progress and how well you are related to a reasonable forecast;
  3. Quality Assurance: The quality of your output will make or break its result. Reach the desired level of quality in the production process and make sure it stays there. Always catch problems at the earliest point of the process since it will also be the cheapest to solve.

If you'd like to understand more about these elements, head to my post about this topic: "Everything is a process".

Takeaway two: Your output is almost entirely based in leverage

Understanding our output is very important. As Andrew describes it:

Manager’s Output = The Output of his organization + The Output of the neighboring organizations under his influence

This means that we as managers have to focus on the organizations' outputs, not our individual ones and stresses the dire need for managers to find leverage.

To put it simply, in order to increase a Manager's productivity--that is, the output of a manager per unit of time worked--we have three ways:

  1. Increase the rate at which a manager performs his activities;
  2. Increase the leverage associated with the various managerial activities and
  3. Shifting the mix of a manager's activities from those with lower to those with higher leverage

Identifying the high leverage activities, then, is key to making ourselves more productive. We can achieve high leverage in three ways:

  1. When many people are affected by one manager;
  2. When a person's activity or behavior over a long period of time is affected by a manager's brief, well-focused set of words or actions;
  3. When a large group's work is influenced by an individual supplying a unique, critical piece of knowledge or information.

Leverage can also be negative. Some activities can end up reducing the output of the organization. One noteworthy example here is Managerial Meddling: when a supervisor uses his superior knowledge and experience of a direct's responsibilities to assume command of a situation rather than letting the direct work things through himself.

Takeaway three: Meetings are a medium of work

While meetings have been getting a lot of hate, chances are if you're a manager and especially if you're a middle manager you will need to get a lot of your work done through them. When done right meetings can go from extremelly harmful to a team's performance to being one key way to have high leverage. With that goal in mind, Andy shares with us some hints on how to do that.

Free Discussion

One key goal to strive in meetings is providing an environment of free discussion. People need to feel encouraged and safe to share their opinions and be assured that personal views will never outweigh the better idea. The greater the disagreement on a topic, the more free the discussion needs to be.

The free discussion model it shows four quadrants on two axes:
   Subordinates and Supervisor the axis go from inactive to active. When the
   subordinates are active, and the supervisor inactive the discussion is on
   track. When both are inactive, the discussion is sleepy. The supervisor
   should become active to put the discussion on track when the subordinates are
   inactive. When both are active the discussion is off-track. The supervisor's effort at a staff meeting should go into keeping the discussion on track, with the subordinates bearing the brunt of working the issues

The manager has the role of a facilitator and avoids stepping in too much with the solutions. The focus is in keeping the discussion on track and keeping all of the attendees active and engaged. Make the right questions at the correct times, but trust your directs to work on the issues.

Things to know before a meeting

A lot of what kills a meeting is lack of preparation. There are some general things we can let everyone know that will bridge this gap:

Things to always Know Before each decision/meeting
What decision needs to be made, I.e. what's the goal of the meeting
When does it have to be made
Who will decide
Who will need to be consulted prior to the making of the decision
Who will ratify or veto the decision
Who will Need to be Informed of the decision

Sounds obvious, but you'd be surprised how common it is to enter a meeting without everyone even knowing what its goal is

Besides having that information, every person attending a meeting should have an opportunity to look at the material that will be shown during that time and prepare accordingly.

The Ideal Decision-Making process

The ideal decision-making process starts with free discussion where all points of view need to be welcomed and debated. After it's all layed out, the next stage is clear decision, here the greater the disagreement, the more clear the decision needs to be.

Finally everyone involved must give the decision reached by the group full support. This does not necessarily mean agreement: so long as the participants commit to back the decision, that is a satisfactory outcome. If we can't reach this stage, then we need more free discussion.

The ideal decision-making process. Shows a state diagram with three
   states: Free Discussion that can transition to Clear Decision. Clear Decision
   can transition to Full Support. If Full support can't be achieved, more free
   discussion is needed The ideal decision-making process. Yes, it's very similar to Bezos' Disagree & Commit leadership principle :)

Takeaway four: Manage short-term outcomes based on long-term plans

Planning is an everyday activity. It will set your strategy and the tactics you will use to put the strategy in place. The dynamics of planning can be best understood by thinking in terms of production principles:

  • Step 1: Determine the market demand for product;
  • Step 2: Establish what the factory will produce if no adjustment is made and
  • Step 3: Reconcile the projected factory output with the projected market demand by adjusting the production schedule

Analogous to that, your planning process should consist of:

  • Step 1: Establish projected need or demand;
  • Step 2: Establish your present status and
  • Step 3: What more (or less) do you need to do to supply the need/demand.

The Plan needs to produce tasks that will be performed now in order to affect future events.

While today's gap represents a failure of planning sometime in the past, forcing ourselves to concentrate on the decisions needed to fix today's problem is like scurrying after our car has already run out of gas.

ANSWER THIS: What do I have to do TODAY to solve - or better yet avoid - TOMORROW's problem?

The true output of the planning process is the set of tasks it causes to be implemented. In other words, it is the decisions made and the actions taken as a result of said process.

We need to understand our objectives and milestones clearly in order to plan. If you don't know where you're going, you will not get there. So ask yourself

  1. Where do I want to go? (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)

Takeaway five: Task-Relevant Maturity and Performance

When I started managing, the first management approach I had was built based on bits and pieces of the managers I had that I felt worked best with me. I failed to understand that:

No optimal management style exists. High output is associated with particular combinations of certain managers and certain groups of workers.

Some researchers and Andrew argue that there is a fundamental variable that tells you what the best management style is in a particular situation. That variable is task-relevant maturity (TRM). As Grove defines it:

TRM =
  Degree of their achievement orientation +
  Readiness to take responsibility +
  Education +
  Training +
  Experience

All of these very specific to the tasks in hand

Given different levels of TRM, we can vary the management style:

TRM of direct Effective Management Style
Low Structured; Task-Oriented; "What", "How" & "When"
Medium Individual-Oriented; emphasis on two-way communication, support, mutual reasoning
High Involvement by manager minimal: Establishing objectives and monitoring

WARNING 🚨: Do not make judgments of what is "nice" or "not nice". We are after what is most effective.

We need to have a varying management style for the same person. People will have different levels of TRM for different kinds of tasks, and we need to understand that. Doing so and letting go of vanity regarding "our management style" is necessary to elicit top performance from our directs.

Peformance vs Individual Capability graph. Different levels of
   motivation will imply different performance curves. The image shows a graph
   in which the level of motivation of a person defines the curve on this plane
   of performance and individual capacity Performance will be a function of the direct's individual capacity and motivation

To understand how we can impact our directs' performances, Grove defends that we should flip the question and instead ask: "What makes our directs unproductive?" And the answer to that is that the person either:

  1. Can't do it: Low individual capacity
  2. Won't do it: Low motivation

Through training we can greatly impact individual capacity. So the question remains on how we can motivate our directs. In Andrew's opinion, that simply can't happen because motivation has to come from within somebody. All a manager can do is create an environment in which motivated people can flourish.


I hope these 5 takeaways were helpful to you as they were for me :) The book has a lot more valuable info that simply wouldn't fit, so I highly recommend reading it through!

Summary

In summary, the takeaways are:

  1. Everything is a process: Find the limiting step and organize the production around it. Measure with meaningful indicators. Fix problems while they're small and assure quality. Be very critical of your process and optimize it diligently;
  2. Your output is almost entirely based in leverage: Your output is not individual anymore, find leverage and multiply the work of others. Manage your time; it's the most valuable asset you have.
  3. Meetings are a medium of work: Meetings are a powerful way to have leverage if used correctly. Prepare accordingly, make the roles very clear to everyone in the meeting. Enable free discussion and be humble, your team often has more perspective than you;
  4. Manage short-term outcomes based on long-term plans: To understand what must be done short-term, we need to look further in the future. Your plan may be tossed in the garbage, but the planning process will provide you
  5. Task-Relevant Maturity and Performancee: Understand the shifts in task-relevant-maturity and change the mode of control accordingly. Performance is a function of understanding what takes to do the work and motivation; find which you can help more with and that will give you leverage. No management style will work for everyone.

I also wrote a book summary which goes into more detail on each chapter, but is less structured.