HIGH OUTPUT MANAGEMENT
Intro: What happened after 1983
[written April 1995]
When products and services become largely indistinguishable from each other, all there is by the way of competitive advantage is time.
Email is also the first manifestation of a revolution in how information flows and how it is managed
…whom this book is aimed at. I am especially eager to reach the middle manager… the muscle and bone of every sizable organization
people who may not supervise anyone directly but whoeven without strict organizational authority affect and influence the work of others… know-how managers
you as a manager need to be mentally and emotionally ready to be tossed into the turbulence generated by a megamerger that takes place in your industry… be prepared for shockwaves engedndered by a brand-new technique pioneered by someone you had never even heard of before.
The output of a manager is the output of the organizational units under his or her supervision or influence
managerial leverage … High managerial productivity… depends largely on choosing to perform tasks that possess high leverage.
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.
One of the fundamental tenets of Intel’s managerial philosophy is the one-on-one meeting… main purposes are mutual education and the exchange of information… one-on-ones take time, both in preparing for them and in actually holding them
You still need one-on-ones. But you need them for fewer of the purposes I envisioned when I oringinally wrote this book.
no matter where you work, you are not an employee–> you are in a business with one employee: yourself.
Sooner or later, your boss will inevitably have to make a choice: whether to hold on to you, who is doing a good job but is in the way of another person. The responsibility to avoid such situations is yours.
Nobody owes you a career.
Questions to ponder
- Are you adding real value or merely passing information along?
- Are you plugged into what’s happening around you?
- Are you trying new ideas… not just reading about them?
Part I: The Breakfast Factory
The Basics of Production: Delivering a Breakfast
The Three-Minute Egg
Production operations
Breakfast preparation, college recruiting, sales training, and compiler design are very much unlike one another, but all of them possess a basically similar flow of activity to produce a specific output
A Few Complications
Real life, as you know, is full of thickets and underbrush. In a schematic flow chart, our breakfast operation assumed infinite capacity, meaning tha nobody had to wait for an available toaster or for a pot to boil an egg in. But no such ideal world exists. What would happen if yo had to stand in a line of waiters?
You must develop a clear understanding of the trade-offs between the various factors—manpower, capacity, and inventory—and you must reuce the understanding to aquantifiable set of relationships. You probably won’t use a stopwatch to conduct a time-and–motion study of the person behind a toaster; nor will you calculate the precise trade-off between the cost of toast inventory and the added toaster capacity in mathematical terms. What is important is the thinking you force yourself to go through to understand the relationship between the various aspects of your production process
Let’s take our manufacturing example a step further and turn our business into a high-volume breakfast factory operation. First, you buy a continuous egg-boier that will produce a constant supply of perfectly boiled three-minute eggs…. Note that our business now assumes a high and predictable demand for three-minute eggs; it cannot now readily provide a four-minute egg, because automated equipment is not very flexible.
Whenever possible you should choose in-process tests over those that destroy product
Adding value
If we compile the cost of the effort that goes into securing a conviction and assign it only to those criminals who actually end up in jail, we find that the cost of a single conviction works out to be well over a million dollars.
Managing the Breakfast Factory
Indicators as a Key Tool
Let’s say that as a manager of the breakfast factory, you will work with five indiators to meet your production goals on a daily basis. Which five would they be? Put another way, which five pieces of information would you want to look at each day, immediately upon arriving at your office?… Here are my candidates:
First, you’ll want to know your sales forecast for the day… Your next key indicator is raw material inventory… Another piece of information is the condition of your equipment… You also must get a fix on your manpower… Finally you want to have some kind of quality indicator…
Indicators tend to direct your attention toward what they are monitoring… If, for example, you start measuring your inventory levels carefully, you are likely to take action to drive your inventory lvels down, which is good up to a point. But your inventories could become so lean that you can’t react to changes in demand without creating shortages. So because indicators direct one’s activities, you should guard against overreacting. This you can do by pairing indicators….
The principle here was evident many times in thed evelopment of a compiler. Measuring the completiton date of each software unit against its capability is one example
… our company has been using measurements as a key tool to improve the productivity of administrative work for several years. The first rule is that a measurement—any measurement—is better than none. But a genuinely effective indicator will cover the output of the work unit, and not simply the activity involved. Obviously, you measure a salesman by the orders he gets (output), not by the calls he makes (activity).
This one has really interesting implications for R&D where risk of failure is high. Underscores the need to not have results against goals mechanically tied to compensation.
The second criterion for a good indicator is that what you measure should be a physical, countable thing. [when these are] all quantity or output indicators, their paired counterparts should stress the quality of the work.
Such indicators have many uses. First, they spell out very clearly what the objectives of an individual or group are. Second, they provide a degree of objectivity when measuring an administrative function. Third, and as important as any, they give us a measure by which various administrative groups performing the same function in different organizations can be compared with each other.
The Black Box
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. To take big, costly, or worrisome steps when you are not yet sure you have a problem is hard. But unless you are prepared to act on what your leading indicators are telling you, all you will get from monitoring them is anxiety
Another sound way to anticipate the future is through the use of the stagger chart, which forecasts an output over the next several months. The chart is updated monthly, so that each month you will have an updated version of the then-current forecast information as compared to several prior forecasts. You can readily see the variation of one forecast from the next, which can help you anticipate future trends better than if you used a simple trend chart.…
Such a chart shows not only your outlook for business month by month, but also how your outlok varied from one month to the next
In R&D type work testing capacity is often critical path and stagger charts can be good for tracking if its keeping up with expectations. Also Tomasz Tunguz has a good article on stagger charts.
| Forecast made in | Jan | Feb | Mar | Apr | May | Jun |
|---|---|---|---|---|---|---|
| Jan | 32* | 35 | 40 | 42 | 54 | |
| Feb | 36* | 42 | 54 | 64 | 74 | |
| Mar | 42* | 48 | 58 | 68 | ||
| Apr | 51* | 52 | 59 | |||
| May | 49* | 62 | ||||
| Jun | 64* |
Controlling Future Output
We can use de facto standards, inferred from the trend data, to forecast the number of people needed to accomplish various anticipated tasks. By rigorous application of the principles of forecasting, manpower can be reassigned from one area to another, and the headcount made to match the forecasted growth or decline in administrative activity. Without rigor, the staffing of administrative units would always be let at its highest level and, given arkinson’s famous law, people would find ways to let whatever they’re doing fill the time available for its completion
Assuring Quality
To assure that the quality of our product will in fact be acceptable, all production flows, whether they “make” breakfasts, college graduates, or software modules, must possess inspection points. To get acceptable quality at the lowest cost, it is vitally important to reject defective material at a stage where its accumulated value is at the lowest possible level.
When material is rejected at incoming inspection, a couple of choices present themselves. We can send it back to the vendor as unacceptable, or we can waive our specifications and use the substandard material anyway….
While in most instances the decision to accept or reject defective material at a given inspection point is an economic one, one should never let substandard material proceed when its defects could cause a complete failure—a reliability problem— for our customer
Management aside, this happens all too often in early prototype builds.
Later, when we examine managerial productivity, we’ll see that whhen 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. The principle of variable inspection applied to managerial work nicely skirts both problems, and, as we shall see, gives us an important tool for improving managerial productivity.
Productivity
Here I’d like to introduce the concept of leverage, which is the output generated by a specific type fo work activity.
Work simplification [can increase productivity]. 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 in 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 oyu 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.…
To implement the actual simplification, you must question why each step is performed.
Management is a Team Game
Managerial Leverage
What Is a Manager’s Output?
I asked a group of middle managers just that question. I got these responses:
- judgement and opinions
- direction
- allocation of resources
- mistakes detected
- personnel trained and subordinates developed
- courses taught
- products planned
- commitments negotiated
Do these things really constitute the ouput of a manager? I don’t think so. They are instead activities, or descriptions of what managers do as they try to create a final result, or output. What, then, is a manager’s output? At Intel, if she is in charge of a wafer fabrication plant, her output consists of completed, high-quality, fully processed silicon wafers. If he supervises a design group, his output consists of completed designs that work correctly and are ready to go into manufacturing.
…the key definition here is that the ouput of a manager is a result achieved by a group either under her supervision or under her influence. While the manager’s own work is clearly very important, that in itself does not create output. Her organization does. By analogy, a coach or a quarterback alone does not score touchdowns and win games.
“Daddy, What Do You Really Do?”
When you look at what happened [in my typical day], you won’t see any obvious patterns. I dealt with things in seemingly random fashion. My wife’s reaction to my day was that it looked very much like one of her own. She was right in noting a similarity. My day always ends when I’m tired and ready to go home, not when I’m done. I am never done.
customer complaints, both external and internal, are also a very important source of information. For example, the Intel training organization, which I serve as an instructor, is an internal customer of mine. To cut myself off from the casual complaints of people in that group would be a mistake because I would miss getting an evaluation of my performance as an internal “supplier”. People also tell us things because they want us to do something for them; to advance their case, teyw ill sometimes shower us with useful information. This is something we should remember, apart from whether we do as they ask.
I have to confess that the information most useful to me, and I suspect most useful to all managers, comes from quick, often casual verbal exchanges. This usually reaches a manager much faster than anything written down. And usually the more timely the information, the more valuable it is.
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. But reports also have another totally different function. As they are formulated and written, the author is forced to be more precise than he might verbally.…
Reports are more a medium of self-discipline than away to communicate information. Writing the report is important; reading it often is not.
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.
There is an especially efficient way to get information, much neglected by most managers. This is to visit a particular place in the company and observe what’s going on out there.…
Then why are they underutilized? Because of the awkwardness that manages feel about walking through an area without a specific task in mind. At Intel we combat this problem by using programmed visits meant to accomplish formal tasks, but which also set the stage for ad hoc mini-transactions
As can be seen from my schedule, a manager not only gathers information but is also a source of it. He must convey his knowledge to members of his own organization and other groups he influences. Beyond relaying facts, a manager must also communicate his objectives, priorities, and preferences as they bear on the way certain tasks are approached. This is extremely important, because only if the manager imparts these will his subordinates know how to make decisions themselves that will be acceptable to the manager, their supervisor.
It’s obvious that your decision-making depends finally on how well you comprehend the facts and issues facing your business. This is why information-gathering is so important in a manager’s life. Other activities—conveying information, making decisions, and being a role model for your subordinates—are all governed by the base of information that you, the manager, have about the tasks, the issues, the needs, and the problems facing your organization. In short, information-gathering is the basis of all other managerial work, which is why I choose to spend so much of my day doing it.
Finally, something more subtle pervades the day of all managers. While we move about, doing what we regard as our obs, we are role models for people in our organization—our subordinates, or peers, and even our supervisors. Much as been said and written about a manager’s need to be a leader. The fact is, no single managerial activity can be said to constitute leadership, and nothing leads as well as example. By this I mean something straightforward. Values and behavioral norms are simply not transmitted easily by talk or memo, but are conveyed very effectively by doing and doing visibly
Leverage of Managerial Activity
HIGH-LEVERAGE ACTIVITIES
These can be achieved in three basic ways:
- When many people are affected by one manager
- 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.
- When a large group’s work is affected by an individual supplying a unique, key piece of knowledge or information..
The first is the most obvious example….Work done in advance of [a] planning meeting obviously has great leverage If Robin has to scramble later to help a manager define guidelines and milestones, her work will clearly have much less leverage.
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.
…a manager can exert either positive or negative leverage… example is waffling, when a manager puts off a decision that will affect the work of other people. In effect, 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.
Managerial meddling is also an example of negative leverage…. In general, meddling stems from a supervisor exploiting too much superior work knowledge (real or imagined). The negative leverage produced comes from the fact that after being exposed to many such instances, the subordinate will begin to take a much more restricted view of what is expected of him.
Have seen this in cases where managers want to track tasks with high resolution.
The art of management lies in the capacity to select from the many activities of seemingly comparable significance the on or two or three that provide leverage well beyond the others and concentrate on them.
DELEGATION AS LEVERAGE
Because managerial time has a hierarchy of values, delegation is an essential aspect of management. The “delegator” and “delgatee” must share a common information base and a common set of operational ideas or notions on how to go about solving problems, a requirement that is not frequently met.
Picture this. I am your supervisor, and I walk over to you with pencil in hand and tell you to take it. You reach for the pencil, but I won’t let go. So I say, “What is wrong with you? Why can’t I delegate the pencil to you?” We all have some things that we don’t really want to delegate simply because we like doing them and would rather not let go. For you managerial effectiveness, this is not too bad so long as it is based on a conscious decision that you will hold on to certain tasks that you enjoy performing, even though you could, if you chose, delegate them. But be sure to know exactly what you’re doing, and avoid the charade of insincere delegation, which can produce immense negative managerial leverage.
We should apply quality assurance principles and monitor at the lowest-added-value stage of the process. For example, review rought drafts of reports that you have delegated; don’t wait until your subordinates have spent time polishing them into final form before you find out that you have a basic problem with the contents. A second principle applies to the frequency with which you check your subordinates’ work. A variable approach should be employee, using different sampling schemes with various subordinates; you should increase or decrease your frequency depending on whether your subordinates is performing a newly delegated task or one that he has experience handling. 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, something I’ll talk about in detail later
Increasing Managerial Activity Rate: Speeding Up the Line
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.
Because manufacturing people trust their indicators, they won’t allow material to begin its journey through the factory if they think it is already operating at capacity. If they did, material might go halfway through and back up behind a bottleneck. Instead, factory managers say “no” at the outset and keep the start level from overloading the system. Other kinds of managers find this hard to apply because their indicators of capacity are not as well established or not as believable….
To use your calendar as a production planning tool, you must accept responsibility for two things:
- 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.
- You should say “no” at the outset to work beyond your capacity to handle.
The next production principle you can apply is to allow slack—a bit of looseness in your scheduling.
A manager should carry a raw material inventory in terms of projects. This is not to be confused with his work-in-process inventory, because that, like eggs in a continuous boiler, tends to spoil or become obsolete over time. 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.
As we become more consistent, we should also remember that the value of an administrative procedure is contained not in formal statements but in the real thinking that led to its establishment. This means that even as we try to standardize what we do, we should continue to think critically about what we do and the approaches we use.
Built-In Leverage: How Many Subordinates Should You Have?
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 guidleines that a manager should allocate about a half day per week to each of his subordinates.
Sometimes a business is organized in away that makes the ideal fan-out of six to eight subordinates hard to reach. A manufacturing pant, for example, may have an engineering section and a production section, in which case the plant manage would only have two people reporting directly to him. The manger might then choose to “act” as one of the subordinates, choosing to be his own engineering manager, for instance. If he does that, the manufacturing manager will still report to him, and he will have added the people who would ordinarily report to the head of engineering. So the plant manager will actually have six direct reports: five engineers and the manufacturing manager. The arrangement, shown below, does not have the engineers appearing* t be at the same organizational level as the manufacturing manager—something he would surely take exception to.
This is especially useful in a startup context where there are more “roles” than people to fill them and so individuals often end up wearing many hats.
Interruptions—The Plague of Managerial Work
The next important production concept we can apply to managerial work is to strive toward regularity….we should always be looking for sources of future high-priority trouble by cutting windows into the black box of our organization. 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 of.
But because you must coordinate your owrk with that of other managers, you can only move toward regularity if others do too. In other words, the same blocks of time must be used for like activities
Let’s apply a production concept. Manufacturers turn out standard products. By analogy, if you can pin down what kind of interruptions you’re getting, you can prepare standard responses for those that pop up most often.…
Also, if you use the production principle of batching…many interruptions that come from your subordinates can be accumulated and handled not randomly, but at staff and at one-on-one meetings, the subject of the next chapter. If such meetings are held regularly, people cant protest too much if they’re asked to batch questions and problems for scheduled times, instead of interrupting you whenever they want….
a manager should try to force his frequent interrupters to make an active decision about whether an issue can wait. So, 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”
Meetings–> The Medium of Managerial Work
The two basic managerial roles produce two basic kinds of meetings. 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. 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.
Process-Oriented Meetings
To make the most of this kind of meeting, we should aim to infuse it with regularity.
At Intel we use three kinds of process-oriented meetings: the one-on-one, the staff meeting, and the operation review
One-On-Ones
Decisions, Decisions
Sometimes no amount of discussion will produce a consensus, yet the time for a decision has clearly arrived. When this happens, the senior person (or “peer-plus-one”) who until now has guided, coached, and prodded the group along has no choice but to make a decision himself. If the decision-making process has proceeded correctly up to this point, the senior manager will be making the decision having had the full benefit of free discussion wherein all points of view, facts, op inions, and judgments were aired without position-power prejudice. In other words, it is legitimate—in fact, sometimes unavoidable—for the senior person to wield position-power authority if the clear decision stage is reached and no consensus has developed. It is not legitimate—in fact, it is destructive—for him to wield that authority any earlier. This is often not easy. We Americans tend to be reluctant to exercise position power deliberately and explicitly—it is just “not nice” to give orders. Such reluctance on the part of the senior manager can prolong the first phase of the decision-making process—the time of free discussion—past the optimum point, and the decision will be put off.
Planning: Today’s Actions for Tomorrow’s Output
You can now see, I hope, the parallels between how Isabella’s government and Intel work. A manager’s objectives are supported by an appropriate set of key results. His objectives in turn are tied to his supervisor’s objective so that if the manager meets his objectives, his supervisor will mee this. But the MBO system cannot be run mechanically by a computer. The system requires judgement and common sense to set the hierarchy of objectives and the key results that support them. Both judgment and common sense are also required when using MBO to guide you in your work from one day to the next.