For those of you just joining us, this is part 3 of a series inspired by Andy Grove's epic book, High Output Management. You can find Part I and II here and here, respectively. So far we've reviewed pages 1-100. This post will cover pages 101-150.

Intel Plant, Philippines, 2007

We'll start with the awkward stuff. One of the main business decisions in this section—whether or not to open an Intel plant in the Philippines, and if so, where—is showcased to highlight the efficacy of 1) the "mission-oriented" meeting structure, and 2) Intel's decision-making process.

That's all fine and good, especially if you were in Cavite circa 2002 and you hear that Intel is pumping almost $100MM into your local economy.

However—and this is the awkward part—Intel actually shut down the Philippines plant and laid of 1,800 workers only 7 years later. Admittedly, it was during the worst bear market in over 75 years, but its worth noting that even the best management teams can't forecast macro demand forces more than a few years out.

Notes from pp. 101-150 of High Output Management

Let's start with a few quotes to warm up the tires:

  • "We must realize—and act on the realization—that if we try to focus on everything, we focus on nothing."

  • "I have seen far too many people who upon recognizing today's gap try very hard to determine what decision has to be made to close it. But today's gap represents a failure of planning sometime in the past."

  • "What do I have to do today to solve—or better, avoid—tomorrow's problem?"

  • "If you don't know where you're going, any road will get you there."

  • "It is entirely possible for a subordinate to perform well and be rated well even though he missed his specified objective." [Christopher Columbus analogy: he failed his Measurable Business Outcome (MBO)—find a new route to the Orient—but discovered the New World, thereby achieving Queen Isabella's objective: increase Spain's wealth]

Let this be a reminder that the DBT Ventures team members do not take ourselves too seriously. At times, while reading pp. 101-150 of High Output Management, it became fairly apparent that Andy Grove is ALL BUSINESS. Some levity would have helped lighten these dogmatic pages, but nevertheless he adeptly covers four topics:

  1. Planning: today's actions for tomorrow's output

  2. Hybrid organizations: a blend of mission-oriented and functional groups

  3. Dual reporting: when a individual contributor reports to two people

  4. Modes of control: different ways to make other people your bitch

With regards to Planning, most of the material presented is from the perspective of a manufacturer, specifically to forecast environmental demand, establishing current capacity, and creating a strategy to address the gap (or surplus). Andy doesn't do the work for you, but he provides a basic framework for thinking about planning.

Within Hybrid organizations Andy emphasizes something most of us already know: the vast majority of companies are "hybrid" orgs, meaning they have elements of both mission-oriented and functional organizations. No need to really rehash all that here.

Moving on to Dual reporting, we learn that at times it makes sense to have a single IC report to two different people simultaneously, especially if distance/region is a factor. That's about it.

Perhaps the most frustrating of the four, Modes of control delineates Andy's view of how to make other people your bitch. He of course doesn't write it this way, but that is exactly what the intended output is. He contends you can control people's behavior in the workplace via:

  • Free-market forces: price, as determined by counter parties operating under self-interest

  • Contractual obligations: written agreements with considerable overhead required

  • Cultural values: common set of values, objectives and methods

Andy then details the role of management in all of this, specifically how they 1) articulate and 2) embody cultural values. To identify the most appropriate mode of control, Andy presents the below chart along with a "CUA Factor" which stands for Complexity, Uncertainty, and Ambiguity to create a spectrum to reflect the nature of the environment for the worker.

The big takeaway here is: when the work environment is complex (high CUA) and individual motivation is based on self-interest, NO MODE OF CONTROL WILL WORK WELL. This is telling, because it is the representative of many of today's scenarios and illustrates just why management is so challenging.

 

Modes of Control, p. 149