Review: High Output Management, Andy Grove

“Thus managers rise to their level of incompetence” (Andy Grove)

Introduction

Andy Grove was President, CEO and ultimately chairman of the board at Intel. It's worth noting this as High Output Management draws significantly on this experience.

It is difficult book to summarise as Grove mixes his own management theory, with case studies and personal reflection. Unlike for instance Zero to One, where Theil presents and reiterates several core themes, each chapter of High Output Management feels self contained.

But to apply some overarching structure to the text, I would suggest that it begins with a mostly theoretical discussion and moves to more practical analysis. Grove evaluates general management concepts, moving to consider organisational structure and ultimately to practical topics such as hiring, staff motivation and employee evaluation.

I would suggest there are 2 core ideas to this book:

• An output-orientated approach to management

• The work of modern organisations is done by teams not individuals. Hence to maximise output managers must maximise the output of all their subordinates

How can managers optimise output? The first question should be what is output. For Grove it is a concept, that broadly describes the impact a manager has on her firm’s capacity to reach its goals. It is also fundamentally a group phenomenon. Grove writes: "A manager can do his "own" job, his individual work, and do it well, but that does not constitute his output.”

Essentially a manager’s goal is to maximise his subordiantes’ abilities to perform and thereby influence the direction of the firm. As result managers should primarily be evaluated on the output the produce for the firm.

As the breadth of Grove’s text is significant this review shall just consider two topics: the implications for organisational management and people management. However it is a rich text and well worth a look by anyone in a management irrespective of organisational size and type.

i)             Organisational implications

The rationale for Grove’s team focus is that the nature of work for modern firms is founded on a knowledge asymmetry to between senior managers and subordinates.

Of course there has always been an asymmetry between new and old employees but this one is of a new type. Traditionally it has been the case that senior employees will know more that their subordinates and new hires to the company. In technology companies, however this is not necessarily the case. Obviously senior employees continue to have greater knowledge of the firm, its processes and more perhaps more general understanding of how to work in an office environment, but fresh employees can have more up to date knowledge on cutting edge research (which is particularly important for manufacturing and engineering industries), this means that managers must work with the subordinates in a way that was not essential before. Managers must be able to evaluate and implement the knowledge that their subordinates can brings.

Clearly Grove was working for a firm in which new hires would have update knowledge on manufacturing that their managers may not have since they only recently graduated. The question then is, does the theory for organisation less dependent on cutting edge research and development?

While there may be an argument that this information asymmetry is not so prevalent in other types of companies, the broader focus on output I believe is very useful. Indeed in other respects Grove’s argument is quite traditional.

Although he emphasise the importance of having a strong team culture, when it comes to decision making, Grove’s idea is hierarchal Ultimately there must be one decision maker, otherwise discussions will go around in circles (peer-group syndrome) until a mushy consensus develops.

Management by objectives must be very focused. We must consider where we want to go (objective) and how we want to get there (milestones, key results). Objectives between supervisors and their subordinates should be aligned so that as the subordinate reaches their objective the supervisor also reaches theirs.

Be careful not to be too specific in assessing the completion of objectives. The main thing is to have objectives in place, but of course as time moves forward unexpected events and opportunities might arise so discretion is essential

Another important note is it is not essential that everyone agrees with the ultimate decision but it is important that everyone supports the decision. This can be particularly troublesome for middle managers but recent graduates and more experienced manager understand this approach

From an organizational standpoint, Grove argues that once an organisation reaches a certain size it will tend to drift towards one of two structures:

• Mission-oriented

• Functional-oriented

Mission orientated companies are highly regional, autonomous from the central organisation, and will often be competitive with other regions for resources for the main organisation. Functional oriented companies on the other hand are highly centralise and can often be much quicker to implement strategy. Most organisations are a hybrid between these two extremes, often firms will shift from one to another during their life

Grove also believes that for firms to be successful they must adopt a hybrid structure that encompasses elements of boss forms.

The only exceptions to this rule being small startup where roles are in general flexible and large conglomerates that own businesses without common business purposes.

ii)            People management

In general, even with the best managerial techniques the success of an organisation will depend on the quality of the people. Therefore all managers can do is create an environment in which good people can thrive.

Another crucial aspect that managers must consider is the motivating factors of their staff and the type of organisation environment they work in.

Grove suggest that individual behavior is controlled by three factors:

• Free market force - price and self-interest

• Contractual obligations - price is too difficult to determine (more mutually interests)

• Cultural values - too complex to control through contracts (can be completely selfless)

Managers must also consider the working culture of their office (CUA factors)

• Complex

• Uncertain

• Ambiguous

An office that has high self-interest and high ambiguity will be chaos.

 Another to bear in mind is the timing of when an employee is hired. Employees will tend to high self-interest at first with this diminishing over time. For low level employees this not such a problem but what if you must appoint a new senior hirer?

It is also crucial for managers to evaluate their subordinates on an ongoing basis and vary these principles when looking to hire new staff or pursued a valuable employee not to quit.

Final one of the more intriguing concepts of the text is the Peter principle which is that candidates for promotion are selected based on their performance in their current role, hence all staff will eventually rise “to their level of incompetence. Grove suggests that management should accept this phenomena as their problem and attempt to recycle employees in such circumstances back down to roles they are capable of."

Review The Best Interface Is No Interface, Golden Krishna

"Good design solves problems. Good experience design isn't about good screens, it's about good experiences." (Golden Krishna)

Summary

There are two main discussion points in this book. First is an account of a screen obsessed culture, second is a discussion on alternatives and speculations on what non-screen-based technical solutions might look like. Krishna is particularly concerned by how a concentration of screen based solutions limits our thinking. This focus on the screen has led to a culture where every company, startup or entrepreneur feels an app is necessary for their service, even when this is inappropriate and creates poor user experience. More worryingly, Krishna speculates that using advertising as the primary revenue source incentivizes firms to create poor screen-based technical solutions because this will lead consumers to spend more time on the app. 

In general, the alternative solutions Krishna proposes emphasise speed, simplicity and seamlessness. They are what Krishna describes as “typical processes”, which in effect means they have a physical component and offer a neat solution to common problems. A good example of what he’s getting at is the Nest smart thermostat, which can learn and adjust itself based on the routines of the occupants of the home.

A screen culture

Krishna repeatedly emphasizes that we live in a screen orientated culture. He bases this perception on several observations. Today it seems that every business from car manufactures to grocery stores to coffee shops feel compelled to make an app. More subtly though, Krishna observes a change in the language in how our culture discusses interfaces. In the first chapter he comments that our general understanding of the word interface has come to be associated with screen-based interactions with computer systems. Indeed, the job descriptions many firms put out for UX and UI designers are interchangeable. In fact, as Krishna notes, these are two distinct roles; one focuses on interaction between consumers and systems via screen-based behaviours and the other is much broader, encompassing the entire experience of using the system. The fact these jobs are now mostly treated as the same indicates how deeply our interactions with technology are premised on manipulation of a screen.

The reason that Krishna finds this situation so objectionable is that he believes it leads to suboptimal technical solutions. Undeniably there are situations in which screen based interfaces are best, but in limiting our thinking to the screen we are missing out. The classic example he cites of such sloppy thinking is the excruciating experience of unlocking a car with an app. Krishna goes through the process of doing this step by step, making it clear that this “solution” only adds complexity. Far better, is a non-screen based technology such as integrating a simple proximity sensor into the car keys that can automatically unlock the car when the owner is nearby.

However, Krishna not only suggest this is the result of lazy thinking or a herd, in some cases something more insidious could be going on. For better or worse many internet-based businesses use advertising to make money. As a result, the more time customers spend on their site the better for them. This means that firms have an incentive to make less effective interfaces so customers spend longer on their sites. Would Google be more effective without displaying prominent links? Would Facebook or Twitter work better without ads? These are the questions Krishna raises and most consumers would agree that indeed these services would be better without advertising. 

Incentives

This topic of balancing business and consumer incentives is an important one. It is obvious that businesses need consumers to survive, this is the position that Krishna takes. But something that is not commented on so much, is that consumers need businesses to provide them with services. Hence why, so long as the service for the most part works, firms can push customers towards suboptimal interfaces that serve their purposes. However perhaps a more balanced approach is possible, where some compromise is made on the experience but the consumer could benefit elsewhere.

Recently I had my own “The Best Interface is no Interface Experience”. I use a store brand card here in Germany to collect points on purchases I make, which I can then be used to buy items offered by their partners (kitchenware for instance). The card has a barcode on the reverse and the most basic way to collect points is to either hand your card to the cashier after he’s done scanning your groceries or scanning it yourself on a barcode reader attached to the till. Over the last couple of years, the firm behind these cards has been pushing its customers to use an app. With the app you can activate various coupons and also activate a barcode for scanning. 

I had forgotten my card one day so decided to try out the app. Of course, by the time I activated the app the cashier had scanned all my items and was ready for me to pay. At this point he was unwilling to let me scan the barcode (in Germany cashiers are typically very efficient but not always so friendly). This would seem to be a typical example of Krishna’s argument; with the card everything can be done much more seamlessly than the app.

However, I do think there is a more complicated point here. First, the question is why is the firm pushing customers to use the app rather than the card that works fine. I think partly this is due to the rise of online shopping, the firm wants its customers to experiment with using the card other ways than just scanning it at the end of a shop. Another reason is that I noticed the firm had started to offer a payment service through the app. With the payment service, you can add your bank details to your account and then the app can generate a QR code for payment.

Not a bad idea. This could potentially have the advantage of something like the paywave technology in modern credit cards, it also has the advantage that you can collect points and finally since it’s linked to your bank account the money goes directly out of your account (in Germany credit cards are often frowned upon so I imagine paywave is not as successful as in other countries). 

However, there is still the interface issue. I’ve not used the payment method myself, however I was in line when a young fellow in front of me tried to use it. He certainly had a much friendlier cashier than I did, they spent a good 5 minutes trying to get either the self-scanner or the cashiers scanner to recognize the code. Having used paywave myself (I am not skeptical about credit cards) I can say that this experience was much worse. However despite the interface issues I do think this is potentially a very good service.

In the end I think this firm is really trying to diversify their service and offering a payment scheme is potentially quite lucrative. On the other side consumers have the possibility of paying for small transaction in a neat way without having to use a credit card. Sure maybe the user experience is not great but compromise on the experience might be worth it.
 

Review of Ghost in the Shell (1995)

To continue the Sci-Fi trend of recent movie reviews, this week’s review is 1995 film adaption of Masamune Shirow’s Manga Ghost in the Shell. This franchise may well become more well-known in the coming years as Scarlett Johansson is due to star in a live-action remake.

The story focuses on Kusanagi Motoko (the Major), leader of an elite special forces team tasked with thwarting cyber-terrorism. In the film, they have the goal of tracking down “The Puppet Master” a mysterious hacker responsible some high-profile diplomatic assignations through brain hacking attendants and bystanders. The film being set in a future were the majority of people have some kind of cybernetic implant, and in the case of the Major being just a brain implanted a full cybernetic body.

Bearing in mind the film came out in the mid-1990s, it’s remarkably how prescient it is on a number of today’s hot topics such as government surveillance via internet technology and the dangers of AI.

I also particularly enjoy the Major’s character. At this time (and still somewhat today) it’s usual to see a female lead in such role. She is also quite unlike traditional action stars, introverted and often brooding on complex existential questions.

While GITS is a cult favorite, it does have some dictators. I think this is largely due to a plot that can be rather obtuse on first viewing and the dialogue that does get rather philosophical at times. I found the film improves significant with re-watching and I actually quite enjoy the shifts in tone from all out action to angst-ridden self-reflection.

I’d say a good way to approach the film for the first time is to either check out the manga first or reading a synopsis online. Just bear in mind the comic has a much more irreverent tone than film. It’s definitely worth checking out and I’d recommend watching it with the Japanese audio and subtitles.

Review of Her

The second feature length film from Spike Jonze (his first being the excellent Being John Malkovich). Set in the not too distant future, Her’s protagonist (played by Joaquin Phoenix), divorced and emotionally disconnected, installs a new “OS” and gradually falls in love with the AI (excellently voiced by Scarlett Johansson).

Being a bit of a sci-fi buff, I was keen to check out this film and I was not disappointed. While far-fetched, the plot works extremely well, it really feels like Spike Jonze (who also draft the script) thought through the story and visuals for the film long before making it.

I find his treatment of the AI theme particularly interesting as well. Generally, films that have anything to do with AI treat the subject very seriously and the setting has an apocalyptic atmosphere (think Blade Runner or that rather unrated Tom Cruise movie Oblivion). Here the setting is sunny and beautiful for the most part, it appears to have been filmed in LA and Shanghai, and the tone has more in common with a romantic comedy than the Terminator.

At more than two hours it is a long film, but I found it captivating from start to finish. Brilliant executed and I should appeal to a large audience.