Summary
A good book on effective management. For me it is not too applicable right now, since I am not managing people, otherwise, this might have deserved a better rating even. Very likely something that I am going to revisit a few years down the road.
Main Ideas
Managers' Output is measured by their team's output. High leverage is important. Holding good meetings is a form of art and it needs solid preparation. Sharing information is one of the main tasks of managers. When people become mature in their job, the management style has to adapt accordingly. From more micro-managing to more enabling. Things can be planned and accounted for. Managerial activities and other activities of "thought" labor can highly benefit from ideas from the manufacturing industry. On that note also see The Goal and The Phoenix Project. Organizations are usually "hybrid" organizations by necessity. The problem they juggle is that of too much versus too little centralization. Some parts of an operation are better when centralized, others are better when decentralized. Finding that balance is important. The highest form of motivation is self-actualization. If people compete with themselves, to see how far they can push themselves, their growth potential is pretty much limitless. If people are not self-actualized, coaxing them will only help until a certain point. Most forms of motivation are bounded -> hedonistic treadmill and hedonistic trap. Similar in spirit to 7 Habits.
This book, overall has some good advice and it's quite a short read, so it's probably worth your time.
Detailed Notes
Introduction
Being second best in a tough environment is just not good enough.
The way information is organized and easily shared fundamentally changes how teams can work together effectively.
Know-how can make you into a manager. People who manage and disperse information within an organization are effectively managing a part of that organization.
When the environment changes, management has to adapt.
The environment is changing. Drastically.
Management, like manufacturing, should be output oriented.
The output of a manager is the output of the organizational units under his or her supervision or influence.
1 on 1s are important for two way knowledge sharing.
People compete with each other for work, in the age of globalization, the competition got much more numerous. Hence staying on top of things, becoming better at what you do, is more important than ever.
Nobody owes you a career.
A manager should spend their time thinking about how to increase the output of their organization. They should think about the Goal.
Our potential to increase our wealth has hardly been tapped.
Wealth here probably has to be understood in the Navalmanack sense - which means that wealth is not money but added value to the society. Assets. Creation.
Foreword
Managers are measured by the effectiveness increases they give to their teams.
Training and motivation are the only 2 things a manager can do to help people do their work.
Entrepreneurs are optimists, they have to be, but that makes them blind for indicators that promise bad news in the future.
Part 1 - The Breakfast Factory
Chapter 1 - The Basics of Production: Delivering a Breakfast (or a College Graduate, or a Compiler, or a Convicted Criminal)
Figure out which task will take the longest. I.e. what is the bottleneck, and how long does it take - this gives the total throughput time.
3 types of Production Operations:
- process manufacturing
- assembly
- testing
Activity flow is similar across many different problem domains. Almost everything undergoes manufacturing, assembly and testing, and some form of rework, in case the testing proved the product to be insufficient.
Equipment capacity, manpower and inventory can be traded off against each other and then balanced against delivery time.
Thinking through the production process helps to find the optimum solution, in terms of cost, to build the product on time.
Continuos Operation destroys a lot of capital, when things break, because whole batches can be lost at a time. So testing has to be in place to minimize the likelyhood of that happening. Functional testing - essentially checking if the product is good, destroys the product, it's better to use in-process testing - looking if all the variables of the process itself stay within the necessary bounds.
Input needs to be inspected, but if the input is bad, the whole factory would have to wait, hence inventory of proven, good input is necessary. How much? Enough to wait for the next delivery or raw materials. The cost of inventory has to be balanced against the cost of opportunity - sometimes keeping inventory is actually worse than shutting down the plant for a while to wait until the new raw materials arrives.
Processing adds value.
Finding flaws in the process should happen at the lowest value level. That's where damage is still limited.
Finding actual bottlenecks in terms of cost or time is the most important step, because the whole process has to be oriented around them. Because bottlenecks are what drive down efficiency of the whole operation. Only improvements at the main bottleneck are improvements, everything else, doesn't actually matter. Just like they say in The Phoenix Project
Chapter 2 - Managing the Breakfast Factory
Key metrics:
- Sales Forecast
- Raw Materials Inventory
- equipment condition
- Manpower
- quality
Indicators should balance each other, so that one doesn't overdo things into one direction.
Leading indicators should give confidence about the inner workings of the machine. If they show something's wrong, we have to act.
Stagger Chart to plot business trends
Building to forecast is harder than building to order. You need to predict how much and what kind of demand is going to happen in the future.
Selling and Manufacturing have to align in time, if a forecasted order is to be delivered.
Quality check frequency can by dynamic. If lots of problems are found - increase frequency.
Work can be sped up by simplifying it or increasing the leverage, through better tools/procedures etc.
Defining output for knowledge work is very hard. Because output and activity look superficially identical.
Part II - Management is a Team Game
Chapter 3 - Managerial Leverage
Move to the point of greatest leverage.
The more timely the information, the more valuable it is.
Reports are for the writer, not the reader. It forces clear thinking.
Basis of managing - information gathering.
From that follows information spreading, good decision making and good resource allocation (time, money, labour)
Managers nudge. They influence decisions slightly, compounding effects in the overall right direction.
output = sum( activity * leverage * time)
Timing of action can increase leverage. Martial arts. No wasted motion.
There are forms of negative leverage: depression, meddling (micromanaging), waffling (procrastinating decision making)
Choosing the highest leverage activities is the art of management.
Run a management job like a manufacturing factory - batch, identify (and accelerate if possible) limiting step, use forecasting, use slack. Use a calendar. Keep inventory of long term work, fill slack with those.
Manage 6-8 people.
Build FAQ or similar systems, every time a question pops up that's not on the FAQ - add it. Have office hours for "unscheduled" problems - i.e. batch them.
Chapter 4 - Meetings —The Medium of Managerial Work
Book Recommendation: The Organization Man - William Whyte
Process Oriented vs. Mission oriented meetings
One on ones: Rolling schedule, minimum one hour, notes, ask questions.
Staff Meetings:
Organized, with agenda, but, with open session. Only discuss things that interest more than 2 people present.
Meeting discipline is key. Especially for meetings with lots of people and a specific occasion. I.e. mission oriented meetings.
Chapter 5 - Decisions, Decisions
Decision making should involve free discussions. To get the best information. Mismatch between people with power and people with knowledge. Free discussions involves both.
Free. Clear. Full support.
Link engineers with managers.
No groupthink.
What? When? Who? Who needs to be consulted? Who will veto / accept? Who has to be informed?
Chapter 6 - Planning: Today's Actions for Tomorrow's Output
Determine Market Demand, Determine Production Capacity, Adjust to fit
Plan for potential losses as well.
Results lag behind actions in time. You need to act now, if you want to avoid gaps between need and capability in the future.
Output of planning is decisions and actions. Not the document paper trail.
Be aware of opportunity costs.
Goals in planning need to be SMART. You need to know when you had success and when not, exactly + a time by which success should be the case.
Part III - Team of Teams
Chapter 7 - The Breakfast Factory Goes National
Scaling things brings its own set of nasty problems to solve. Where should things be centralized to take advantage of scale, where should they be localized to better fit the market?
Management is a game of teams of teams. Creating and optimizing and coordinating teams across different locations with different specialities is very hard indeed.
Chapter 8 - Hybrid Organizations
Mission Oriented vs. Functionally Oriented Hierarchies and Company Organizations
Basically - fully distributed management vs. fully centralized Management.
The ideal is to find the right balance between the two.
Functional Groups can act like company internal subcontractors. Offering "services" for the business units to consume.
Grove's Law: All large organizations with a common business purpose end up in a hybrid organizational form.
Middle managers glue together hybrid organizations.
Chapter 9 - Dual Reporting
Matrix Management: Report to different levels of the organization.
Both technical know how at a lower level, as well as business oversight from a higher level are necessary.
Hybrid Organizations create ambiguity, they are not perfect, but the best solution available.
Chapter 10 - Modes of Control
3 things that control behavior in work environments:
- free market forces
- contracts
- cultural values
Management articulates rules and lives cultural examples.
CUA factor - complexity, uncertainty, ambiguity
High CUA, Group Interest => Cultural Values Low CUA, Group Interest => Contracts Low CUA, Self Interest => Market Forces Else => Chaos
Part 4 - The Players
Chapter 11 - The Sports Analogy
When a person is not doing his job, there can only be two reasons for it. The person either can't do it, or won't do it. He's either not capable or not motivated.
Fear won't work as well with computer architects as with galley slaves.
Needs => Drives => Motivation
Nobody who is miserable wants to be around someone happy.
Motivation is limiting. When a need is fulfilled motivation is gone too. That's how Dopamine works.
Self-actualization - what I can be, I must be
This is the only source or unlimited motivation. It's the Taoist/Stoic ideal, it's not caring about results but about character. Who you are and want to be is what's pushing you and there's no limit to this type of personal growth, hence motivation is infinite for it.
Competence vs. Achievement Driven
Loving the process vs. Wanting the Results
Testing yourself, to see what you are capable of, and then continually pushing those limits. That's the idea of a life well lived.
Money can be a measure of achievement. Therefore people can chase money forever, the source of motivation from it then, is unlimited.
This is a trap though. Because it's not centered on self - not on virtues but on a form of greed, caring too much about results.
Powerful Idea: The environment feedback determines our level of skill we think is achievable, breaking out of that illusion is important and where great mastery lies. You can become stuck at a level of skill, simply because you believe and see that this is the ceiling. But the truth is there are no ceilings. Everything is an infinite game waiting for you to play it better.
Fear of failure can be crippling if one is not truly self-actualized. Being driven only to become your best means that failure is a tool, feedback, to do so. It's enabling rather than limiting. If one is instead achievement driven, failure means no achievement, means stress, means bad feelings. The psychological response, how we frame failure is what's important.
You cannot stay in the self-actualized mode if you're always worried about failure.
People who work tirelessly are different from workaholics. The difference lies in the motivation and the associated stress Levels. Different motivation => different stress levels. Different performance. When work is like play, working 16h a day is a good thing. It's actually fun. It's feeling alive and well.
Throwing down competitions can improve this kind of motivation, but I think, it doesn't lead to self actualization in the end. Because competition is outcomes focused! It's competition with yourself that should be fostered.
Chapter 12 - Task Relevant Maturity
Combination of manager with right team => high Output
Task Relevant Maturity (TRM) changes which management style will work best.
Less managerial involvement the higher the TRM of the managed person. Hence over time you go from being task based to person based. Still measure performance indicators. Don't be surprised. Delegation != Abdication
Structure moves from being externally imposed to being internally given.
Situations can change the TRM of the team, and hence management style has to adapt, sometimes even within a day, hour to hour.
Chapter 13 - Performance Appraisal - Manager as Judge and Jury
Performance reviews are an absolutely necessary tool to improve the performance of employees. They are hard though. Because correctly assessing if a person does their job correctly is difficult. And because that assessment heavily affects the receiving person and their motivation.
One has to define the expectations before the review. Then compare - were the expectations met?
Output indicators can lag behind drastically, this has to be kept in mind.
Performance of a manager is measured against the performance of his organization, his team.
3 L's on Delivery:
- Level, Listen, Leave yourself out
The aim of communication is to transmit thoughts from the brain of person A to the brain of person B.
Problem Solving Stages:
Ignore - Deny - Blame - Assume Responsibility - Find Solution
People don't need to follow your solution to the problem. Any solution is fine. Leave yourself out. If no acceptance is to be gained on acknowledging the problem, use power. I want you to do this, even though we disagree on the reasoning.
Increasing the performance of already good people is higher leverage than normal performance reviews. But it's much harder to find ways in which already really good people could improve. Yet it is absolutely necessary.
Chapter 14 - Two Difficult Tasks
Job Interviews Purpose: Selection, Education about company, Determine mutual match, Sell job
Try your best to keep good people who want to quit.
Chapter 15 - Compensation as Task-Relevant Feedback
Promotions and raises are tools to reward good performance and should be bound to both experience, merit and whole company performance.
Peter Principle is an inevitable problem of promotions. However the alternatives are much worse because they mean stagnation of people and therefore keeping them from reaching higher potential.
Why Training Is the Boss's Job
Training is one of the highest-leverage activities a manager can perform.
Training should be a process, not an event.
Develop a course to teach most important ideas, first one will be bad. Use it to learn for the second one.
While preparing for the course, gaining a deeper understanding of things is normal. To teach needs more understanding than to do.
One More Thing
Section with practical assignments. Score points, by putting into practice what the book has taught.