The story of András Gróf’s life could be a blockbuster movie.
Born to Jewish parents in Hungary in the 1930s, his early years were fraught with -- to wildly understate things -- difficult circumstances. Here’s Gróf describing the first two decades of his life in his autobiography:
By the time I was twenty, I had lived through a Hungarian Fascist dictatorship, German military occupation, the Nazis' "Final Solution," the siege of Budapest by the Soviet Red Army, a period of chaotic democracy in the years immediately after the war, a variety of repressive Communist regimes, and a popular uprising that was put down at gunpoint... [where] many young people were killed; countless others were interned.
Some two hundred thousand Hungarians escaped to the West. I was one of them.
At age 21, having survived all of that, András entered the United States and found himself penniless, at the starting line of the American dream. Like many new arrivals in the country, he was young, scrappy and hungry, and he was not throwing away his shot.1
Gróf took on an Anglicised name -- Andrew Grove -- and armed with a thirst for learning, he got a degree and PhD in Chemical Engineering, moved to California, and eventually joined Intel as one of its first employees. He rose to become CEO, grew revenue by 20x and took the company from a market cap of $4B to $197B, and was named Time Man of the Year in 1997. He was a mentor to tech luminaries like Steve Jobs, and when he died in 2016, his legacy was such that he was declared “the father of Silicon Valley.”
So do you think we should listen to what he has to say about how to run a successful company?
What is high output management?
Grove’s book High Output Management, published in 1983, remains a timeless classic on the art of management.
I highly recommend reading the book in full: it’s packed full of useful lessons like using paired KPIs (e.g. a production volume and production quality measure, to ensure one isn’t sacrificed in the name of the other), how to have effective one-to-ones with your team, and running an effective annual planning process. There’s a reason Ben Horowitz, tech entrepreneur and co-founder of VC firm A16Z, calls High Output Management “a true masterpiece...[with] almost legendary status.”
Today we are concerning ourselves with Grove’s definition of a manager’s output, which is:
A manager’s output = the output of his/her organisation + the output of neighbouring organisations under his/her influence.
A manager’s output is not solely what they individually produce. The point of having managers is that they lead teams. It is the manager who sets the objectives for their team, motivates their team, provides feedback to their team, and is ultimately responsible for that team’s output. Thus the output of the manager is the output of their team.
A manager -- and Grove also defines a manager as an individual contributor (IC) who gathers and disseminates information within a company -- also has influence over neighbouring organisations.
A Finance team will work with an Ops team to identify and realise potential cost savings. An HR team will help a Marketing team restructure so that they can work more effectively. A Sales team will feed back to the Product team on what potential customers do and don’t like, so that the Product team can change their development roadmap accordingly.
These are all outputs by neighbouring organisations, but nonetheless count towards a manager’s output. If I, a manager in Finance, guide my team so that they help an Ops team identify £2M of cost savings, that is good output from me.
Let’s do some algebra
I’m going to reach back deep into the archives of what I learned at school, and pull out some substitution.
Remember substitution? It’s the idea that if A = B + C, and you know that C = B*2, you can substitute in this new definition of C into your first equation. You end up with A = B + B*2, or A = 3B -- and now if you know that B = 2, you can solve the whole thing.2
You can do that because C is a common term -- a variable that appears in both equations, allowing you to substitute in B*2 in place of C in your first equation.
Stick with me, but we’re about to do exactly the same for high output management. I know. Exciting stuff, right?
In 2018, Morten Hansen published Great at Work: How Top Performers Do Less, Work Better, and Achieve More. That subtitle sure is promising a lot.
In this book, Hansen, a professor at UC Berkeley3, gives us his formula for the value of a person’s work.
Value of a person’s work = Efficiency * Quality * Benefit To Others
The important thing is that this is multiplicative. If you drop to zero on any one of efficiency, quality, or benefit to others, the entire value drops to zero.
As an example, let’s imagine a young business analyst at a credit card company. Her job is to generate a monthly report on the spending patterns of the customer portfolio, so that management can respond if needed.
If she is able to create a single high quality, useful report, but has to spend a year interviewing 500 individual customers and taking photocopies of their statements when a simple SQL query would have done the job, that scores a zero on efficiency. Not valuable.
If she efficiently generates a report that provides benefit to others, but the numbers are materially wrong because she screwed up her Excel spreadsheet, that scores a zero on benefit to others. Not valuable.
If she works efficiently to create a high standard report on why Genghis Khan was able to unite the Mongol tribes and conquer the Western Xia empire, that scores a zero on benefit to others4. Not valuable.
But if our analyst can efficiently create a high-quality report that others find useful, that is very valuable.
That’s the formula to describe the value of a single piece of work.
I’m going to go one further and describe an individual’s output as the quantity of value they create. So adding quantity and output into the equation, we get:
An individual’s output = Quantity * Efficiency * Quality * Benefit to Others
(Side note: I see efficiency and quantity as different here: quantity describes the overall volume of output, whereas efficiency is a function of the level of resource required to create one ‘unit’ of work, however defined. The less resources required, the greater the efficiency.)
Aha, I hear you say. We have a common term between this, and Grove’s definition of a manager’s output. Output appears in both, meaning that we can substitute one equation into another.
So:
A manager’s output =
the quantity * efficiency * quality * benefit to others of his/her own organisation
+ the quantity * efficiency * quality * benefit to others of neighbouring organisations
Your output as a manager is the sum of your team’s output and the output of neighbouring teams. The output of those teams depends on the quantity, quality, efficiency, and benefit to others of the work they are producing.
Which means that as a manager, there are 8 levers to pull to increase your output:
- Increase the quantity of work your team does
- Increase the efficiency which with your team works
- Increase the quality of your team’s work
- Increase the benefit to others of your team’s work
- Increase the quantity of work your neighbouring teams do
- Increase the efficiency which with your neighbouring teams work
- Increase the quality of your neighbouring teams’ work
- Increase the benefit to others of your neighbouring teams’ work
The more of your time you spend doing those things, and the more you are able to do those things, the better a manager you are.
What does this mean in practice?
This means that the vast majority of your time and energy should be spent trying to increase the quantity, efficiency, quality, and benefit to others of the work done by people around you.
Yes, there will be times when you need to do things that aren’t these things. Approving expense reports. Answering tedious emails from recruiters.
But this also means that there are a plethora of activities that to non-management look like a waste of time. Alignment. Cross-department communication. Prioritisation.
In fact, these are not a waste of time at all. They are in fact the core functions of management. Making sure your team and your neighbouring teams are working on the right things, in the right way, at the right time.
This was one of my biggest learnings from moving into a management role at a F500 company. During Covid I would spend all day -- and I mean *all day* -- in Zoom meetings. Just back to back talking with people, or being talked to, or At the end of the day my wife would turn to me and say, “what did you actually do today?”
For a while I didn’t have an answer. But after a few months I realised: those meetings are the work.
Could I have spent more time doing actual work myself, rather than attending meetings? Sure. That’s pulling lever #1 above: increasing the quantity of work my team does.
But there are seven other levers to pull. Coaching your team will improve the quality and benefit to others of their work. Spending time on cross-departmental communication improves the benefit to others of your team’s work and other teams’ work. Going through a year-end performance management cycle should result in everyone’s team having a clearer idea of what’s expected of them: and therefore increase either the quantity, quality, efficiency or value to others of their work over the next 12 months.
So when people joke that middle managers spend all their time in meetings: they do. Because that’s the job.
Footnotes
- Yes, I recently saw Hamilton, why do you ask?
- A is 6, B is 2, C is 4. Numbers are fun.
- Coincidentally where Andrew Grove did his PhD before joining the tech world.
- In her particular role, that is. I’d happily read this report, just not in a professional capacity.