High Output Management by Andy Grove | with guest Rich Willan

0:01Welcome to Business Book Club, the show where top entrepreneurs break down the most powerful insights from the world's best business books. I'm your host, Sam Graham, and today we're diving into High Output Management by Andy Grove.

0:17If there's a Bible for Silicon Valley CEOs, it's this book, High Output Management by Andy Grove. Though, this isn't just a book. It's the operating system that helped Intel scale to become the world's largest semiconductor manufacturer. It's the exact same framework used by leaders at Apple, Facebook and Google. But does a book written about a chip manufacturer in the 80s actually apply to modern, creative businesses? To find out, I'm sitting down with my co-founder at Fascinate Productions, Rich Willen. Rich is obsessive about systems. He turned our creative workflows into a well-oiled machine and he credits this book with changing how he leads.

0:56Today we're going to show you how to measure productivity in a knowledge economy, how to leverage your time for maximum impact, and why process might actually be the secret to unlocking your team's creativity. Let's dive in. Why did you choose High Up for Management? In quite a meta example for now I came across it in a podcast which was tim ferris speaking to tobias lutka the founder of shopify and he was talking about how much impact it had on him and so i'm a fan of shopify i'm clearly gonna be somewhat inclined to go straight out and buy it yeah so that was where it um came from so let's get into your first lesson what is it everything is a process which is certainly something i live by and in fact in our now company the company that acquired us zoe i got teased for for a while for quite the level of belief in this but i think people are coming around to it perhaps I like to believe they are.

2:05How does Andy Grove think about using processors as like a high level concept? Andy throughout the book, he uses this analogy called the breakfast factory. And he opens the book by talking about the process of making bacon and eggs and how you might scale that up and some of the challenges that you would face in doing so. so you kind of follow an egg through the factory from step one finding a supplier through to it entering a frying pan getting it from farm to table I suppose and how you would maintain quality throughout that and you know a big thing is basically just making everything repeatable he uses that analogy and he talks about the challenges right because process as you scale it is all about trade-offs and when you go from operator to manager of a process set that process free and feel very satisfied by that and bottom line is you don't have to do the thing anymore which is fantastic however there's a high likelihood that you will see the quality go down or something will just be completely missed or something like that.

3:24So as you then build this organization with multiple processes running, how do you maintain quality? Awesome. So is there anything that Andy says that we shouldn't really be using processes for or that it's not really necessary? Or are you sticking by everything as a process? I'm sticking by everything as a process. I don't have an example from Andy, but I do have a way of thinking to support. My natural state is fairly chaotic creative. And this whole obsession with processes has actually come through as a reaction to pain, frankly, of needing to mitigate that reality of not naturally being organized.

4:06and so essentially through process i hand off that organization even if i'm just doing it like a process for myself which i do do the whole time like in life as well as work like handing it or getting out of my head and being like i'm just going to hand this off and in a lot of processes some some of them you'll be going like really deep and specific and prescriptive of exactly what people will be doing like do this step do it exactly like this one two three four but then you get to step five say and it will be like okay now use your creative skills to realize this big chunk of work which is step five and there will be no other guidance because like for me process is a way to enable creativity and the biggest the thing that process gets a bad rap about is that people are saying, oh, yes, just like so many processes, I'm limited by process.

5:05It should be the complete opposite. They should be a way to enable creativity by not having to use the finite amount of decisions that you have every single day on stuff that can just be the same as last time, can just be repeated. So processes are great because the stuff that is not creative, it removes the decision and you can use that decision later on to do something highly creative, which takes like thousands of decisions per minute. We've got a huge podcast operating system for the Zoe Science and Nutrition show that we make. Tell us about how that came about and why you spent so much time on that.

5:46Yeah, the podcast OS, as I like to call it, is a massive collection of processes, I suppose. It maps every step from the inception of an idea for an episode through to the moment that we release everything on YouTube and podcast platforms. And essentially, when we were selling the business, I was quite aware of the fact that we were going to be bringing some teammates over and they would be working on the project, which they actually hadn't worked on it before. I was thinking about making that as easy as possible in one respect. And so, yeah, one Christmas break, I think I spent about four days mapping this thing out.

6:30It's probably like 32 hours of work on just writing all of these SOPs. So this thing is like a big flowchart. And on each of the boxes of the flowchart links an SOP, standard operating procedure. And that maps each step in the production process. and so yeah went through and did all of that and I think what that really enabled was in being forced to write all of those steps out you realize where things can be better and often it's quite an easy solve so you know you're able to remove a couple of steps here you know make a tweak here which is going to save time and do other things which are going to contribute to a better quality outcome.

7:12So yeah, map the whole thing out. When we started the new year, we had new team members over. It was so clearly written out. It is like following a recipe that they were able to just hit the ground running, feel really good about executing on their role immediately. And yeah, it creates a win for everyone. 32 hours or so to make this process, then extra time iterating as well. It's over a week's work of making this process. But if you put it in the context of like how much time you've saved it means that we can employ like two less people because of the amount of time that all of the stuff saves yeah absolutely i had no idea like to put hours on it but it's a ridiculous amount of time each week and that's not just from the reduced steps it's from the consistency that this way of working creates and i think without good process here you'd spend the entire time fixing mistakes that were recurring yeah consistency is huge especially when there's a creative output there's certain elements of it that have to be consistent Andy Grove talks about processes in meetings as well can you tell us a little bit how you've sort of implemented that yeah totally if um you know anyone listening to this has direct reports then they probably do one-to-ones and people have one-to-ones and they get their reports to bring everything it kind of blurs into a load of stuff in terms of them carrying out the function of their role, but in kind of a chaotic way.

8:39And then there's a bit of time to talk about them as a person, you know, and their growth and stuff like that. So we tend to split this up. There'll be a meeting where every single week there's a checklist for review and feedback on, you know, a number of things. It's a prerequisite that every single time that we do that meeting, we're going to check off every single one of these points for feedback or discussion without fail. and what that means is that we're able to iterate that meeting so it's the same sort of thinking it's saying how can we increase quality and reduce time and the kind of rigidity and the ability to be able to apply incremental gains you know even in a meeting is the key here the direct report will prepare the meeting but they'll prepare it to like a very rigid structure that we both kind of agreed and worked out.

9:29And then just to add to that, as problems arise, which they inevitably do, and throughout the week, you'll see a little thing. Every now and then, you'll say, okay, do I need to add a step to the meeting? I think Andy calls them gates. Basically, it's indicators, like how you're going to get ahead of these things and measure whether the output is where you need it to be. Yeah, similar to when you were talking about enabling creativity, just getting through the things that you need to get through in the meeting. you do that a lot quicker and you're able to concentrate on the variables after that.

10:01You mentioned earlier that you put processes in place in your personal life. Have you got any quick examples about one of those that's worked really well? Yeah, I've just got this process for booking and organizing holidays. It's on a Google Doc on like hyperlinked on the home screen of my phone. And typically when creating a new process, you would do the thing without the process. So I'll book a holiday, which I did this time, booked a holiday at a high level, wrote down the steps I took to do it. Went on a holiday. Something irritated me. I can remember one was, and here's some good value, don't stay in a desert more than three days.

10:40So I then added questions saying, are you staying somewhere more than three days? Is that a good idea? So the next time I book a holiday, I just run through the thing and look at it and be like, oh, yeah, true. you remember that time that being in a desert for way too long sent you a little bit mental and then you don't need to make the mistake again again it's also got things like pack electrolytes because you're inevitably gonna be hung over in a hot place and I think there's a step saying make sure that the bag has this in at all times and you know optimally I just sort of keep it like that yeah so anyway the whole thing is a process basically going on holiday and just had to make it as pain-free as possible through an SOP.

11:24What is lesson number two? So that is task-relevant maturity or TRM, one of Andy's frameworks, which is about adapting your management style to get the most out of people. So yeah, let's break that down. Task-relevant maturity, what does that mean? Task-relevant maturity simply means how experienced you or one of your team is at carrying out a certain task and three different approaches depending on that level of experience. So it's low, medium and high. Low task relevant maturity or TRM, you basically have no idea what you're doing. Middle, you have a bit of an idea. High, you know what you're on about.

12:11And so each of those from the position of a manager requires a different approach. It's essentially like how prescriptive you're being versus how outcomes oriented you're being. So I've definitely made mistakes at both ends here, trying to tell someone how to do a thing when they knew very well how to do it and did not need me micromanaging them and then vice versa, giving someone way too much freedom, wasting a ton of time, them not feeling great about it, me feeling very put out. And yeah, that really is where you have not picked the right approach, low, medium or high in terms of TRM for the person that you're working with.

12:56So when you say low, medium, high, you mean the amount of input and assistance that they need to receive from you to enable them to do a really good job? Precisely, yeah. Typically, the times they get it wrong is where I'm overly optimistic. It's probably when I like a person, I think they're smart and I mistake being smart for being experienced in a particular task. So, I mean, I can think of a lot of times when it's gone this way, where someone has just come back to me, like to go away and make a plan and has just come back with something that wasn't even pointing in the right direction. And I had just not given them enough information to be going off.

13:34And in fact, it's not even about giving them information. When people are low TRM this is where processes really come in so you actually want to say here's the recipe follow this step by step to get the thing done and this actually I think this is maybe the more important point of all of this with TRM is it was such a breakthrough for me because I hate being told what to do that when someone is inexperienced and what they're looking for is clarity and to do a good job and so if you give them a step-by-step guide to by your measure and you're the person doing the measuring equals success they're able to execute on it step-by-step and come back to you with a good result for you to say amazing that's exactly what we're looking for they get a huge amount of satisfaction from that and that's a great thing and then over a couple of reps of following that recipe they might say hey rich have you thought about improving this by doing x and you say i hadn't but you have and that's amazing and then you go from being prescriptive to building together and then at the other end obviously is where you have someone experienced and you essentially tell them to do it a certain way and they feel like they're being micromanaged and that can be really annoying and also you can both miss out on where this person's kind of creativity and experience could have led you to whole new kind of outcomes and together you could have built something completely new with their experience.

15:00And then actually one little watch out here, a big flag is when someone thinks that they're very, very experienced, or in fact, is adamant that they're experienced and that they know how to do the thing and they will repeatedly try and do it their way. And it sucks. That's typically a time where you think, okay, you know, either be moved on to another project or need to consider your position within the business. I'm just wondering how you think about the balance and like how you ensure that you give people the right room to learn? Yeah so it comes down to the system one and system two thinking so following a sat nav you can pretty much do without thinking and so you will think about other things it won't really go in you'll just automatically follow it whereas the stuff at least in my experience that we're doing is hard enough and takes enough thought that I think understanding is a prerequisite and I know from my side to learning what I always try and do is whatever the outcome is I'll be like who did the thing that I want to do the best and I'll try and copy it step by step and achieve the same outcome and along the way you tend to learn the why it's kind of obvious why you're doing it is you build up the picture through executing the whole thing and then you know very quickly the individual operators of each of the sops within the process will actually stop using the processes and it's only when a problem arises that you might need to jump back in and say hey you missed that step or something but like when people build the muscle yeah they kind of intuit the why and they you know a lot of the time stop using the process frankly even though they're doing it step by step they're not actually looking back at it what have you got for lesson number three from high output management leveraging your time okay great leverage you hear about leverage all the time how is leverage spoken about in high output management and how do you think about leverage the way i think about it is simply what can i do once that is going to have an impact multiple times or what can i do where my one input leads to multiple outputs.

17:20So to give you a couple of examples, for the first one, it would be how might I remove a step from a process that saves 10 minutes and that process repeats weekly without my input? Yeah, that's something that Elon Musk does. He walks around his factory and sits at various stations and asks, why is this process happening? Does it need to happen and then let's remove it and if something doesn't break after it gets removed then you've saved everyone loads of time you know sometimes it does break but you've got to try and keep cutting the process down cutting out those little bits of time even if it's 10 minutes 10 minutes a week adds up and then another example of just one to many would be you run a meeting where you teach five people something then your leverage is one to five ah so in terms of teaching that's great Right.

18:09So that's the positive side of leverage. I know in the book, they speak about negative as well. Could you tell us a little bit about negative leverage? Yeah, for sure. So one example I think he talks about is saying where you turn up to a meeting unprepared. So you have like 10 people on a call, they're all on time, you rock up five minutes late, you haven't prepared, you waste all of their time, which is going to cost you a lot of money, basically yeah and lots of other negative outcomes of course so yeah i mean yeah actually just being late to meetings typical negative leverage example i also think another thing would just be having crap managers within your company so say a manager has five direct reports and actually without their manager they would all be better at their job this person is having a continued negative leverage on your company by being there.

19:02I think the meetings one is huge, actually. There's so many knock-on effects, aren't there? If you're ill-prepared for a meeting, not only does everyone waste their time at that point, but then everyone could be wasting their time or going in the wrong direction for the rest of the day and probably will be a little bit disgruntled with their job. It's such a small thing to be prepared for a meeting, but it's funny how often that can sort of slip under the radar. Any sort of top tips and takeaways in increasing positive leverage? What have you found? Well, do more high leverage stuff. So Andy's example in the book is very sort of type A.

19:39I actually think this was what sold me on it when I heard Tobias Looker talking about it originally, is that Andy color codes his calendar for low, medium and high leverage. And he'll just try and look back and make sure that he's very much in the green all of the time. And yeah, I definitely haven't gone to that extent, but I do do a calendar audit on a semi-regular basis and it definitely leads to some actions. I know like recently one of the things with one of our team members I felt like is a really good breakthrough is she's doing a certain part of the production process that's frankly like really hard.

20:19And I've been involved in it for far, far too long, but it's been really hard to let go of because, you know, the now CEO of the company we're in is really particular and kind of has also been very resistant to me not doing it. And what I realized was looking back was quite how much time I'd spent redoing work at the kind of last minute, which obviously I sort of see it as negative leverage, really, because I just shouldn't be doing that. And I noticed how much time that I've been taking, how much time I've been building in to do that. And so the action was to really prioritize and make time for training.

20:58and so that's what I've been doing with her for a while really over-indexing on training and I think we just had like a breakthrough where I felt for the first time that I didn't want to change anything and if you think about the leverage that that creates for me I now buy back a huge amount of time each week because I prioritized a higher leverage activity for yeah again buying. So that was a dive into high output management by Andy Grove, courtesy of Rich Willen. Before you head off to build your own breakfast factory, let's recap the three big takeaways from today's conversation. First, master high leverage activities.

21:38Andy Grove defines a manager's output as the output of their organization. Therefore, your time should be spent on things that multiply results. Training is the ultimate high leverage activity. One hour of training can result in hundreds of hours of better output from your team. Preparation is key. Walking into a meeting unprepared is negative leverage. You aren't just wasting your time, you're wasting the salary of everyone that's in the room. So here's a tip, take a leaf out of Rich's book, audit your calendar. Are you spending time on$10 tasks or$10 ,000 tasks? Second, process enables creativity.

22:12The big pushback that people have against systems is that they think processes make us robotic. But as Rich explained using the podcast OS. The opposite is actually true. When you automate the mundane, take email templates or setting up a project file, you stop making low value decisions. This frees up your brain space for high value creative work that actually moves the needle. If you find yourself solving the same problem twice, build a process for it. Don't let your team waste energy reinventing the wheel every Monday morning. And to the point of the first takeaway, this is a high leverage activity.

22:47Third, match your management style to task-relevant maturity. This is the TRM framework. It's not about asking, should you be hands-on or hands-off as a manager? The answer is really that it depends. If your team member is new to a specific task, they are low maturity. So how do you act? You have to be prescriptive. It's not micromanagement, it's training. If they are an expert, they are high maturity. Get out of their way and stop wasting your own and their time. One of the biggest mistakes that founders make is mixing these two up, micromanaging their best people and abandoning their new hires.

23:20This is something I'm constantly trying to remind myself about, adjusting my style to not only the person, but also to their task. If you want to master these three concepts, I really would recommend buying a copy of this book. There's a link in the episode description, and buying it through that link would actually help this show. It's a value-packed read that really does belong on your shelf. And if you got value from this breakdown, If you haven't already, please hit the follow button on your podcast player right now. It takes two seconds, but it helps me get these episodes in front of more smout founders like you.

23:50Plus, by following the show, it helps you never miss an episode so you can absorb the best lessons from one of the world's best business books every single week. Business Book Club is the community of founders learning to lead better one chapter at a time. Thank you so much for listening and I'll see you on the next one.