Output Senior Quotes

Eliciting peak performance means going up against something or somebody. Let me give you a simple example. For years the performance of the Intel facilities maintenance group, which is responsible for keeping our buildings clean and neat, was mediocre, and no amount of pressure or inducement seemed to do any good. We then initiated a program in which each building’s upkeep was periodically scored by a resident senior manager, dubbed a “building czar.” The score was then compared with those given the other buildings. The condition of all of them dramatically improved almost immediately. Nothing else was done; people did not get more money or other rewards. What they did get was a racetrack, an arena of competition. If your work is facilities maintenance, having your building receive the top score is a powerful source of motivation. This is key to the manager’s approach and involvement: he has to see the work as it is seen by the people who do that work every day and then create indicators so that his subordinates can watch their “racetrack” take shape.

Then at 00:28, while reducing power to levels low enough to begin - a process which would take about an hour - Senior Reactor-Control Engineer Leonid Toptunov made a mistake when switching from manual to automatic control, causing the control rods to descend far more than intended.99 Toptunov had only been in his current position for a few months, during which the reactor power had never been reduced.100 Perhaps his nerves got the better of him. Power levels - supposed to be held at 1,500-Megawatts thermal (MWt) for the test - dropped all the way to 30MWt. (The reactor’s output is measured in terms of thermal power - the turbogenerator’s in electrical power. Energy is lost during the transfer from steam to electricity, hence the higher thermal figures.)

gave up on the idea of creating “socialist men and women” who would work without monetary incentives. In a famous speech he criticized “equality mongering,” and thereafter not only did different jobs get paid different wages but also a bonus system was introduced. It is instructive to understand how this worked. Typically a firm under central planning had to meet an output target set under the plan, though such plans were often renegotiated and changed. From the 1930s, workers were paid bonuses if the output levels were attained. These could be quite high—for instance, as much as 37 percent of the wage for management or senior engineers. But paying such bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow. Even when bonuses and incentives were effective in changing behavior, they often created other problems. Central planning was just not good at replacing what the great eighteenth-century economist Adam Smith called the “invisible hand” of the market. When the plan was formulated in tons of steel sheet, the sheet was made too heavy. When it was formulated in terms of area of steel sheet, the sheet was made too thin. When the plan for chandeliers was made in tons, they were so heavy, they could hardly hang from ceilings. By the 1940s, the leaders of the Soviet Union, even if not their admirers in the West, were well aware of these perverse incentives. The Soviet leaders acted as if they were due to technical problems, which could be fixed. For example, they moved away from paying bonuses based on output targets to allowing firms to set aside portions of profits to pay bonuses. But a “profit motive” was no more encouraging to innovation than one based on output targets. The system of prices used to calculate profits was almost completely unconnected to the value of new innovations or technology. Unlike in a market economy, prices in the Soviet Union were set by the government, and thus bore little relation to value. To more specifically create incentives for innovation, the Soviet Union introduced explicit innovation bonuses in 1946. As early as 1918, the principle had been recognized that an innovator should receive monetary rewards for his innovation, but the rewards set were small and unrelated to the value of the new technology. This changed only in 1956, when it was stipulated that the bonus should be proportional to the productivity of the innovation. However, since productivity was calculated in terms of economic benefits measured using the existing system of prices, this was again not much of an incentive to innovate. One could fill many pages with examples of the perverse incentives these schemes generated. For example, because the size of the innovation bonus fund was limited by the wage bill of a firm, this immediately reduced the incentive to produce or adopt any innovation that might have economized on labor.

What happens inside the WBR is critical execution not normally visible outside the company. A well-run WBR meeting is defined by intense customer focus, deep dives into complex challenges, and insistence on high standards and operational excellence. One may wonder, at what level is it appropriate for executives to shift focus to output metrics? After all, companies and their senior executives are routinely judged by output metrics like revenue and profit. Jeff knows this well, in part based on his time spent working at a Wall Street investment firm. The simple answer is that the focus does not shift at any level of management. Yes, executives know their output metrics backward and forward. But if they don’t continue to focus on inputs, they lose control over and visibility into the tools that generate output results.

It is worth noting here that, at Amazon, even the most senior executives review the full WBR deck of metrics, including all the inputs and outputs. Metrics—as well as anecdotes about the customer experience—are the area where the leadership principle Dive Deep is most clearly demonstrated by senior leaders. They carefully examine the trends and changes in the metrics; audit incidents, failures, and customer anecdotes; and consider whether the input metrics should be updated in some way to improve the outputs.

The more ambitious the OKR, the greater the risk of overlooking a vital criterion. To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results, to measure both effect and counter effect, as Grove wrote in High Output Management. When key results focus on output, Grove noted, 'the paired counterparts should stress the quality of work, thus in Accounts Payable, the number of vouchers processed should be paired with the number of errors found either by auditing or by our suppliers. For another example, the number of square feet cleaned by a custodial group should be paired with by rating of the quality of work as assessed by a senior manager with an office in that building.' -- Let the quantity goal be three new features, the paired quality goal will be fewer than 5 bugs per feature in quality assurance testing. The result - developers will write cleaner code. If the quantity goal is 50 million dollars in Q1 sales, the quality goal can be 10 million dollars in maintenance contracts, because sustained retention by sales professionals will increase customer success and satisfaction.

In a famous speech he criticized “equality mongering,” and thereafter not only did different jobs get paid different wages but also a bonus system was introduced. It is instructive to understand how this worked. Typically a firm under central planning had to meet an output target set under the plan, though such plans were often renegotiated and changed. From the 1930s, workers were paid bonuses if the output levels were attained. These could be quite high—for instance, as much as 37 percent of the wage for management or senior engineers. But paying such bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus. The fact that bonuses were paid monthly also kept everyone focused on the present, while innovation is about making sacrifices today in order to have more tomorrow.

The more ambitious the OKR, the greater the risk of overlooking a vital criterion. To safeguard quality while pushing for quantitative deliverables, one solution is to pair key results—to measure “both effect and counter-effect,” as Grove wrote in High Output Management. When key results focus on output, Grove noted: [T]heir paired counterparts should stress the quality of [the] work. Thus, in accounts payable, the number of vouchers processed should be paired with the number of errors found either by auditing or by our suppliers. For another example, the number of square feet cleaned by a custodial group should be paired with a . . . rating of the quality of work as assessed by a senior manager with an office in that building.

If the decision-making process has proceeded correctly up to this point, the senior manager will be making the decision having had the full benefit of free discussion wherein all points of view, facts, opinions, and judgments were aired without position-power prejudice. In other words, it is legitimate—in fact, sometimes unavoidable—for the senior person to wield position-power authority if the clear decision stage is reached and no consensus has developed. It is not legitimate—in fact, it is destructive—for him to wield that authority any earlier. This is often not easy. We Americans tend to be reluctant to exercise position power deliberately and explicitly—it is just “not nice” to give orders. Such reluctance on the part of the senior manager can prolong the first phase of the decision-making process—the time of free discussion—past the optimum point, and the decision will be put off.

Amazon has a deep belief in setting goals that stretch teams and individuals but defining them in a way that puts the team in control of hitting these lofty goals. This empowers teams and stretches them to great achievements. Of course, many of the goals have a direct customer experience component and rarely are they revenue-oriented. “Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs,” wrote Bezos. “To be clear, we take these financial outputs seriously, but we believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time.

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