The key to optimization is to find the most cost-effective way to deploy your limited resources.

When diagnosing an operational process, first find the limiting step. Then offset the other steps around that step.

Look for appropriate places for receiving inspection, in-process inspection, and final inspection. Whenever you can, choose in-process tests for quality vs. tests that destroy product or halt production.

Try to diagnose and fix problems at the lowest value stage. As raw materials move through production, each step adds value and cost. The earlier you find a problem the better.

Good managers have to have good indicators or measurements to tell them how their output is working. It's helpful to pair effect and counter-effect measures together. Managing inventory levels and incidence of shortages, for example.

Good indicators cover the output, not the activity. Orders, not calls. Although both matter. Good paired indicators stress quality of work.

Linearity indicators can tell us if we're likely to miss our target. Show straight-line progress vs. actual progress.

Leverage is the output generated by a specific type of work. High leverage generates high levels of output. Automation is an obvious form of leverage. But an even better one is work simplication. Create a flow chart of current state. Identify number of steps, and look for all ways you can remove or consolidate steps.

A Manager's Output = The output of his organization + the output of the neighboring organizations under his influence.

A manager's job typically consists of information gathering, nudging team members toward certain decisions, making decisions oneself.

A manager should move toward where their leverage will be the greatest.

High leverage activities include decisions or activities where many people are impacted, where a person's activity is impacted over a long period of time relative to the manager's input, or when a large group's work is affected by information or guidance from the manager. Each time you impart knowledge you're delivering high leverage. Things you set up once that operate for a long time are useful leverage.

Avoid negative leverage. A good example is managerial meddling. This forces team members to take a restricted view of their areas of influence or autonomy over time.

Delegation is a fantastic use of leverage. It requires a common information base. It requires follow through - without it you're abdicating, not delegating.

Batching similar tasks is a form of leverage.

Good managers are great at using their calendars to manage their "production". Scheduling work that is not time-critical in between the firm landscape of their day. You must actively use it. And you should say no to work beyond your capacity to handle it. Need to account for slack - allow looseness in your schedule.

Monitor the lowest value added step - review rough drafts vs. finals. Use task-relevant maturity to determine frequency of follow up.

The number of subordinates matters. Generally speaking 6-8 is optimal leverage. Managers should allocate a half day per week to each.

How to Run Meetings

For one-on-ones, consider the job or task relevant maturity of the subordinate when determining frequency. One on ones should last an hour at a minimum. Near subordinate's work area. It is their meeting - they drive the agenda. Ask them to prepare an outline. The key to good one on ones is didactic management - keep asking questions. Ask subordinates to have a hold or agenda list to tackle during 1:1s, vs. making ad hoc interruptions all the time.

Staff meetings provide oppportunities to examine peer relationships. Can discuss anything that affects more than. people present. Should always have an agenda. Your job is leader, observer, expediter, questioner, decision-maker, but not lecturer.

Decision Making

Have free discussion, where everyone gets to share their opinions and points of view. Make a clear decision. Then everyone must give the decision full support (even if they don't agree.) If it ends up being wrong, start over at the beginning.

This sounds simple but can be quite difficult because people often have trouble expressing their views forcefully, have a hard time making hard decisions, and have a hard time supporting decisions they don't agree with.

Ideally decisions are reached and acted on at the lowest competent level. This is another for of leverage for the organization.

Your goal when making a decision is to answer the following:


  1. Establish projected need or demand. Need to consider both now and in the future.
  2. Establish current state. List present capabilities and porjects in the works.
  3. Compare and reconcile steps 1 and 2. What do you need to do to close the gap? What can you realistically do?

The output of a planning process is the series of steps that need to be done to execute on the plan.

Management by Objectives can help codify this. Ask youself where you want to go (the objective), and how you will pace yourself to see if you're getting there (the key results.)

Hybrid organizations

"Good management rests on a reconciliation of centralization and decentralization" - Alfred Sloan

All large organizations sharing a common business purpose eventually end up becoming hybrid organizations.

To make them work you have to have a way to coordinate the mission-oriented units and functional units. The functional units have to be allocated to deliver and meet the needs of the mission units.

Managing People

When a person isn't doing their job, ask yourself if they could if their life depended on it. I can't play the violin - I have a capability problem. I theoretically could run a 6 minute mile, but I don't want to. I have a motivation problem. (Similar to Fogg's Behavior Change Model.)

Thus your two tools are training and motivation. At lower levels or for certain people, money can be an effective motivational tool. But it quickly loses its power - it's not longer a motivator but rather a measurement for achievement.

MBOs are helpufl because they tie the performance of the organization to the performance of the individual. You're providing them with a "stopwatch" to see how they're doing.

Good coaches provide feedback - they can be critical, but because they're trying to get the best out of their team. Ideally they've done it before - they have street cred.

Using task-relevant maturity well:

One of your goals should be to raise the task-level maturity of your team as quickly as possible.

Giving reviews is the single most important form of task-relevant feedback. Reviews should focus on the skill level of the subordinate, and intensifying the motivation.

Remember you're assessing performance, not potential.