Systems Thinking for Engineering Leaders: 5 Books for Bridging Technical and Business Complexity
Gold standard business texts for combatting organizational sub-optimization and aligning strategy, culture, and architecture across massive engineering operations
Leading an engineering company is a high-stakes exercise in managing complexity. It’s not just about knowing the physics or technical specifics; it’s about knowing how to orchestrate the efforts of thousands of engineers, millions or even billions in capital, and leverage decades of institutional knowledge and key capabilities to win market share.
However, leaders all suffer from human biases and tendencies, including:
The tendency for linear thinking and templates in planning (SWOT, vision, mission, values)
Tendency to reward people similar to themselves in business culture
A disconnect between how high level business decisions affect people with boots on the ground
To establish a broad understanding on how engineers can lead, I’ve selected five books that cover a large breadth of challenges in the organizational space.
High Output Management
Written by the legendary former CEO of Intel, this is considered the “Bible” of Silicon Valley operations. Andy Grove treats management as a production process, using the “Breakfast Factory” as a metaphor for high-stakes manufacturing.
He establishes a few key responsibilities of managers in high-tech organizations:
The Concept of Leverage: A manager’s output is the output of their organization plus the neighboring organizations they influence. A managers job is to focus on “High Leverage” activities—those where a small amount of their time produces a large amount of results.
Task-Relevant Maturity (TRM): There is no one-size-fits-all management style. Depending on the TRM, new people might require hand on training, whereas more experienced people don’t need to be handheld as much. It is the managers job to ensure that people are adequately trained for the job they are in.
Grove observed that all large organizations with a common business purpose eventually become hybrid/matrix organizations with dual reporting to both functional and project managers. This structure allows a huge amount of flexibility to match talent to business needs, but this requires a strong corporate culture to manage dual reporting.
Good Strategy Bad Strategy
Rumelt argues that most “strategy” is actually just “bad strategy”—a collection of buzzwords, goals, and ambition, and the use of templates with vision, mission, and value statements. It is what leaders tend to revert to when they don’t want to deal with tricky fundamentals and risk tradeoffs.
Bad strategy can manifest at higher level positions because of things we tend to perceive and reward in business culture - sales ability, visibility, or pure business knowledge without much technical depth.
“Good strategy” is more intellectual in nature, and involves a “kernel” that consists of three components:
A Diagnosis: Defining the nature of the challenge.
A Guiding Policy: An overall approach to deal with the obstacles identified.
Coherent Actions: Steps coordinated with one another to support the guiding policy.
Good strategy involves viewing the organization as a “chain link” of interconnected functions that are hard to replace. An organization is only as strong as its weakest subunit. In semis, if your EDA tools are world-class but your packaging tech is mediocre, the entire product fails.
To increase performance, you must integrate components more tightly, not just improve them in isolation, so good strategy can involve strategic acquisitions that enhance this chain link.
Good strategy is hard because organizations are resource limited and it can involve choosing between a number of lucrative opportunities. To concentrate on one pivotal objective requires the courage to ignore a dozen other “important” things.
Innovators Solution
Speaking of bad strategy, there are no buzzwords more frequently abused than the words “disruptive” and “innovation” because everyone wants the benefit of these, but few people want to bear the risk involved.
If The Innovator’s Dilemma explained why large companies fail, The Innovator’s Solution explains how companies structure themselves to overcome this dilemma. This books highlights the key difference between conventional business processes which are deliberate, vs innovation processes which are emergent.
It advocated spitting business into into execution and R&D teams:
Execution teams focus on core revenue generating business with low risk
R&D teams incubating new ideas and technologies with high risk
On the product side, one core theme as it applies to complex engineering products is the concept of Modular vs. Interdependent Architectures: Early in a product’s life, when performance isn’t “good enough,” interdependent (proprietary) architectures win because they allow for performance optimization and control of all the components. Once performance exceeds market needs, the industry shifts to modular architectures that involves “outsourcing” components with industry-standard interfaces. This can lead to commoditization.
One major topic Christiansen advocates is avoiding the bias to favor “Right stuff Criteria” when evaluating managers for new growth businesses. These are mental heuristics used to evaluate people in corporate contexts among a large body of candidates, such as prestige of the company, the school they went to, whether they are a good communicator, results-oriented, decisive, and have good people skills. However, the downside of “right stuff criteria” is that managers can succeed for reasons not of their own making and the tendency to favor success in low-risk contexts. Instead, potential managers should be asked what problems they have wrestled with in the past.
Christiansen also talks about “good” and “bad” money involved between core revenue generating businesses and innovative businesses. This refers to the risk vs return expectations tied to the money that the shareholder or investor gives. Most corporate finance literature advocate for minimizing risk in the core business since shareholder value is largely tied to it. However, innovation requires risk distributed among a number of “bets”. When a core business sags, “good money” can turn into “bad money” when corporations demand that new ventures become “big, fast”. This “impatient capital” forces startups to bypass the learning phase, often leading to failure.
Thinking in Systems
Humans tend to feel a comfort in linear thinking - of thinking in terms of cause and effect. Frederick Taylor, one of the pioneers of scientific management, strongly advocated for breaking down complex tasks into smaller, specialized roles with rigorously defined processes for each.
However, this type of thinking can narrow ones view to complex interdependencies involved. Semiconductors are perhaps the world’s most complex system of feedback loops not only in the circuit themselves, but within the organization and supply chain.
Donella Meadows provides the tools to understand non-linear cause-and-effect with a few key concepts:
Stocks, Flows, and Feedback: A system consists of elements (stocks), interconnections (flows), and a purpose. In our industry, the “stock” might be engineering talent or wafer inventory, and the “flow” is the rate of hiring or production.
Feedback Delays: Because of long lead times in fabs, by the time a problem becomes apparent, it is often too late to solve easily. Leaders must “get the beat” of the system and look for “leverage points” where small shifts in structure cause big changes in behavior.
The Trap of Sub optimization: When a subsystem (like a specific design team) optimizes for its own goals at the expense of the total system (the final chip’s power/performance), the whole organization suffers.
Reframing Organizations
“Reframing Organizations” by Bolman and Deal is one of the most influential leadership books that is commonly read in top MBA programs.
This book establishes four possible “frames” for leaders to view an organization through. These frames provide a framework for leaders to balance the coordination of the tasks involved with the psychological tendencies and needs of the humans that operate in organizations, including the desire for power and meaning. These four frames include:
The Structural Frame (The Factory): Focuses on goals, roles, and technology. It assumes the organization is a machine designed to achieve a specific task.
The Human Resource Frame (The Family): Focuses on the relationship between the organization and the people. It assumes that if people feel competent and supported, they are more willing to give more to the company.
The Political Frame (The Jungle): Sees the organization as an arena for competition. It recognizes that resources are scarce and power is the primary currency. Leaders here must be negotiators and coalition-builders.
The Symbolic Frame (The Theater): Focuses on meaning, ritual, and culture. It recognizes that in a world of ambiguity, people need a “vision” and symbols to give their work purpose.
Having knowledge of these frames allows leaders to be flexible in creating a culture that enables production. It also allow leaders to “reframing” to turn around failing organizations - that is, when organizations are facing issues in, say, structure and politics, leaders can emphasize the human resource and symbolic side to generate enough buy in amongst workers.
Conclusion: The Holistic Leader
Engineering leadership requires having a broad organizational knowledge of how peoples efforts are organized to achieve a goal. They must make decisions and set standards that balance the market needs and the psychology of the people within the organization.
All of the books I mentioned provide a foundational overview into the type of thinking leaders must face. Leaders might be concerned with how projects are being managed from within, the overall business strategy, how innovation is being handled, and whether all the parts of the organizations are being optimized properly.
Top leaders might start their morning in the structural frame (analyzing fab yields), move to the political frame (negotiating with a geopolitical partner), then the human resource frame (understand what motivates your workers to achieve), and end the day in the symbolic frame (rallying the team around a breakthrough).