The Leadership Philosophy of Jensen Huang
The Leadership Philosophy of Jensen Huang
“What is this machine that you are trying to create? What is its output, what is its input, what are the conditions that it is in? What is the industry like? Is it a fast-moving industry? Is it bureaucratic? Is it highly regulated? What kind of industry is it? And what are you trying to build?”
Jensen Huang, on the importance of first principles thinking when creating and running a company.
NVIDIA is the only chip company and one of the only large public technology companies that has been continuously led by a founder-CEO for over 3 decades since its founding – and Jensen Huang is one of the longest serving technology CEOs in Silicon Valley1. Jensen rarely speaks publicly about his management philosophy but in recent months, he gave a couple of candid interviews2 about his leadership style and company culture. These interviews offer a direct view of his leadership philosophy and shed some light onto the culture of a unique, founder-led company, which is now one of only 8 publicly traded companies to cross a market valuation of one trillion dollars. This essay summarizes the key tenets of Jensen Huang’s leadership philosophy, as distilled from his interviews.
Develop and Trust Your Intuition
“If you work in a very technology driven industry, it is essential that you understand the underpinnings of the technology so that you have an intuition for how the industry is going to change. You need to have an intuition for which one of the technologies is a bit of left turn and which one is fundamental to realize that may be the early work we did with generative adversarial models to variational auto encoders to diffusional models – they were somewhat cousins of each other and that realizing the impact of one could lead to breakthroughs in another which eventually opened up the horizon for diffusion models which are utterly incredible.”
Jensen Huang
Jensen talks about the importance of intuition, especially for leaders of fast-moving technology companies. Having an intuition for technology allows a leader to better extrapolate the future, which is essential because while technology changes very fast, it takes several years to build a great solution based on that technology. Striking a balance between building something that takes years to do while using technology that is changing by a factor of 1000 every few years – Jensen argues can only be done with an innate intuition, curiosity and conviction that is essential to run a technology driven company.
Shun Commodity Work
“We never talk about market share in our company…because the concept of market share says that there are a whole bunch of other people who are doing the same thing. And if they are doing the same thing, then why are we doing it? You know, why am I squandering the lives of these incredibly talented people to go do something that's already been done? And so, we tend not to go fight people for market share, fight people for markets that that that are already commoditized and so, that's one way of thinking. To go do something that's never been done before. The other way to demonstrate that is to walk away from businesses that that have been commoditized. Either through our own initiative or otherwise, we've walked away from many businesses in the past and so that demonstrates very clearly to our employees that we're not going to do commodity work and so the combination of choosing the right work and walking away from the wrong work, that is the best way...”
Jensen Huang
Avoiding commodity work is a core business principle for Jensen. He proactively focuses the company on something that has never been done before and proactively walks away from businesses that have already been commoditized. This is a way to “naturally attract” the most amazing people to the company and also to make the best use of these talented employees and keep them motivated to do their life’s work at NVIDIA.
Flat org – 40 Direct Reports and No 1:1s
“A company's architecture should not be generic. Every company in the world should not be built like the US military. And in fact, if you look at every company's org chart in the world, they kind of look like the US military…the number of direct reports of CEOs are very few and the number of direct reports of the people who are just learning how to manage, the first level managers are very large. It's exactly the opposite of how it should probably be architected.”
Jensen Huang
Jensen’s guiding principle at NVIDIA is to keep the company as small as possible. This naturally requires him to empower people, which in turn necessitates having a flat org structure. Jensen has ~40 direct reports, highly unusual for a public company CEO. He does not have regularly scheduled 1:1s with any of his staff.
“I wanted a company that was smaller, not larger. You want a company that's as small as possible, not as large as possible. It needs to be as large as necessary to do the job well but should be as small as possible. And so naturally you want to empower people. Well, if you want, if you want an organization that obeys command and control, then you make it like a pyramid, just like the military all the way back to the Roman Empire. But if you want to empower people, then you want to make it as flat as possible so that information travels quickly. In order to make something as flat as possible, the first layer has to be well considered. Well, the first layer happens to be the most senior people and you would think that they need the least amount of management. None of my management team is coming to me for career advice. They made it, and they're doing great. So, I have a whole lot of people reporting to me because I don't need to do one on ones. I don't have to do career coaching.”
Jensen Huang
No Business Units and No Divisions
“We don't have business units; we don't have divisions. Everybody works as one. And the company is shaped in a way that allows us to build accelerated computing best. If you ask me to go do fried chicken, we will have a hard time doing fried chicken. But accelerated computing, we do very well.”
Jensen Huang
No Status Reports
“We don't do status reports. I don't read any status reports. And the reason I don't is because status reports are meta-information by the time you get them. They are barely informative. They have been distilled and refined and bias has been inserted, perspective has already been added and you're not looking at ground truth anymore. I tend to appreciate information that that anybody presents. So, any employee can send out an e-mail called “Top Five Things” and it can be just whatever happens to be their top five things, whatever they observed or whatever they did or whatever they learned. If you send it out, I will read it.”
Jensen Huang
Jensen categorically refuses to read status reports. Instead, employees are encouraged to send out their list of “Top Five Things” summarizing information that they want everyone including the CEO to know. Every morning, Jensen reads about one hundred “Top Five Things” emails that are sent to him from people all across the company. He uses these emails to “stochastically sample the system” and get a feeling for whether the company is going in the direction he wants it to go. For example, Jensen looks out for whether employees’ “Top Five Things” reflect real actions and execution (not just words) around the company strategy. Jensen deliberately doesn’t broadcast his own “Top Five Things” because if he did, he would be “contaminating the system”. He keeps his list to himself.
“Top Five Things” appears to be an informal variant of the more conventional OKRs (Objectives and Key Results). But it allows for quicker, stochastic, and more real-time checks on the state of the organization.
No 5 Year Plan; No 1 Year Plan; No Plan!
“We don't do a periodic planning system. And the reason for that is because the world is a living, breathing thing. And so, we just plan continuously, there's no five year plan, there’s no one year plan. There’s no plan! There's just…what we're doing.”
Jensen called out “giant five-year plans” as “horrible” and “ridiculous” for technology companies, simply because technology is always evolving at a much faster pace. Instead, Jensen advocates a “continuous planning” system where the company is constantly observing and adapting to a fast-changing world. This requires formulating a view of the world based on first principles thinking, trusting your intuition and acting with conviction. Along the way, if he realizes he is wrong, then he calls it out and changes course right away – as many times as necessary – in real time – he calls this ability to change “the beauty of modern leadership”.
What Jensen calls “continuous planning” is analogous to the “Observe, Orient, Decide, Act” (OODA loop) approach developed by US Air Force fighter pilot John Boyd. So long as your OODA loop is faster than your competitor’s, you are likely to come out ahead.
Reason Out Loud with Employees
“I spend a lot of time reasoning through my decisions, which empowers employees because they learn how leaders think through problems. In every meeting I'm in, I'm explaining how I think through the situation; let me reason through this; let me explain why I did that; how do we compare and contrast these ideas. That process of management I think is really empowering.”
Jensen Huang
When asked about his leadership style and how it had evolved over time, Jensen called out being direct as a key attribute. If he doesn’t like the way something is going, he likes to be direct and say it. He doesn’t like to convey his decisions via 1:1s or by taking individual employees aside; if he has a different opinion, he just says it aloud in a group setting. The idea, according to him is to ensure that everyone has all the context, all the time. He proactively spends a lot of time reasoning through his decisions in group settings so that employees understand and appreciate his thought process behind important decisions.
Allow Information to Travel as Quickly as Possible
“We don't do just vice president meetings or just director or board meetings. The meetings I have, there's new college grads in there. There are people from every different organization. We are just all sitting in there. You want the person who is most informed, or best skilled or just has the most experience. They either made the mess, or they actually confronted the situation. You want ground truth and experts, the best as you can.”
Jensen Huang
Jensen’s approach is to communicate to all stakeholders at once so that there are no silos formed within the organization. His rationale is that once you have a formulated a strategy, it doesn’t make sense to tell just a few people about it, he would rather tell everybody at once. He welcomes feedback from anyone and is open to refining his strategy. He believes there are very few secrets at NVIDIA, and this is another way to empower employees and make them feel valued.
Aart de Geus recently announced his retirement after 37 years as CEO of Synopsys.