David A. Antler

High Output Management

By Andy Grove

Read: 2017-02-05
Rating: 8/10
ISBN: 978-1608193387

It wouldn’t be right for me to read Shoe Dog and not a book by Andy Grove as well. This book is jam-packed with wisdom about management, a fairly mysterious topic to me!

my notes

Back in the eighties, when the Japanese seemed invincible, one explanation advanced for their ability to act quickly and decisively was the way Japanese offices were set up. In a Japanese office, a manager and his subordinates all sit around a big long table. People work on their own assignments but when they need to exchange information, everybody they work with sits within speaking distance, right around the same table. So information is exchanged in minutes and everybody can be reached with the same effort. As a result, because of the ease with which Japanese office workers communicate, they have, in fact, been slow to embrace electronic mail.

“Let chaos reign, then rein in chaos.”

This book contains three basic ideas. The first is an output-oriented approach to management. That is to say, we apply some of the principles and the discipline of the most output-oriented of endeavors—manufacturing—to other forms of business enterprise, including most emphatically the work of managers.

we found that all our employees “produce” in some sense—some make chips, others prepare bills, while still others create software designs or advertising copy. We also found that when we approached any work done at Intel with this basic understanding in mind, the principles and discipline of production gave us a systematic way of managing it, much as the language and concepts of finance created a common approach to evaluating and managing investments of any sort.

The second idea is that the work of a business, of a government bureaucracy, of most forms of human activity, is something pursued not by individuals but by teams. This idea is summed up in what I regard as the single most important sentence of this book: The output of a manager is the output of the organizational units under his or her supervision or influence.

High managerial productivity, I argue, depends largely on choosing to perform tasks that possess high leverage.

A team will perform well only if peak performance is elicited from the individuals in it.

You need to plan the way a fire department plans. It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event.

The key to survival is to learn to add more value—and that ultimately is what this book is about.

I strongly believe that applying the methods of production, exercising managerial leverage, and eliciting an athlete’s desire for peak performance can help nearly everyone—lawyers, teachers, engineers, supervisors, even book editors; in short, middle managers of all kinds—to work more productively.

the very first chapter: “The Basics of Production: Delivering a Breakfast (or a College Graduate, or a Compiler, or a Convicted Criminal…).”

the most useful management question that I use in interviews: “Is it better to be a hands-on or hands-off manager?”

“In order to build anything great, you have to be an optimist, because by definition you are trying to do something that most people would consider impossible. Optimists most certainly do not listen to leading indicators of bad news.”

the three fundamental types of production operations: process manufacturing, an activity that physically or chemically changes material just as boiling changes an egg; assembly, in which components are put together to constitute a new entity just as the egg, the toast, and the coffee together make a breakfast; and test, which subjects the components or the total to an examination of its characteristics.

All production flows have a basic characteristic: the material becomes more valuable as it moves through the process.

a college graduate to whom we are ready to extend an employment offer is more valuable to us than the college student we meet on campus for the first time.

if indicators are put in place, the competitive spirit engendered frequently has an electrifying effect on the motivation each group brings to its work, along with a parallel improvement in performance

Leading indicators give you one way to look inside the black box by showing you in advance what the future might look like.

trend indicators. These show output (breakfasts delivered, software modules completed, vouchers processed) measured against time (performance this month versus performance over a series of previous months), and also against some standard or expected level. A display of trends forces you to look at the future as you are led to extrapolate almost automatically from the past.

If you do not systematically collect and maintain an archive of indicators, you will have to do an awful lot of quick research to get the information you need, and by the time you have it, the problem is likely to have gotten worse.

Computer software products, such as compilers, are also typically developed in response to an anticipated market need rather than to specific customer order. So “building” to forecast is a very common business practice.

given Parkinson’s famous law, people would find ways to let whatever they’re doing fill the time available for its completion.

in the work of the soft professions, it becomes very difficult to distinguish between output and activity. And as noted, stressing output is the key to improving productivity, while looking to increase activity can result in just the opposite.

their value stems from the discipline and the thinking the writer is forced to impose upon himself as he identifies and deals with trouble spots in his presentation. Reports are more a medium of self-discipline than a way to communicate information. Writing the report is important; reading it often is not.

Your information sources should complement one another, and also be redundant because that gives you a way to verify what you’ve learned.

decisions can be separated into two kinds. The forward-looking sort are made, for example, in the capital authorization process. Here we allocate the financial resources of the company among various future undertakings. The second type is made as we respond to a developing problem or a crisis, which can either be technical (a quality control problem, for example) or involve people (talking somebody out of quitting).

The fact is, no single managerial activity can be said to constitute leadership, and nothing leads as well as example.

How you handle your own time is, in my view, the single most important aspect of being a role model and leader.

Another seemingly trivial piece of work—creating a tickler file—can improve daily work significantly for a long time.

delegation is an essential aspect of management. The “delegator” and “delegatee” must share a common information base and a common set of operational ideas or notions on how to go about solving problems, a requirement that is frequently not met. Unless both parties share the relevant common base, the delegatee can become an effective proxy only with specific instructions.

should you delegate activities that are familiar to you or those that aren’t? Before answering, consider the following principle: delegation without follow-through is abdication.

Because it is easier to monitor something with which you are familiar, if you have a choice you should delegate those activities you know best. But recall the pencil experiment and understand before the fact that this will very likely go against your emotional grain.

if we determine what is immovable and manipulate the more yielding activities around it, we can work more efficiently.

A manager should carry a raw material inventory in terms of projects.

this inventory should consist of things you need to do but don’t need to finish right away—discretionary projects, the kind the manager can work on to increase his group’s productivity over the long term. Without such an inventory of projects, a manager will most probably use his free time meddling in his subordinates’ work.

As a rule of thumb, a manager whose work is largely supervisory should have six to eight subordinates; three or four are too few and ten are too many. This range comes from a guideline that a manager should allocate about a half day per week to each of his subordinates

To make something regular that was once irregular is a fundamental production principle, and that’s how you should try to handle the interruptions that plague you.

In the first kind of meeting, called a process-oriented meeting, knowledge is shared and information is exchanged.

The purpose of the second kind of meeting is to solve a specific problem. Meetings of this sort, called mission-oriented, frequently produce a decision.

What is the role of the supervisor in a one-on-one? He should facilitate the subordinate’s expression of what’s going on and what’s bothering him. The supervisor is there to learn and to coach. Peter Drucker sums up the supervisor’s job here very nicely: “The good time users among managers do not talk to their subordinates about their problems but they know how to make the subordinates talk about theirs.”

How is this done? By applying Grove’s Principle of Didactic Management, “Ask one more question!” When the supervisor thinks the subordinate has said all he wants to about a subject, he should ask another question. He should try to keep the flow of thoughts coming by prompting the subordinate with queries until both feel satisfied that they have gotten to the bottom of a problem.

What is the leverage of the one-on-one? Let’s say you have a one-on-one with your subordinate every two weeks, and it lasts one and a half hours. Ninety minutes of your time can enhance the quality of your subordinate’s work for two weeks, or for some eighty-plus hours, and also upgrade your understanding of what he’s doing.

What is the role of the supervisor in the staff meeting—a leader, observer, expediter, questioner, decision-maker? The answer, of course, is all of them. Please note that lecturer is not listed. A supervisor should never use staff meetings to pontificate, which is the surest way to undermine free discussion and hence the meeting’s basic purpose

As a rule of thumb, I would recommend four minutes of presentation and discussion time per visual aid, which can include tables, numbers, or graphics. The presenter must highlight whatever he wants to emphasize with a color pen or pointer. Throughout, a presenter has to watch his audience like a hawk. Facial expressions and body language, among other things, will tell him if people are getting the message, if he needs to stop and go over something again, or if he is boring them and should speed up.

If you avoid the presenter’s eyes, yawn, or read the newspaper it’s worse than not being there at all. Lack of interest undermines the confidence of the presenter.

In our business we have to mix knowledge-power people with position-power people daily, and together they make decisions that could affect us for years to come. If we don’t link our engineers with our managers in such a way as to get good decisions, we can’t succeed in our industry. Now, status symbols most certainly do not promote the flow of ideas, facts, and points of view. What appears to be a matter of style really is a matter of necessity.

in the end self-confidence mostly comes from a gut-level realization that nobody has ever died from making a wrong business decision, or taking inappropriate action, or being overruled. And everyone in your operation should be made to understand this.

Politics and manipulation or even their appearance should be avoided at all costs.

Thus, the true output of the planning process is the set of tasks it causes to be implemented. The output of Intel’s annual plan, for instance, is the actions taken and changes prompted as a result of the thinking process that took place throughout the organization.

What are some of the advantages of organizing much of a company in a mission-oriented form? There is only one. It is that the individual units can stay in touch with the needs of their business or product areas and initiate changes rapidly when those needs change. That is it. All other considerations favor the functional-type of organization.

Grove’s Law: All large organizations with a common business purpose end up in a hybrid organizational form.

To put a man on the moon, NASA asked several major contractors and many subcontractors to work together, each on a different aspect of the project. An unintended consequence of the moon shot was the development of a new organizational approach: matrix management.

the core idea was that a project manager, somebody outside any of the contractors involved, could wield as much influence on the work of units within a given company as could the company management itself.

our behavior in a work environment can be controlled by three invisible and pervasive means. These are: • free-market forces • contractual obligations • cultural values

An imaginary composite index can be applied to measure an environment’s complexity, uncertainty, and ambiguity, which we’ll call the CUA factor.

He learns that if he is on a boat and wants to get ahead, it is better for him to help row than to run to the bow. The employee can then be promoted into a more complex, uncertain, ambiguous job. (These tend to pay more.)

A manager’s output is the output of the organization under his supervision or influence.

When a person is not doing his job, there can only be two reasons for it. The person either can’t do it or won’t do it; he is either not capable or not motivated. To determine which, we can employ a simple mental test: if the person’s life depended on doing the work, could he do it? If the answer is yes, that person is not motivated; if the answer is no, he is not capable.

The single most important task of a manager is to elicit peak performance from his subordinates. So if two things limit high output, a manager has two ways to tackle the issue: through training and motivation.

self-limiting. That is, when a need is gratified, it can no longer motivate a person. Once a predetermined goal or level of achievement is reached, the need to go any further loses urgency.

works to sharpen his own skill, trying to do a little bit better this time than the time before, just as a teenager on a skateboard practices the same trick over and over again. The same teenager may not sit still for ten minutes to do homework, but on a skateboard he is relentless, driven by the self-actualization need, a need to get better that has no limit.

management needs to create an environment to foster it. In an MBO system, for example, objectives should be set at a point high enough so that even if the individual (or organization) pushes himself hard, he will still only have a fifty-fifty chance of making them. Output will tend to be greater when everybody strives for a level of achievement beyond his immediate grasp, even though trying means failure half the time. Such goal-setting is extremely important if what you want is peak performance from yourself and your subordinates.

if the possibility for improvement does not exist, the desire to keep practicing vanishes. I knew an Olympic fencing champion, a Hungarian who immigrated to this country. When I ran into him recently, he told me that he had quit fencing shortly after arriving in the U.S. He said that the level of competition here was not high enough to produce someone who could give him a contest, and that he couldn’t bear to fence any longer because every time he did, he felt his skill was diminishing.

In general, in the upper levels of motivation, fear is not something coming from the outside. It is instead fear of not satisfying yourself that causes you to back off. You cannot stay in the self-actualized mode if you’re always worried about failure.

there a systematic way to lead people to self-actualization? For an answer, let’s ask another question. Why does a person who is not terribly interested in his work at the office stretch himself to the limit running a marathon? What makes him run? He is trying to beat other people or the stopwatch. This is a simple model of self-actualization, wherein people will exert themselves to previously undreamed heights, forcing themselves to run farther or faster, while their efforts fill barrels with sweat. They will do this not for money, but just to beat the distance, the clock, or other people. Consider

we must first overcome cultural prejudice. Our society respects someone’s throwing himself into sports, but anybody who works very long hours is regarded as sick, a workaholic. So the prejudices of the majority say that sports are good and fun, but work is drudgery, a necessary evil, and in no way a source of pleasure.

competitive sports. And the best way to get that spirit into the workplace is to establish some rules of the game and ways for employees to measure themselves. Eliciting peak performance means going up against something or somebody.

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.

his pleasure in his work began to wane after [his paper and the competitive paper] merged. ‘I’ll never forget that day of the merger,’ the columnist said. ‘I walked out to get the train, and I just thought: There isn’t anyone else to beat.’ ”

The role of the manager here is also clear: it is that of the coach. First, an ideal coach takes no personal credit for the success of his team, and because of that his players trust him. Second, he is tough on his team. By being critical, he tries to get the best performance his team members can provide. Third, a good coach was likely a good player himself at one time. And having played the game well, he also understands it well.

Turning the workplace into a playing field can turn our subordinates into “athletes” dedicated to performing at the limit of their capabilities—the key to making our team consistent winners.

a manager’s most important responsibility is to elicit top performance from his subordinates.

Some researchers in this field argue that there is a fundamental variable that tells you what the best management style is in a particular situation. That variable is the task-relevant maturity (TRM) of the subordinates, which is a combination of the degree of their achievement orientation and readiness to take responsibility, as well as their education, training, and experience. Moreover, all this is very specific to the task at hand, and it is entirely possible for a person or a group of people to have a TRM that is high in one job but low in another.

when the TRM is low, the most effective approach is one that offers very precise and detailed instructions, wherein the supervisor tells the subordinate what needs to be done, when, and how: in other words, a highly structured approach. As the TRM of the subordinate grows, the most effective style moves from the structured to one more given to communication, emotional support, and encouragement, in which the manager pays more attention to the subordinate as an individual than to the task at hand. As the TRM becomes even greater, the effective management style changes again. Here the manager’s involvement should be kept to a minimum, and should primarily consist of making sure that the objectives toward which the subordinate is working are mutually agreed upon. But regardless of what the TRM may be, the manager should always monitor a subordinate’s work closely enough to avoid surprises. The presence or absence of monitoring, as we’ve said before, is the difference between a supervisor’s delegating a task and abdicating it.

The fundamental variable that determines the effective management style is the task-relevant maturity of the subordinate.

delivering a good performance review is really a unique act given both our cultural background and our professional training.

the idea of “present value” used in finance: how much will the future-oriented activity pay back over time? And how much is that worth today?

The old saying has it that when we promote our best salesman and make him a manager, we ruin a good salesman and get a bad manager. But if we think about it, we see we have no choice but to promote the good salesman. Should our worst salesman get the job? When we promote our best, we are saying to our subordinates that performance is what counts.

The opening shot usually occurs when you are on the run. On your way to what you consider an important meeting, your subordinate timidly stops you and mutters under his breath, “Do you have a minute?” He then mutters further that he has decided to leave the company. You look at him wide-eyed. Your initial reaction to his announcement is absolutely crucial. If you’re human, you’ll probably want to escape to your meeting, and you mumble something back about talking things over later. But in almost all such cases, the employee is quitting because he feels he is not important to you. If you do not deal with the situation right at the first mention, you’ll confirm his feelings and the outcome is inevitable.

If the absolute amount of a raise in salary is important, that person is probably motivated by physiological or safety/security needs. If the relative amount of a raise—what he got compared to others—is the important issue, that person is likely to be motivated by self-actualization, because money here is a measure, not a necessity.

If your training efforts result in a 1 percent improvement in your subordinates’ performance, your company will gain the equivalent of two hundred hours of work as the result of the expenditure of your twelve hours. This assumes, of course, that the training will accurately address what students need to know to do their jobs better. This isn’t always so—particularly with respect to “canned courses” taught by someone from outside. For training to be effective, it has to be closely tied to how things are actually done in your organization.

For training to be effective, it also has to maintain a reliable, consistent presence. Employees should be able to count on something systematic and scheduled, not a rescue effort summoned to solve the problem of the moment. In other words, training should be a process, not an event.