High Output Management

by Andrew S. Grove

A manager’s output = the output of his organization + the output of the neighboring organizations under his influence.

Ms. Manager, you know more about our product’s viral loop than anyone in the company? That’s worth exactly nothing unless you can effectively transfer that knowledge to the rest of the organization. That’s what being a manager is about. It’s not about how smart you are or how well you know your business; it’s about how that translates to the team’s performance and output.

As a means to obtain this leverage, a manager must understand, as Andy writes: “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.” This insight enables a manager to dramatically focus her efforts. All you can do to improve the output of an employee is motivate and train. There is nothing else.

common rule we should always try to heed is to detect and fix any problem in a production process at the lowest-value stage possible. Thus, we should find and reject the rotten egg as it’s being delivered from our supplier rather than permitting the customer to find it. Likewise, if we can decide that we don’t want a college candidate at the time of the campus interview rather than during the course of a plant visit, we save the cost of the trip and the time of both the candidate and the interviewers. And we should also try to find any performance problem at the time of the unit test of the pieces that make up a compiler rather than in the course of the test of the final product itself.

Just to get a fix on your output, you need a number of indicators; to get efficiency and high output, you need even more of them. The number of possible indicators you can choose is virtually limitless, but for any set of them to be useful, you have to focus each indicator on a specific operational goal.

Nowhere can indicators—and paired indicators—be of more help than in administrative work. Having come to this realization, our company has been using measurements as a key tool to improve the productivity of administrative work for several years. The first rule is that a measurement—any measurement—is better than none. But a genuinely effective indicator will cover the output of the work unit and not simply the activity involved. Obviously, you measure a salesman by the orders he gets (output), not by the calls he makes (activity).

Leading indicators give you one way to look inside the black box by showing you in advance what the future might look like. And because they give you time to take corrective action, they make it possible for you to avoid problems. Of course, for leading indicators to do you any good, you must believe in their validity. While this may seem obvious, in practice, confidence is not as easy to come by as it sounds. To take big, costly, or worrisome steps when you are not yet sure you have a problem is hard. But unless you are prepared to act on what your leading indicators are telling you, all you will get from monitoring them is anxiety. Thus, the indicators you choose should be credible, so that you will, in fact, act whenever they flash warning signals.

The linearity indicator can give us an early warning that we are likely to miss our target.

I have found the “stagger chart” the best means of getting a feel for future business trends.

output. But in both widget manufacturing and administrative work, something else can also increase the productivity of the black box. This is called work simplification.

To get leverage this way, you first need to create a flow chart of the production process as it exists. Every single step must be shown on it; no step should be omitted in order to pretty things up on paper. Second, count the number of steps in the flow chart so that you know how many you started with. Third, set a rough target for reduction of the number of steps. In the first round of work simplification, our experience shows that you can reasonably expect a 30 to 50 percent reduction.

To implement the actual simplification, you must question why each step is performed. Typically, you will find that many steps exist in your work flow for no good reason. Often they are there by tradition or because formal procedure ordains it, and nothing practical requires their inclusion. Remember, the “visa factory” at our embassy in Britain didn’t really have to process 100 percent of the applicants. So no matter what reason may be given for a step, you must critically question each and throw out those that common sense says you can do without. We found that in a wide range of...

A manager’s output = The output of his organization + The output of the neighboring organizations under his influence

A manager can do his “own” job, his individual work, and do it well, but that does not constitute his output. If the manager has a group of people reporting to him or a circle of people influenced by him, the manager’s output must be measured by the output created by his subordinates and associates. If the manager is a knowledge specialist, a know-how manager, his potential for influencing “neighboring” organizations is enormous.

Thus, the definition of “manager” should be broadened: individual contributors who gather and disseminate know-how and information should also be seen as middle managers, because they exert great power within the organization.

But the key definition here is that the output of a manager is a result achieved by a group either under her supervision or under her influence.

While the manager’s own work is clearly very important, that in itself does not create out...

It is important to understand that a manager will find himself engaging in an array of activities in order to affect output. As the middle managers I queried said, a manager must form opinions and make judgments, he must provide direction, he must allocate resources, he must detect mistakes, and so on. All these are necessary to achieve output. But output and activity are by no means the same thing.

As president of a company, I can affect output through my direct subordinates—group general managers and others like them—by performing supervisory activities. I can also influence groups not under my direct supervision by making observations and suggestions to those who manage them. Both types of activity will, I hope, contribute to my output as a manager by contributing to the output of the company as a whole. I was once asked by a middle manager at Intel how I could teach in-plant courses, visit manufacturing plants, concern myself with the problems of people several levels removed from me in the organization, and still have time to do my job. I asked him what he thought my job was. He thought for a moment, and then answered his own question, “I guess those things are your job too, aren’t they?” They are absolutely my job—not my entire job, but part of it, because they help add to the output of Intel.

Like a housewife’s, a manager’s work is never done. There is always more to be done, more that should be done, always more than can be done.

A manager must keep many balls in the air at the same time and shift his energy and attention to activities that will most increase the output of his organization. In other words, he should move to the point where his leverage will be the greatest.

As you can see, much of my day is spent acquiring information. And as you can also see, I use many ways to get it. I read standard reports and memos but also get information ad hoc. I talk to people inside and outside the company, managers at other firms or financial analysts or members of the press. Customer complaints, both external and internal, are also a very important source of information. For example, the Intel training organization, which I serve as an instructor, is an internal customer of mine. To cut myself off from the casual complaints of people in that group would be a mistake because I would miss getting an evaluation of my performance as an internal “supplier.” People also tell us things because they want us to do something for them; to advance their case, they will sometimes shower us with useful information. This is something we should remember, apart from whether we do as they ask. I have to confess that the information most us...

Reports are more a medium of self-discipline than a way to communicate information. Writing the report is important; reading it often is not.

As we will see later, the preparation of an annual plan is in itself the end, not the resulting bound volume. Similarly, our capital authorization process itself is important, not the authorization itself.

To prepare and justify a capital spending request, people go through a lot of soul-searching analysis and juggling, and it is this mental exercise that is valuable. The formal authorization is useful o...

Other activities—conveying information, making decisions, and being a role model for your subordinates—are all governed by the base of information that you, the manager, have about the tasks, the issues, the needs, and the problems facing your organization. In short, information-gathering is the basis of all other managerial work, which is why I choose to spend so much of my day doing it.

Finally, something more subtle pervades the day of all managers. While we move about, doing what we regard as our jobs, we are role models for people in our organization—our subordinates, our peers, and even our supervisors. Much has been said and written about a manager’s need to be a leader. The fact is, no single managerial activity can be said to constitute leadership, and nothing leads as well as example.

Values and behavioral norms are simply not transmitted easily by talk or memo, but are conveyed very effectively by doing and doing visibly.

All managers need to act so that they can be seen exerting influence, but they should do so in their own way. Some of us feel comfortable dealing with large groups and talking about our feelings and values openly in that fashion. Others prefer working one-on-one with people in a quieter, more intellectual environment. These and other styles of leadership will work, but only if w...

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

Before you are horrified by how much time I spend in meetings, answer a question: which of the activities—information-gathering, information-giving, decision-making, nudging, and being a role model—could I have performed outside a meeting? The answer is practically none. Meetings provide an occasion for managerial activities. Getting together with others is not, of course, an activity—it is a medium. You as a manager can do your work in a meeting, in a memo, or through a loudspeaker for that matter. But you must choose the most effective medium for what you want to accomplish, and that is the one that gives you the greatest leverage. More about meetings later.

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. (Two days a week per subordinate would probably lead to meddling; an hour a week does not provide enough opportunity for monitoring.)

But there is another way to regard meetings. Earlier we said that a big part of a middle manager’s work is to supply information and know-how, and to impart a sense of the preferred method of handling things to the groups under his control and influence. A manager also makes and helps to make decisions. Both kinds of basic managerial tasks can only occur during face-to-face encounters, and therefore only during meetings. Thus I will assert again that a meeting is nothing less than the medium through which managerial work is performed. That means we should not be fighting their very existence, but rather using the time spent in them as efficiently as possible.

The two basic managerial roles produce two basic kinds of meetings. In the first kind of meeting, called a process-oriented meeting, knowledge is shared and information is exchanged. Such meetings take place on a regularly scheduled basis. 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. They are ad hoc affairs, not scheduled long in advance, because they usually can’t be.

The supervisor’s effort at a staff meeting should go into keeping the discussion on track, with the subordinates bearing the brunt of working the issues.

Thus the chairman must have a clear understanding of the meeting’s objective—what needs to happen and what decision has to be made. The absolute truth is that if you don’t know what you want, you won’t get it. So before calling a meeting, ask yourself: What am I trying to accomplish? Then ask, is a meeting necessary? Or desirable? Or justifiable? Don’t call a meeting if all the answers aren’t yes.

Peter Drucker said that if people spend more than 25 percent of their time in meetings, it is a sign of malorganization. I would put it another way: the real sign of malorganization is when people spend more than 25 percent of their time in ad hoc mission-oriented meetings.

All a manager can expect is that the commitment to support is honestly present, and this is something he can and must get from everyone.

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.

Similarly, managers holding position power don’t know what to do because they realize they don’t know enough about the technical details to arrive at the correct decision. We must strive not to be done in by such obstacles. We are all human beings endowed with intelligence and blessed with willpower. Both can be drawn upon to help us overcome our fear of sounding dumb or of being overruled, and lead us to initiate discussion and come out front with a stand.

decision-making has an output associated with it, which in this case is the decision itself. Like other managerial processes, decision-making is likelier to generate high-quality output in a timely fashion if we say clearly at the outset that we expect exactly that. In other words, one of the manager’s key tasks is to settle six important questions in advance: • What decision needs to be made? • When does it have to be made? • Who will decide? • Who will need to be consulted prior to making the decision? • Who will ratify or veto the decision? • Who will need to be informed of the decision?

“Group decisions do not always come easily. There is a strong temptation for the leading officers to make decisions themselves without the sometimes onerous process of discussion.” Because the process is indeed

Finally, remember that by saying “yes”—to projects, a course of action, or whatever—you are implicitly saying “no” to something else.

People who plan have to have the guts, honesty, and discipline to drop projects as well as to initiate them, to shake their heads “no” as well as to smile “yes.”

If you don’t know where you’re going, you will not get there.

All large organizations with a common business purpose end up in a hybrid organizational form.

At work, surrendering individual decision-making depends on trusting the soundness of actions taken by your group of peers.

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

The Role of Management You don’t need management to supervise the workings of free-market forces; no one supervises sales made at a flea market. In a contractual obligation, management has a role in setting and modifying the rules, monitoring adherence to them, and evaluating and improving performance. As for cultural values, management has to develop and nurture the common set of values, objectives, and methods essential for the existence of trust. How do we do that? One way is by articulation, by spelling out these values, objectives, and methods. The other, even more important, way is by example. If our behavior at work will be regarded as in line with the values we profess, that fosters the development of a group culture.

Earlier I built a case summed up by the key sentence: A manager’s output is the output of the organization under his supervision or influence.