High Output Management

by Andrew S. Grove

Ultimately, the losses forced us to do something extraordinarily difficult: to back out of the business that the company was founded upon, and to focus on another business that we thought we were best at—the microprocessor business.

under this strong attack, we learned that we must lead with our strength. Being second best in a tough environment is just not good enough.

this assault was just one wave of a much larger tide—the tide of globalization.

Globalization simply means that business knows no national boundaries. Capital and work—your work and your counterparts’ work—can go anywhere on earth and do a job.

Today, many markets outside the United States are growing faster than markets inside the U.S. And the domestic market can be supplied from anywhere in the world.

When products and services become largely indistinguishable from each other, all there is by the way of competitive advantage is time.

e-mail is also the first manifestation of a revolution in how information flows and how it is managed.

The informed use of e-mail—short for computer-to-computer electronic messaging—results in two fundamentally simple but startling implications. It turns days into minutes, and the originator of a message can reach dozens or more of his or her co-workers with the same effort it takes to reach just one. As a result, if your organization uses e-mail, a lot more people know what’s going on in your business than did before, and they know it a lot faster than they used to.

time becomes the key competitive weapon,

And e-mail is only the first wave. Everything today is going to a digital format: sound, photos, movies, books, financial services. And everything that’s digital can be shipped around the world just as fast as it can be shipped down the hall at your workplace.

Thus a know-how manager can legitimately be called a middle manager. In fact, as our world becomes ever more information- and service-oriented, know-how managers will acquire greater importance as members of middle management.

What are the rules of the new environment? First, everything happens faster. Second, anything that can be done will be done, if not by you, then by someone else. Let there be no misunderstanding: These changes lead to a less kind, less gentle, and less predictable workplace.

The motto I’m advocating is “Let chaos reign, then rein in chaos.”

This book contains three basic ideas. The first is an output-oriented approach to management.

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 bureacracy, of most forms

of human activity, is something pursued not by individ...

single most important sentence of this book: The output of a manager is the output of the organizational units under hi...

what specifically should they be doing during the day when a virtually limitless number of possible tasks calls for their attention?

concept of managerial leverage, which measures the impact of what managers do to increase the output of their teams.

High managerial productivity, I argue, depends large...

perform tasks that possess hi...

A team will perform well only if peak performance is elicited from t...

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.

responsive company should have fewer levels of managers. This concept is easier to apply today as electronic mail can carry information to anyone in the organization.

One basic role of management—the role of disseminating information—is no longer as important a managerial ...

lot of the purposes of the one-on-ones are taken care of minute by minute.

Are you adding real value or merely passing information along? How do you add more value?

By continually looking for ways to make things truly better in your department.

the output of a manager is the output of hi...

In principle, every hour of your day should be spent increasing the output or the value of the output of the peo...

3. Are you trying new ideas, new techniques, and new technologies, and I mean personally trying them, not just reading about them?

These are to build and deliver products in response to the demands of the customer at a scheduled delivery time, at an acceptable quality level, and at the lowest possible cost.

How are we going to do this in the most intelligent way? We start by looking at our production flow.

first thing we must do is to pin down the step in the flow that

will determine the overall shape of our operation, which we’ll ca...

The issue here is simple: which of the breakfast components takes th...

Not only does that component take the longest to prepare, the egg is also for most customers the most important feature of the breakfast.

What must happen is illustrated opposite. To work back from the time of delivery, you’ll need to calculate the time required to prepare the three components to ensure that they are all ready simultaneously.

the total throughput time.

key idea is that we construct our production flow by starting with the longest (or most difficult, or most sensitive, or most expensive) step and work our way back.

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.

The conversion of large amounts of raw data about the product into meaningful selling strategies comprehensible to the sales personnel is a process step, which transforms data into strategies.

The combination of the various sales strategies into a coherent program can be compared to an assembly step.

charts. The test operation comes in the form of a “dry run” presentation with a selected group of field sales personnel and field sales management. If the dry run fails the test, the material must be “reworked” (another well-established manufacturing concept) to meet the concerns and objections of the test audience.

Because each alternative costs money, your task is to find the most cost-effective way to deploy your resources—the key to optimizing all types of productive work.

Bear in mind that in this and in other such situations there is a right answer, the one that can give you the best delivery time and product quality at the lowest possible cost.

To find that right answer, you must develop a clear understanding of the trade-offs between the various factors—manpower, capacity, and inventory—and you must reduce the under...

We have now turned things into a continuous operation at the expense of flexibility, and we can no longer prepare each customer’s order exactly when and how he requests it. So our customers have to adjust their expectations if they want to enjoy the benefits of our new mode: lower cost and more predictable product quality.

But continuous operation does not automatically mean lower cost and better quality.