High Output Management

by Andrew S. Grove

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.

“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.

“CEOs always act on leading indicators of good news, but only act on lagging indicators of bad news.”

All production flows have a basic characteristic: the material becomes more valuable as it moves through the process. A boiled egg is more valuable than a raw one, a fully assembled breakfast is more valuable than its constituent parts, and finally, the breakfast placed in front of the customer is more valuable still.

A 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.

It is a good idea to use stagger charts in both the manufacturing and sales forecasts.

To get acceptable quality at the lowest cost, it is vitally important to reject defective material at a stage where its accumulated value is at the lowest possible level. Thus, as noted, we are better off catching a bad raw egg than a cooked one, and screening out our college applicant before he visits Intel. In short, reject before investing further value.

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

The mailroom manager’s strategy is the communications manager’s tactics.

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

What is “nice” or “not nice” should have no place in how you think or what you do. Remember, we are after what is most effective.

Everyone must decide for himself what is professional and appropriate here. A test might be to imagine yourself delivering a tough performance review to your friend. Do you cringe at the thought? If so, don’t make friends at work. If your stomach remains unaffected, you are likely to be someone whose personal relationships will strengthen work relationships.

Likewise, unions and most government jobs lean toward pure experience-only salary scales. Apart from whether this is fair or not, the message from management is that performance doesn’t matter much. Consider teachers in many school systems. A good one gets paid the same salary as a bad one if they both have been around for the same length of time.