High Output Management

by Andrew S. Grove

The chairman is also responsible for maintaining discipline. It is criminal for him to allow people to be late and waste everyone’s time. Remember, wasting time here really means that you are wasting the company’s money, with th...

Do not worry about confronting the late arriver. Just as you would not permit a fellow employee to steal a piece of office equipment worth $2,000, you shouldn’t let anyone ...

He should also send out an agenda that clearly states the purpose of the meeting, as well as what role everybody there is expected to play to get the desired output.

Once the meeting is over, the chairman must nail down exactly what happened by sending out minutes that summarize the discussion that occurred, the decision made, and the actions to be taken. And it’s very important that attendees get the minutes quickly, before they forget what happened.

if the meeting was worth calling in the first place, the work needed to produce the minutes is a small additional investment

Ideally, a manager should never have to call an ad hoc, mission-oriented meeting, because if all runs smoothly, everything is taken care of in regularly scheduled, process-oriented meetings.

the real sign of malorganization is when people spend more than 25 percent of their time in ad hoc mission-oriented meetings.

in businesses that mostly deal with information and know-how, a manager has to cope with a new phenomenon. Here a rapid divergence develops between power based on position and power based on knowledge, which occurs because the base of knowledge that constitutes the foundation of the business changes rapidly.

the greater the disagreement about the issue, the more important becomes the word clear.

Finally, everyone involved must give the decision reached by the group full support.

ideally, decision-making should occur in the middle ground, between reliance on technical knowledge on the one hand, and on the bruises one has received from having tried to implement and apply such knowledge on the other.

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.

Observers in the audience couldn’t believe their eyes and ears as the mock meeting proceeded. The managers working on the problem did nothing but go around in circles for some fifteen minutes, and none of them noticed they weren’t getting anywhere.

After the chairman intervened, the problem was resolved in very short order. We named this the peer-plus-one approach, and have used it since then to aid decision-making where we must.

but the bottom line in both is that people didn’t really speak their minds freely. That certainly makes it harder for a manager to make the right decisions.

You can overcome the peer-group syndrome if each of the members has self-confidence, which stems in part from being familiar with the issue under consideration and from experience.

If the peer-group syndrome manifests itself, and the meeting has no formal chairman, the person who has the most at stake should take charge.

As a manager, you should remind yourself that each time an insight or fact is withheld and an appropriate question is suppressed, the decision-making process is less good than it might have been.

if the rest of the group or a senior-level manager vetoed a junior person or opposed a position he was advocating, the junior manager might lose face in front of his peers. This, even more than fear of sanctions or even of the loss of job, makes junior people hang back

Sometimes no amount of discussion will produce a consensus, yet the time for a decision has clearly arrived. When this happens, the senior person (or “peer-plus-one”) who until now has guided, coached, and prodded the group along has no choice but to make a decision himself.

it is legitimate—in fact, sometimes unavoidable—for the senior person to wield position-power authority if the clear decision stage is reached and no consensus has developed. It is not legitimate—in fact, it is destructive—for him to wield that authority any earlier.

reluctance on the part of the senior manager can prolong the first phase of the decision-making process—the time of free discussion—past the optimum point, and the decision will be put off.

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?

I can think of no better way to make the decision-making process straightforward than to apply before the fact the structure imposed by our six questions.

a difference analysis is crucial, because if your current activities satisfy the current demands placed on your business, anything more and new should be undertaken to match this difference. How you react to this difference is in fact the key outcome of the planning process.

What you’ll do to implement the strategy is your tactics. Frequently, a strategy at one managerial level is the tactical concern of the next higher level. Let’s return to our mailroom.

their planning produced tasks that had to be performed now in order to affect future events. I have seen far too many people who upon recognizing today’s gap try very hard to determine what decision has to be made to close it. But today’s gap represents a failure of planning sometime in the past.

What do I have to do today to solve—or better, avoid—tomorrow’s problem?

the output of the planning process is the decisions made and the actions taken as a result of the process.

Who should be involved in the planning process? The operating management of the organization. Why? Because the idea that planners can be people apart from those implementing the plan simply does not work. Planning cannot be made a separate career but is instead a key managerial activity, one with enormous leverage through its impact on the future performance of an organization.

remember that by saying “yes”—to projects, a course of action, or whatever—you are implicitly saying “no” to something else. Each time you make a commitment, you forfeit your chance to commit 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. Or, as an old Indian saying puts it, “If you don’t know where you’re going, any road will get you there.”

A successful MBO system needs only to answer two questions: 1. Where do I want to go? (The answer provides the objective.) 2. How will I pace myself to see if I am getting there? (The answer gives us milestones, or key results.)

We must realize—and act on the realization—that if we try to focus on everything, we focus on nothing. A few extremely well-chosen objectives impart a clear message about what we say “yes” to and what we say “no” to—which is what we must have if an MBO system is to work.

a nesting hierarchy of objectives: if the subordinate’s objectives are met, the supervisor’s will be as well.

The MBO system is meant to pace a person—to put a stopwatch in his own hand so he can gauge his own performance.

to be useful a key result must contain very specific wording and dates, so that when deadline time arrives, there is no room for ambiguity.

A manager’s objectives are supported by an appropriate set of key results. His objectives in turn are tied to his supervisor’s objectives so that if the manager meets his objectives, his supervisor will meet his.

judgment and common sense are also required when using MBO to guide you in your work from one day to the next.

the centralization-decentralization dichotomy is so pervasive that it has become one of the most important themes in the management of our network.

management is not just a team game, it is a game in which we have to fashion a team of teams, where the various individual teams exist in some suitable and mutually supportive relationship with each other.

organizations can come in two extreme forms: in totally mission-oriented form or in totally functional form.

In the mission-oriented organization (a), which is completely decentralized, each individual business unit pursues what it does—its mission—with little tie-in to other units.

At the other extreme is the totally functional organization (b), which is completely centralized.

the merchandising department is responsible for merchandising at all locations; the staff of the personnel organization hires, fires, and evaluates personnel at all branches; and so on.

The desire to give the individual branch manager the power to respond to local conditions moves us toward a mission-oriented organization. But a similarly legitimate desire to take advantage of the obvious economies of scale and to increase the leverage of the expertise we have in each operational area across the entire corporation would push us toward a functiona...

Alfred Sloan summed up decades of experience at General Motors by saying, “Good management rests on a reconciliation of centralization and decentralization.”

This is much like the way I imagine any army is organized. The business divisions are analogous to individual fighting units, which are provided with blankets, paychecks, aerial surveillance, intelligence, and so forth by the functional organizations, which supply such services to all fighting units. Because each such unit does not have to maintain its own support groups, it can concentrate on a specific mission, like taking a hill in a battle. And for that, each unit has all the necessary freedom of action and independence.

The functional groups can be viewed as if they were internal subcontractors. Let’s take a sales organization as an example. Though a lot of companies use outside sales representatives, an internal group presumably provides the service at less expense and with greater responsiveness. Likewise, manufacturing, finance, or data processing can all be regarded as functional groups, which, as internal subcontractors, provide services to all the business units.