High Output Management

by Andrew S. Grove

Teachers, market researchers, computer mavens, and traffic engineers shape the work of others through their know-how just as much as or more than the traditional manager using supervisory authority. 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.

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.

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.

But at least you know that alternatives do exist: equipment capacity, manpower, and inventory can be traded off against each other and then balanced against delivery time. 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 understanding to a quantifiable set of relationships.

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. As noted, they will show the trend of change from one forecast to another, as well as the actual results. By repeatedly observing the variance of one forecast from another, you will continually pin down the causes of inaccuracy and improve your ability to forecast both orders and the availability of product.

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.

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.

Another seemingly trivial piece of work—creating a tickler file—can improve daily work significantly for a long time. Setting up the simple mechanical aid is a one-time activity, yet it is likely to improve the productivity of the manager who uses it indefinitely. Thus the leverage here is very, very high.

The art of management lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them. For me, paying close attention to customer complaints constitutes a high-leverage activity. Aside from making a customer happy, the pursuit tends to produce important insights into the workings of my own operation.

Before answering, consider the following principle: delegation without follow-through is abdication. You can never wash your hands of a task. Even after you delegate it, you are still responsible for its accomplishment, and monitoring the delegated task is the only practical way for you to ensure a result. Monitoring is not meddling, but means checking to make sure an activity is proceeding in line with expectations.

To use your calendar as a production-planning tool, you must accept responsibility for two things: 1. You should move toward the active use of your calendar, taking the initiative to fill the holes between the time-critical events with non-time-critical though necessary activities. 2. You should say “no” at the outset to work beyond your capacity to handle.

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.

Eight people should be the absolute cutoff. Decision-making is not a spectator sport, because onlookers get in the way of what needs to be done.

The next stage is reaching a clear decision. Again, the greater the disagreement about the issue, the more important becomes the word clear. In fact, particular pains should be taken to frame the terms of the decision with utter clarity. Again, our tendency is to do just the opposite: when we know a decision is controversial we want to obscure matters to avoid an argument. But the argument is not avoided by our being mealy-mouthed, merely postponed.

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.

Employing consistent ways by which decisions are to be made has value beyond simply expediting the decision-making itself. People invest a great deal of energy and emotion in coming up with a decision. Then somebody who has an important say-so or the right to veto it may come across the decision later. If he does veto it, he can be regarded as a Johnny-come-lately who upsets the decision-making applecart. This, of course, will frustrate and demoralize the people who may have been working on it for a long time. If the veto comes as a surprise, however legitimate it may have been on its merits, an impression of political maneuvering is inevitably created. Politics and manipulation or even their appearance should be avoided at all costs.

We should also be careful not to plan too frequently, allowing ourselves time to judge the impact of the decisions we made and to determine whether our decisions were on the right track or not.

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. But this leverage can only be realized through a marriage, and a good collaborative one at that, between planning and implementation.

Indeed, things often move beyond negotiation to intense and open competition among business units for the resources controlled by the functional groups. The bottom line here is that both the negotiation and competition waste time and energy because neither contributes to the output or the general good of the company.

A university is an odd place to manage. The president of the University said, “There’s clearly a shared responsibility for decision-making between administration [functional organization] and faculty [mission-oriented organization].” A University Planning Advisory Council [a group of peers] was formed with representation from the faculty and administration to help allocate limited resources [a most difficult and common problem] in the face of severe budget cuts. “We are being educated to think institutionally,” said one council member. “I’m representing student affairs, which had some projects up for consideration this year. But I made a big pitch for buying a new bulldozer.” So to put it yet another way, the hybrid organizational form is the inevitable consequence of enjoying the benefits of being part of a large organization—a company or university or whatever.

The point is that the two- (or multi-) plane organization is very useful. Without it I could only participate if I were in charge of everything I was part of. I don’t have that kind of time, and often I’m not the most qualified person around to lead. The multi-plane organization enables me to serve as a foot soldier rather than as a general when appropriate and useful. This gives the organization important flexibility.