High Output Management Quotes

“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 output. Her organization does.”
― Andrew S. Grove, High Output Management

“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.”
― Andrew S. Grove, High Output Management

“Automation is certainly one way to improve the leverage of all types of work. Having machines to help them, human beings can create more 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.”
― Andrew S. Grove, High Output Management

“a very important way to increase productivity is to arrange the work flow inside our black box so that it will be characterized by high output per activity, which is to say high-leverage activities.”
― Andrew S. Grove, High Output Management

“when we examine managerial productivity, we’ll see that when a manager digs deeply into a specific activity under his jurisdiction, he’s applying the principle of variable inspection. If the manager examined everything his various subordinates did, he would be meddling, which for the most part would be a waste of his time. Even worse, his subordinates would become accustomed to not being responsible for their own work, knowing full well that their supervisor will check everything out closely. The principle of variable inspection applied to managerial work nicely skirts both problems, and, as we shall see, gives us an important tool for improving managerial productivity.”
― Andrew S. Grove, High Output Management

“Suitably thought through, intelligent inspection schemes can actually increase the efficiency and productivity of any manufacturing or administrative process”
― Andrew S. Grove, High Output Management

“While in most instances the decision to accept or reject defective material at a given inspection point is an economic one, one should never let substandard material proceed when its defects could cause a complete failure—a reliability problem—for our customer.”
― Andrew S. Grove, High Output Management

“we should deliberately build a reasonable amount of “slack” into the system. And inventory is the most obvious place for it. Clearly, the more inventory we have, the more change we can cope with and still satisfy orders. But inventory costs money to build and keep, and therefore should be controlled carefully. Ideally, inventory should be kept at the lowest-value stage, as we’ve learned before, like raw eggs kept at the breakfast factory. Also, the lower the value, the more production flexibility we obtain for a given inventory cost.”
― Andrew S. Grove, High Output Management

“nowhere has the stagger chart been more productive than in forecasting economic trends. The way it works is shown in the figure below, which gives us forecasted rates of incoming orders for an Intel division. The stagger chart then provides the same forecast prepared in the following month, in the month after that, and so on. Such a chart shows not only your outlook for business month by month but also how your outlook varied from one month to the next. This way of looking at incoming business, of course, makes whoever does the forecasting take his task very seriously, because he knows that his forecast for any given month will be routinely compared with future forecasts and eventually with the actual result. But even more important, the improvement or deterioration of the forecasted outlook from one month to the next provides the most valuable indicator of business trends that I have ever seen.”
― Andrew S. Grove, High Output Management

“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.”
― Andrew S. Grove, High Output Management

“In fact, if indicators are put in place, the competitive spirit engendered frequently has an electrifying effect on the motivation each group brings to its work, along with a parallel improvement in performance.”
― Andrew S. Grove, High Output Management

“Indicators tend to direct your attention toward what they are monitoring. It is like riding a bicycle: you will probably steer it where you are looking. If, for example, you start measuring your inventory levels carefully, you are likely to take action to drive your inventory levels down, which is good up to a point. But your inventories could become so lean that you can’t react to changes in demand without creating shortages. So because indicators direct one’s activities, you should guard against overreacting. This you can do by pairing indicators, so that together both effect and counter-effect are measured. Thus, in the inventory example, you need to monitor both inventory levels and the incidence of shortages. A rise in the latter will obviously lead you to do things to keep inventories from becoming too low.”
― Andrew S. Grove, High Output Management

“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.”
― Andrew S. Grove, High Output Management

“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.”
― Andrew S. Grove, High Output Management

“the 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.”
― Andrew S. Grove, High Output Management

“How are we going to do this in the most intelligent way? We start by looking at our production flow. The 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 call the limiting step.”
― Andrew S. Grove, High Output Management

“the basic requirements of production. 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.”
― Andrew S. Grove, High Output Management

“Andy replied with an answer that I did not expect: “CEOs always act on leading indicators of good news, but only act on lagging indicators of bad news.” “Why?” I asked him. He answered in the style resonant of his entire book: “In order to build anything great, you have to be an optimist, because by definition you are trying to do something that most people would consider impossible. Optimists most certainly do not listen to leading indicators of bad news.”
― Andrew S. Grove, High Output Management

“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.”
― Andrew S. Grove, High Output Management

“Andy introduces management with this classic equation: A manager’s output = the output of his organization + the output of the neighboring organizations under his influence.”
― Andrew S. Grove, High Output Management

“A team will perform well only if peak performance is elicited from the individuals in it.”
― Andrew S. Grove, High Output Management

“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 individuals but by teams.”
― Andrew S. Grove, High Output Management

“As we founded, organized, and managed Intel, we found that all our employees “produce” in some sense—some make chips, others prepare bills, while still others create software designs or advertising copy. 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.”
― Andrew S. Grove, High Output Management

“Under the ferocious attack of aggressively priced, high-quality Japanese DRAMs, we were forced to retreat and cut prices to a level where being in the DRAM business brought us major losses. 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. While this adjustment sounds quite logical and straightforward in theory, in reality its implementation required us to move and redeploy a lot of our employees, let some of them go, and shutter a number of factories. We did all this because 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.”
― Andrew S. Grove, High Output Management

“To digress a bit, I also think that one-on-ones at home can help family life. As the father of two teenage daughters, I have found that the conversation in such a time together is very different in tone and kind from what we say to each other in other circumstances. The one-on-one makes each of us take the other seriously and allows subtle and complicated matters to come up for discussion. Obviously, no notes are taken, as father and daughter usually go out for dinner at a restaurant, but a family one-on-one very much resembles a business one-on-one. I strongly recommend both practices.”
― Andrew S. Grove, High Output Management

“As a supervisor, you have to be very sensitive toward the various money needs of your subordinates and show empathy toward them. You must be especially careful not to project your own circumstances onto others.”
― Andrew S. Grove, High Output Management

“We all have a hard time saying things that are critical, whether we’re talking to a superior employee or a marginal one. We must keep in mind, however, that no matter how stellar a person’s performance level is, there is always room for improvement. Don’t hesitate to use the 20/20 hindsight provided by the review to show anyone, even an ace, how he might have done better.”
― Andrew S. Grove, High Output Management

“the performance rating of a manager cannot be higher than the one we would accord to his organization!”
― Andrew S. Grove, High Output Management

“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.”
― Andrew S. Grove, High Output Management

“As a general rule, you have to accept that no matter where you work, you are not an employee—you are in a business with one employee: yourself. You are in competition with millions of similar businesses.”
― Andrew S. Grove, High Output Management