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By Andy Grove

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In one sentence

A manager’s output is not primarily what they personally accomplish; it is the output of their organization plus the output of adjacent organizations they influence. Management is therefore a discipline of designing systems, clarifying objectives, improving capability, and choosing actions with high leverage.

Overview

Grove applies manufacturing logic to managerial work. He begins with production concepts—throughput, bottlenecks, quality control, and measurable indicators—then extends them to hiring, supervision, meetings, motivation, organizational design, and performance reviews. The book’s distinctive move is to treat meetings, reports, training, and decisions as production activities rather than administrative overhead.

Core ideas

Manage for output, not busyness

Define the output of a role or team before judging its activity. A manager should ask what results the organization must produce, which processes generate them, and where managerial attention can increase total throughput.

Use managerial leverage

Some actions affect many people or persist over time: training, process redesign, clear policies, useful indicators, and well-run meetings. Prioritize these over repeatedly solving isolated problems yourself. The manager’s scarce resource is time, so its allocation determines organizational impact.

Find the limiting step

In any process, a bottleneck limits overall output. Improve the constraint before optimizing activities elsewhere. The breakfast-factory analogy makes this concrete: capacity, wait time, inventory, and defects interact, so local efficiency can be meaningless if the system’s limiting step remains unchanged.

Measure leading indicators

Results are often visible only after damage is done. Track indicators that reveal the condition of the process early, and pair them with outcome measures so people cannot improve a proxy while harming the real objective.

Meetings are managerial work

Meetings should have a defined production purpose: transferring information, making decisions, solving problems, or developing people. One-on-ones are especially valuable when the subordinate owns the agenda and the manager uses the time for coaching, clarification, and feedback.

Match supervision to task-relevant maturity

The appropriate level of direction depends on a person’s competence and experience with the specific task—not simply their seniority or general intelligence. Give more structure where capability is low; grant more autonomy where the person has demonstrated mastery.

Motivation and performance are managerial responsibilities

When someone is underperforming, examine both ability and motivation. Training addresses capability; clear expectations, feedback, recognition, consequences, and job design address motivation. Grove presents the manager’s central responsibility as eliciting sustained performance from others.

Objectives need measurable results

Management by objectives works when objectives describe outcomes and key results provide observable evidence of progress. The framework associated with Grove and Intel later became widely known as OKRs; its purpose is alignment and focus, not merely numerical scoring.

Practical takeaways

Caveats and counterpoints

Questions worth revisiting

Return to this when…

Return to the chapters on managerial leverage, production principles, indicators, meetings, one-on-ones, and performance evaluation when taking on a new team, redesigning operating rhythms, or diagnosing why effort is not becoming results.

Highlights

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.


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


The output of a manager is the output of the organizational units under his or her supervision or influence.


In principle, every hour of your day should be spent increasing the output or the value of the output of the people whom you’re responsible for.


  1. Are you plugged into what’s happening around you? And that includes what’s happening inside your company as well as inside your industry as a whole. Or do you wait for a supervisor or others to interpret whatever is happening? Are you a node connected to a network of plugged-in people or are you floating by yourself?

  1. Are you trying new ideas, new techniques, and new technologies, and I mean personally trying them, not just reading about them? Or are you waiting for others to figure out how they can re-engineer your workplace—and you out of that workplace?

As a means to obtain this leverage, a manager must understand, as Andy writes: “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.”


The 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. Notice when each of the three steps began and ended. We planned our flow around the most critical step—the time required to boil the egg—and we staggered each of the other steps according to individual throughput times; again in production jargon, we offset them from each other. Making the eggs is the limiting step.


In any case, the development of the individual pieces out of which a compiler is built represents a series of processing steps. Actual working pieces of software are generated out of specifications and basic design know-how. Each piece then undergoes an individual operation called a “unit test.” When one fails, the defective portion of the software is returned to the process phase for “rework.”


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.


The limiting step here should clearly be obtaining a conviction. The construction cost of a jail cell even today is only some $80,000. This, plus the $10–20,000 it costs to keep a person in jail for a year, is a small amount compared to the million dollars required to secure a conviction. Not to jail a criminal in whom society has invested over a million dollars for lack of an $80,000 jail cell clearly misuses society’s total investment in the criminal justice system. And this happens because we permit the wrong step (the availability of jail cells) to limit the overall process. 2 Managing the Breakfast Factory Indicators as a Key Tool A hungry public has loved the breakfast you’ve been serving, and thanks to the help of your many customers and a friendly banker, you’ve created a breakfast factory, which among other things uses specialized production lines for toast, coffee, and eggs.


Assuring Quality As we have said, manufacturing’s charter is to deliver product at a quality level acceptable to the customer at minimum cost. To assure that the quality of our product will in fact be acceptable, all production flows, whether they “make” breakfasts, college graduates, or software modules, must possess inspection points. 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. In the language of production,


The productivity of any function occurring within it is the output divided by the labor required to generate the output. Thus, one way to increase productivity is to do whatever we are now doing, but faster.


There is a second way to improve productivity. We can change the nature of the work performed: what we do, not how fast we do it. We want to increase the ratio of output to activity, thereby increasing output even if the activity per employee-hour remains the same. As the slogan has it, we want to “work smarter, not harder.”


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. In the first round of work simplification, our experience shows that you can reasonably expect a 30 to 50 percent reduction.


To implement the actual simplification, you must question why each step is performed. Typically, you will find that many steps exist in your work flow for no good reason. Often they are there by tradition or because formal procedure ordains it, and nothing practical requires their inclusion. Remember, the “visa factory” at our embassy in Britain didn’t really have to process 100 percent of the applicants. So no matter what reason may be given for a step, you must critically question each and throw out those that common sense says you can do without.


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


A manager can do his “own” job, his individual work, and do it well, but that does not constitute his output. If the manager has a group of people reporting to him or a circle of people influenced by him, the manager’s output must be measured by the output created by his subordinates and associates. If the manager is a knowledge specialist, a know-how manager, his potential for influencing “neighboring” organizations is enormous.


But 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. By analogy, a coach or a quarterback alone does not score touchdowns and win games. Entire teams with their participation and guidance and direction do. League standings are kept by team, not by individual.


My day always ends when I’m tired and ready to go home, not when I’m done. I am never done. Like a housewife’s, a manager’s work is never done. There is always more to be done, more that should be done, always more than can be done.


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.


A manager can also exert high leverage by engaging in an activity that takes him only a short time, but that affects another person’s performance over a long time.


Because managerial time has a hierarchy of values, delegation is an essential aspect of management. The “delegator” and “delegatee” must share a common information base and a common set of operational ideas or notions on how to go about solving problems, a requirement that is frequently not met. Unless both parties share the relevant common base, the delegatee can become an effective proxy only with specific instructions. As in meddling, where specific activities are prescribed in detail, this produces low managerial leverage.


Given a choice, should you delegate activities that are familiar to you or those that aren’t? 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. Because it is easier to monitor something with which you are familiar, if you have a choice you should delegate those activities you know best. But recall the pencil experiment and understand before the fact that this will


Monitoring the results of delegation resembles the monitoring used in quality assurance. We should apply quality assurance principles and monitor at the lowest-added-value stage of the process. For example, review rough drafts of reports that you have delegated; don’t wait until your subordinates have spent time polishing them into final form before you find out that you have a basic problem with the contents. A second principle applies to the frequency with which you check your subordinates’ work. A variable approach should be employed, using different sampling schemes with various subordinates; you should increase or decrease your frequency depending on whether your subordinate is performing a newly delegated task or one that he has experience handling. How often you monitor should not be based on what you believe your subordinate can do in general, but on his experience with a specific task and his prior performance with it—his task-relevant maturity, something I’ll talk about in detail later. As the subordinate’s work improves over time, you should respond with a corresponding reduction in the intensity of the monitoring.


A second production principle we can apply to managerial work is batching similar tasks. Any manufacturing operation requires a certain amount of set-up time. So for managerial work to proceed efficiently, we should use the same set-up effort to apply across a group of similar activities. Think about our continuous egg-boiler, which was installed to produce fine-quality, identical, three-minute eggs. Should we now decide to serve our customers four-minute eggs, we would have to slow down the conveyor belt moving them through the hot water. The adjustment takes time: not only do we adjust nuts and bolts on the machine, we also have to inspect the quality of the four-minute eggs by sampling a few of them. Set-up time has many parallels in managerial work. For example, once we have prepared a set of illustrations for a training class, we will obviously increase our productivity if we can use the same set over and over again with other classes or groups. Similarly, if a manager has a number of reports to read or a number of performance reviews to approve, he should set aside a block of time and do a batch of them together, one after the other, to maximize the use of the mental set-up time needed for the task.


You can obviously say “no” either explicitly or implicitly, because by not delivering you end up saying what amounts to “no.” Remember too that your time is your one finite resource, and when you say “yes” to one thing you are inevitably saying “no” to another.


Interruptions—The Plague of Managerial Work The next important production concept we can apply to managerial work is to strive toward regularity. We could obviously run our breakfast factory more efficiently if customers arrived in a steady and predictable stream rather than dropping in by ones and twos. Though we can’t control our customers’ habits, we should try to smooth out our workload as much as possible. As noted, we should try to make our managerial work take on the characteristics of a factory, not a job shop. Accordingly, we should do everything we can to prevent little stops and starts in our day as well as interruptions brought on by big emergencies. Even though some of the latter are unavoidable, we should always be looking for sources of future high-priority trouble by cutting windows into the black box of our organization. Recognizing you’ve got a time bomb on your hands means you can address a problem when you want to, not after the bomb has gone off.


In any case, a manager should try to force his frequent interrupters to make an active decision about whether an issue can wait. So, instead of going into hiding, a manager can hang a sign on his door that says, “I am doing individual work. Please don’t interrupt me unless it really can’t wait until 2:00.” Then hold an open office hour, and be completely receptive to anybody who wants to see you. The key is this: understand that interrupters have legitimate problems that need to be handled. That’s why they’re bringing them to you. But you can channel the time needed to deal with them into organized, scheduled form by providing an alternative to interruption—a scheduled meeting or an office hour. The point is to impose a pattern on the way a manager copes with problems. To make something regular that was once irregular is a fundamental production principle, and that’s how you should try to handle the interruptions that plague you. 4 Meetings—The Medium of Managerial Work Meetings have a bad name.


Peter Drucker sums up the supervisor’s job here very nicely: “The good time users among managers do not talk to their subordinates about their problems but they know how to make the subordinates talk about theirs.”


How is this done? By applying Grove’s Principle of Didactic Management, “Ask one more question!” When the supervisor thinks the subordinate has said all he wants to about a subject, he should ask another question. He should try to keep the flow of thoughts coming by prompting the subordinate with queries until both feel satisfied that they have gotten to the bottom of a problem.


staff meeting is like the dinner-table conversation of a family, while other forums of interaction at work, involving people who don’t know each other very well, are like a group of strangers having to make a decision together.


An estimate of the dollar cost of a manager’s time, including overhead, is about $100 per hour. So a meeting involving ten managers for two hours costs the company $2,000. Most expenditures of $2,000 have to be approved in advance by senior people—like buying a copying machine or making a transatlantic trip—yet a manager can call a meeting and commit $2,000 worth of managerial resources at a whim. So even if you’re just an invited participant, you should ask yourself if the meeting—and your attendance—is desirable and justified. Tell the chairman—the person who invited you—if you do not feel it is.


Keep in mind that a meeting called to make a specific decision is hard to keep moving if more than six or seven people attend. 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 chairman should finally be responsible for logistical matters. He should, for example, make sure that all necessary and audiovisual equipment is present in the meeting room. 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. An example of such an agenda is shown below.


One of the reasons why people are reluctant to come out with an opinion in the presence of their peers is the fear of going against the group by stating an opinion that is different from that of the group. Consequently, the group as a whole wanders around for a while, feeling each other out, waiting for a consensus to develop before anyone risks taking a position. If and when a group consensus emerges, one of the members will state it as a group opinion (“I think our position seems to be…”), not as a personal position. After a weak statement of the group position, if the rest of the mob buys in, the position becomes more solid and is restated more forcefully.


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. But in the end self-confidence mostly comes from a gut-level realization that nobody has ever died from making a wrong business decision, or taking inappropriate action, or being overruled. And everyone in your operation should be made to understand this.


Basically, like other things managers do, decision-making has an output associated with it, which in this case is the decision itself. Like other managerial processes, decision-making is likelier to generate high-quality output in a timely fashion if we say clearly at the outset that we expect exactly that. In other words, 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?


Your general planning process should consist of analogous thinking. Step 1 is to establish projected need or demand: What will the environment demand from you, your business, or your organization? Step 2 is to establish your present status: What are you producing now? What will you be producing as your projects in the pipeline are completed? Put another way, where will your business be if you do nothing different from what you are now doing? Step 3 is to compare and reconcile steps 1 and 2. Namely, what more (or less) do you need to do to produce what your environment will demand?


Once you have established what constitutes your environment, you need to examine it in two time frames—now, and sometime in the future, let’s say in a year. The questions then become: What do my customers want from me now? Am I satisfying them? What will they expect from me one year from now? You need to focus on the difference between what your environment demands from you now and what you expect it to demand from you a year from now. Such 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.


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. By analogy, forcing ourselves to concentrate on the decisions needed to fix today’s problem is like scurrying after our car has already run out of gas. Clearly we should have filled up earlier. To avoid such a fate, remember that as you plan you must answer the question: What do I have to do today to solve—or better, avoid—tomorrow’s problem?


Finally, 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. This, of course, is an inevitable, inescapable consequence of allocating any finite resource. 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.”


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. To determine which, we can employ a simple mental test: if the person’s life depended on doing the work, could he do it? If the answer is yes, that person is not motivated; if the answer is no, he is not capable. If my life depended on playing the violin on command, I could not do it. But if I had to run a mile in six minutes, I probably could. Not that I would want to, but if my life depended on it, I probably could.


The role of the manager here is also clear: it is that of the coach. First, an ideal coach takes no personal credit for the success of his team, and because of that his players trust him. Second, he is tough on his team. By being critical, he tries to get the best performance his team members can provide. Third, a good coach was likely a good player himself at one time. And having played the game well, he also understands it well. Turning the workplace into a playing field can turn our subordinates into “athletes” dedicated to performing at the limit of their capabilities—the key to making our team consistent winners.


TASK-RELEVANT MATURITY OF SUBORDINATE    CHARACTERISTICS OF THE EFFECTIVE MANAGEMENT STYLE   low    Structured; task-oriented; tell “what,” “when,” “how”    medium    Individual-oriented; emphasis on two-way communication, support, mutual reasoning    high    Involvement by manager minimal: establishing objectives and monitoring


An associate of mine who had always done an outstanding job hired a junior person to handle some old tasks, while he himself took on some new ones. The subordinate did poor work. My associate’s reaction: “He has to make his own mistakes. That’s how he learns!” The problem with this is that the subordinate’s tuition is paid by his customers. And that is absolutely wrong. The responsibility for teaching the subordinate must be assumed by his supervisor, and not paid for by the customers of his organization, internal or external.


Remember, the more complex the issue, the more prone communication is to being lost. Does your subordinate give appropriate responses to what you are saying? Does he allow himself to receive your message? If his responses—verbal and nonverbal—do not completely assure you that what you’ve said has gotten through, it is your responsibility to keep at it until you are satisfied that you have been heard and understood. This is what I mean by listening: employing your entire arsenal of sensory capabilities to make certain your points are being properly interpreted by your subordinate’s brain. All the intelligence and good faith used to prepare your review will produce nothing unless this occurs.


If it becomes clear that you are not going to get your subordinate past the blame-others stage, you will have to assume the formal role of the supervisor, endowed with position power, and say, “This is what I, as your boss, am instructing you to do. I understand that you do not see it my way. You may be right or I may be right. But I am not only empowered, I am required by the organization for which we both work to give you instructions, and this is what I want you to do…” And proceed to secure your subordinate’s commitment to the course of action you want and thereafter monitor his performance against that commitment.


Interviewing The purpose of the interview is to: •  select a good performer •  educate him as to who you and the company are •  determine if a mutual match exists •  sell him on the job


If performance appraisal is difficult, interviewing is just about impossible. The fact is, we managers have no choice but to perform the interview, no matter how hard it is. But we must realize that the risks of failure are high.


Most of us will sit and listen until the end out of courtesy. Instead, you should interrupt and stop him, because if you don’t, you are wasting your only asset—the interview time, in which you have to get as much information and insight as possible.


What are the subjects that you should bring up during an interview? A group of managers provided me with what they thought were the best questions. They were: —  Describe some projects that were highly regarded by your management, especially by the levels above your immediate supervisor. —  What are your weaknesses? How are you working to eliminate them? —  Convince me why my company should hire you. —  What are some of the problems you are encountering in your current position? How are you going about solving them? What could you have done to prevent them from cropping up? —  Why do you think you’re ready for this new job? —  What do you consider your most significant achievements? Why were they important to you? —  What do you consider your most significant failures? What did you learn from them? —  Why do you think an engineer should be chosen for a marketing position? (Vary this one according to the situation.) —  What was the most important course or project you completed in your college career? Why was it so important?


Let’s look at how the questions above fit into the four categories. Technical/Skills describe some projects what are your weaknesses What He Did With Knowledge past achievements past failures Discrepancies what did you learn from failures problems in current position Operational Values why are you ready for new job why should my company hire you why should engineer be chosen for marketing most important college course/project


What about “tricks”? The best ones I’ve heard about come to me from somebody who had tried to get into the Navy’s nuclear submarine program. Admiral Rickover apparently personally interviewed each candidate and employed techniques like having the candidate sit on a three-legged chair. When it tipped over, the poor man would be left sprawling on the floor. Rickover evidently thought the trick tested strength of character in the face of embarrassment. But I think the interview should be completely straightforward.


Production   Points    Identify the operations in your work most like process, assembly, and test production.    10    For a project you are working on, identify the limiting step and map out the flow of work around it.    10     Define the proper places for the equivalents of receiving inspection, in-process inspection, and final inspection in your work. Decide whether these inspections should be monitoring steps or gate-like. Identify the conditions under which you can relax things and move to a variable inspection scheme.   10    Identify half a dozen new indicators for your group’s output. They should measure both the quantity and quality of the output.    10    Install these new indicators as a routine in your work area, and establish their regular review in your staff meetings.    20    What is the most important strategy (plan of action) you are pursing now? Describe the environmental demand that prompted it and your current status or momentum. Is your strategy likely to result in a satisfactory state of affairs for you or your organization if successfully implemented?    20     Leverage        Conduct work simplification on your most tedious, time-consuming task. Eliminate at least 30 percent of the total number of steps involved.    10    Define your output: What are the output elements of the organization you manage and the organizations you can influence? List them in order of importance.    10    Analyze your information- and knowledge-gathering system. Is it properly balanced among “headlines,” “newspaper articles,” and “weekly news magazines”? Is redundancy built in?    10    Take a “tour.” Afterward, list the transactions you got involved in during its course.    10     Create a once-a-month “excuse” for a tour.   10    Describe how you will monitor the next project you delegate to a subordinate. What will you look for? How? How frequently?    10    Generate an inventory of projects on which you can work at discretionary times.    10    Hold a scheduled one-on-one with each of your subordinates. (Explain to them in advance what a one-on-one is about. Have them prepare for it.)    20    Look at your calendar for the last week. Classify your activities as low-/medium-/high-leverage. Generate a plan of action to do more of the high-leverage category. (What activities will you reduce?)    10    Forecast the demand on your time for the next week. What portion of your time is likely to be spent in meetings? Which of these are process-oriented meetings? Mission-oriented meetings? If the latter are over 25 percent of your total time, what should you do to reduce them?    10    Define the three most important objectives for your organization for the next three months. Support them with key results.    20    Have your subordinates do the same for themselves, after a thorough discussion of the set generated above.    20    Generate an inventory of pending decisions you are responsible for. Take three and structure the decision-making process for them, using the six-question approach.    10     Evaluate your own motivational state in terms of the Maslow hierarchy. Do the same for each of your subordinates.   10    Give your subordinates a racetrack: define a set of performance indicators for each.    20    List the various forms of task-relevant feedback your subordinates receive. How well can they gauge their progress through them?    10    Classify the task-relevant maturity of each of your subordinates as low, medium, or high. Evaluate the management style that would be most appropriate for each. Compare what your own style is with what it should be.

References

  1. Review: High Output Management, Andy Grove — Sam McDonald
  2. High Output Management review, Books
  3. themarketingstudent.com
  4. Book Review | High Output Management
  5. robdix.com
  6. iffaglobal.com
  7. glasp.co
  8. anglesapp.com
  9. bookbase.app
  10. howtoes.blog
  11. campelolabs.com
  12. briansnotes.io