Key Points: High Output Management from former Intel CEO

High Output Management Book Cover High Output Management
Andrew S. Grove
Business & Investing
Penguin Press
1995
Paperback
227
https://www.amazon.ca/High-Output-Management-Andrew-Grove/dp/0679762884

Andrew S. Grove was one of the founders and the CEO of Intel Corporation, helping transform the company into the world’s largest manufacturer of semiconductors.

He passed away in March of 2016, but left behind a fantastic legacy, including High Output Management, which illustrates how he successfully ran one of the world’s leading companies for decades.

Below, you’ll find an outline of the key points I took away from this title. I explain why I outline books in this post. I’d recommend it for not only middle-managers, but also for their subordinates (myself), as you can understand what makes a great manager, in addition to improving your one-on-ones, how to increase your leverage, and get others to commit to key decisions.

In addition, here is a great blog post with some pull quote from the book, which offer more context behind many of the points below.

I – The Breakfast Factory

Questions to ponder

  1. Am I adding real value, or just passing along information?
  2. Am I plugged into what is happening?
  3. Am I trying new things?

“Every hour should be spent increasing output or value of the output of those around you.”

The output of a manager is the output of the organization + units under management’s influence.”

25% Rule

Companies such as Intel typically have their staff base broken down into:

  • 25% Make the product
  • 25% Supervision
  • 25% Administration
  • 25% Design

Rules of a new environment

  1. Things happen faster
  2. Anything that can be done, will be done, either by you, or someone else

Chapter 1 – The Basics of Production

Your task

Find the most cost effective way to deploy your resources.

  • There is one right answer, one that can give you the best delivery time and product quality at the lowest possible cost

Testing / Inspection

2 options for testing / inspection:

  1. In-process
  2. Functional

Choose in-process tests over those that destroy the product. Items become more valuable as they get further through down the chain of production.

Chapter 2 – Managing the Breakfast Factory

Managing Salespeople

Measure them by their output (orders), and not their activity (calls)

Why use indicators?

  1. Spell out objectives
  2. Provider a degree of objectivity
  3. Measure to compare different organizations performing the same task

Reliability: – Gate-like inspection vs. monitoring

  • Lean towards monitoring
    • Ex: The IRS monitors and randomly checks, instead of watching every person who files taxes

How to Increase productivity – 2 ways

  1. Work faster
  2.  Change the nature of your work

Leading Indicators

  1. Show what the future may look like
  2. Give time to take corrective action
  3. Make it possible to avoid problems

Trend Indicators

  1. Show output over time
  2. Force you to look at the future, as you can extrapolate from the past

Stagger Charts

  1. Forecast output over several months
  2. Great for economic trends

Parkinson’s Law

People will find ways to let whatever they’re doing, fill the time available for completion”

II – Management is a Team Game

Chapter 3 – Managerial Leverage

Manager’s Output: Output of the org / Output of the neighboring orgs under mgt influence

Written Reports

  • Writing them is important, but reading them is not nearly as important
  • Author is forced to be more precise vs. what they would say if it were only a verbal explanation

Info Gathering

Basis of all managerial work. Managers also do:

  • Nudging
  • Info Gathering
  • Description Making

Leverage

Output generated by managerial activity

Managerial Productivity

Can be increased in 3 ways:

  1. Speed of work
  2. Increasing Leverage
  3. Shifting your mix of activities and resources

Meddling

Using a manager’s experience & knowledge of a subordinates responsibilities to assume control.

Don’t do this.

Delegation

  • Must share a common information base & open ideas with subordinate for this to work
  • You must also follow through after the activity is completed by someone else, to verify
  • Delegate the activities you know best

Calendar

Should be used as a production planning tool

Chapter 4 – Meetings, The Medium of Managerial Work

Two types of meetings

  1. Process oriented
    1. Knowledge is shared, and info is exchanged. Take place on a regular basis.
  2. Mission oriented
    1. Purpose is to solve problems
    2. Frequently used to produce a decision
    3. Not scheduled long in advance, b/c they usually can’t be

Process oriented meetings

  1. One-on-one
  2. Staff meetings
  3. Operational review

“If you spend 25% or more of your time in meetings, it’s a sign of mis-management.” – Peter Drucker

One-on-one

  • This is the subordinate’s meeting
  • Emphasis should be on indicators signaling trouble

Operational reviews

Opportunity to share learning b/t employees who are several ranks apart

Why take notes during meetings?

  1. Allows you to keep focus6
  2. You can digest information better

Chapter 5 – Decisions, Decisions

Decision making

Goal: Not to get people to agree with you, simply means you need them to get on board with the decision.

6 points of every decision

  1. What decision needs to be made?
  2. When does it need to be made?
  3. Who will decide?
  4. Who needs to be consulted?
  5. Who will veto / ratify
  6. Who needs to be informed of the decision?

At the end of big decisions

  • Announce the decision
  • Meet again at a later date, and gather feedback

Chapter 6 – Planning: Today’s Actions for Tomorrow’s Output

Planning

  1. Determine expectations of you
  2. Keep aware of team advances
  3. Evaluate performance of your vendors

 

Step 1:

  • (above)

Step 2:

  • Determine your present status

Step 3:

  • Close the game
  1. What can you do to close the gap?
  2. What do you need to do to close the gap?

Strategy vs. Tactics

  • Strategy
    • Summary of general actions meaningful to you
  • Tactics
    • What you’ll do to implement the strategy

Today’s gap represents a failure in prior planning.

Allow for time to judge if decisions have been effective. Don’t plan too often.

MBO – Management By Objectives

  1. Where do you want to go?
  2. How will I pace myself? (milestones)

III – Team of Teams

Chapter 8 – Hybrid Orgs

Mission Oriented vs Functional

Most companies are a hybrid

Mission Oriented

  • Decentralized
  • Each business unit pursues what it does best
  • Little tie-in to other units

Functional

  • Completely centralized
  • Performs work for other groups

3 Benefits of functional

  1. Economies of scale
  2. Resources can be shifted
  3. Can concentrate on mastering a specific trade

2 Disadvantages of functional

  1. Information overload
  2. Competition for resources

Which businesses are an exception to the hybrid approach?

Conglomerates are typically mission oriented

Chapter 9 – Dual Reporting

Matrix Management

  • Started by NASA in the 1960s
  • An outsider can wield as much influence as internal management

Chapter 10 – Modes of Control

Behavior: Controlled by 3 factors

  1. Free market forces
  2. Contractual obligations
  3. Cultural values

Big Business

In exchange for a monopoly, gov’t can dictate pricing and profit generated by utility companies

Cultural Values: Can be imposed on employees in two ways:

  1. Articulation
  2. Example

Appropriate modes of control

  1. Nature of a person’s motivation
  2. Nature of the environment

IV – The Players

Chapter 11 – The Sports Analogy

#1 task of managers should be to elicit maximum performance from subordinates

Motivation comes from within the individual

Managers should create an environment where motivated people can succeed

Needs -> Drive -> Motivation

Self Actualization

When an individual reaches this on Mazlow’s Hierarchy of Needs, there is no limit to their drive

2 inner forces driving people

  1. Competence drive
  2. Achievement driven

How to decide if money is a huge factor in an employee’s decision

  • Absolute sum
    • How much am I making?
    • Individual is working within physiological or safety modes.
  • Relative to others
    • How do I stack up against my teammates’ pay?
    • Esteem / recognition based, or self-actualization
    • Best employees! Need measures to gauge his progress and achievement.
    • Money is a measure to the employee- they value recognition over money

Chapter 12 – Task Relevant Maturity

What is it?

Combo of the degree of their achievement, orientation, and readiness to take on responsibility

When TRM is high, you can delegate tasks to those high TRM employees, thereby increasing your managerial leverage

At highest levels, employee training is complete, and their motivation comes from within — best employees

Chapter 13 – Performance Appraisal

Performance Appraisal

Single most valuable feedback to an employee

Purpose: Improve subordinate’s performance

How to hold a performance review

  1. Be objective
  2. Clarify expectations of the subordinate
  3. Judge whether subordinate has met expectations

How to judge during a performance review

Both performance of the group & the individual need to be taken into consideration

  • Asses the subordinate’s performance, not their potential

Misc

  • Performance reviews should not contain any surprises
  • Poor performers have a tendency to ignore their flaws
  • Management should focus on their best employees to increase their own leverage

There are three outcomes of the performance review

  • Sub agrees the assessment, commits to improve
  • Sub disagrees w/ assessment,  commits to improve
  • Sub disagrees w/ assessment, does not commit to improve

 

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