High Output Management

date Dec 19, 2015
authors Andrew S. Grove
reading time 15 mins

Andy Grove, the former CEO of Intel, has thoroughly written down how to run teams and production line with metrics, thinking and process. It was an immense insight to how he led Intel.

Tackling the unanticipated

You need to plan the way a fire department plans. It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event.

Manager’s output

A manager’s output = the output of his organization + the output of the neighboring organizations under his influence. On the surface it may seem simple, but he clarifies the essential difference between a manager and an individual contributor.

Motivation or capability

“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.

Energy at first » Energy later

you only understand one thing about building products, you must understand that energy put in early in the process pays off tenfold and energy put in at the end of the program pays off negative tenfold.

Importance of one-on-ones meeting

In my experience, managers who don’t have one-on-ones understand very little about what’s happening in their organizations.


“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.”

Peter’s Principle

The Peter Principle is a concept in management theory in which the selection of a candidate for a position is based on the candidate’s performance in their current role, rather than on abilities related to the intended role. Thus, “managers rise to the level of their incompetence.”

3 requirements for customers

The task here encompasses 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.


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.

Detecting errors

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.

Daily numbers to look at

which five pieces of information would you want to look at each day, immediately upon arriving at your office? Here are my candidates… (1) How many breakfasts should you plan to deliver? … (2) Your next key indicator is raw material inventory … (3) Another important piece of information is the condition of your equipment … (4) You also must get a fix on your manpower (5) Finally, you want to have some kind of quality indicator

Indicators + attention

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.

Counter indicators for balance: Quantity vs Quality

Because those listed here are all quantity or output indicators, their paired counterparts should stress the quality of work. Thus, in accounts payable, the number of vouchers processed should be paired with the number of errors found either by auditing or by our suppliers.

Build to order vs build to forecast

At Intel, we build to forecast because our customers demand that we respond to their needs in a timely fashion, even though our manufacturing throughput times are quite long.

People who forecast should be also responsible for the task == engineer should set the deadline and not marketing

Because the art and science of forecasting is so complex, you might be tempted to give all forecasting responsibility to a single manager who can be made accountable for it. But this usually does not work very well. What works better is to ask both the manufacturing and the sales departments to prepare a forecast, so that people are responsible for performing against their own predictions.

In-process inspection and final inspection

If we again use a black box to represent our production process, inspections that occur at intervening points within it are called, logically enough, in-process inspections. Finally, the last possible point of inspection, when the product is ready to be shipped to the customer, is called final inspection or outgoing quality inspection.

Sampling vs processing 100%

For that, the bureaucratic minds at the embassy would need to accept that a 100 percent check of the visa applicants is unnecessary. Some 98 percent of those applying are approved without any question. So if the embassy were to institute a sampling test of visas (a quality assurance test), and a thorough one at that, the logjam of applications could be broken without materially increasing the chance that the undesirable will enter our country.


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.

What a day looks like

As you can see, much of my day is spent acquiring information. And as you can also see, I use many ways to get it. I read standard reports and memos but also get information ad hoc. I talk to people inside and outside the company, managers at other firms or financial analysts or members of the press.


As you can see, in a typical day of mine one can count some twenty-five separate activities in which I participated, mostly information-gathering and -giving, but also decision-making and nudging.


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.

Delegate what you are familiar with - counter-intuitive!

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.

Monitoring and delegation

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… As the subordinate’s work improves over time, you should respond with a corresponding reduction in the intensity of the monitoring.

Batching and mental work

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.

When to say NO

  1. You should say “no” at the outset to work beyond your capacity to handle. It is important to say “no” earlier rather than later because we’ve learned that to wait until something reaches a higher value stage and then abort due to lack of capacity means losing more money and time.

Leverage and subordinates

An important component of managerial leverage is the number of subordinates a manager has. If he does not have enough, his leverage is obviously reduced. If he has too many, he gets bogged down—with the same result. As a rule of thumb, a manager whose work is largely supervisory should have six to eight subordinates; three or four are too few and ten are too many.

Meeting times

Peter Drucker once said that spending more than 25 percent of his time in meetings is a sign of a manager’s malorganization, and William H. Whyte, Jr., in his book The Organization Man, described meetings as “non-contributory labor” that managers must endure.

3 kinds of meetings

At Intel we use three kinds of process-oriented meetings: the one-on-one, the staff meeting, and the operation review.


Learning form subordinates

I also didn’t know much about manufacturing techniques, my background having been entirely in semiconductor device research. So two of my associates, both of whom reported to me, agreed to give me private lessons on memory design and manufacturing.

Importance of one-on-ones

Accordingly, you should have one-on-ones frequently (for example, once a week) with a subordinate who is inexperienced in a specific situation and less frequently (perhaps once every few weeks) with an experienced veteran.

How long?

I feel that a one-on-one should last an hour at a minimum. Anything less, in my experience, tends to make the subordinate confine himself to simple things that can be handled quickly.


I think you should have the meeting in or near the subordinate’s work area if possible. A supervisor can learn a lot simply by going to his subordinate’s office. Is he organized or not? Does he repeatedly have to spend time looking for a document he wants? Does he get interrupted all the time? Never? And in general, how does the subordinate approach his work?

How often?

One-on-ones should be scheduled on a rolling basis—setting up the next one as the meeting taking place ends. Other commitments can thereby be taken into account and cancellations avoided.

Family one-on-ones! Great idea :)

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.

Role of a supervisor

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.


“Mr. Grove, isn’t your company’s emphasis on visible signs of egalitarianism such as informal dress, partitions instead of offices, and the absence of other obvious perks like reserved parking spaces, just so much affectation?” My answer was that this is not affectation but a matter of survival. 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.

Teams of teams

We now discover that 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.


Though most are mixed, organizations can come in two extreme forms: in totally mission-oriented form or in totally functional form.

Branch manager’s decisive role

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 functional organization. In the real world, of course, we look for a compromise between the two extremes.

When to centralise and decentralise

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

Mantrix management at work

To put a man on the moon, NASA asked several major contractors and many subcontractors to work together, each on a different aspect of the project. An unintended consequence of the moon shot was the development of a new organizational approach: matrix management.


Previous definition of motivation - punishment

For most of Western history, including the early days of the Industrial Revolution, motivation was based mostly on fear of punishment. In Dickens’ time, the threat of loss of life got people to work, because if people did not work, they were not paid and could not buy food, and if they stole food and got caught, they were hanged.

Motivation and hierarchy of needs

My description of what makes people perform relies heavily on Abraham Maslow’s theory of motivation, simply because my own observations of working life confirm Maslow’s concepts. For Maslow, motivation is closely tied to the idea of needs, which cause people to have drives, which in turn result in motivation … Simply put, if we are to create and maintain a high degree of motivation, we must keep some needs unsatisfied at all times.

Lower need vs higher

Maslow defined a set of needs, as shown below, that tend to lie in a hierarchy: when a lower need is satisfied, one higher is likely to take over.

Showing up vs performing

The physiological, safety/security, and social needs all can motivate us to show up for work, but other needs—esteem and self-actualization—make us perform once we are there.

High levels of performance

its most important characteristic is that unlike other sources of motivation, which extinguish themselves after the needs are fulfilled, self-actualization continues to motivate people to ever higher levels of performance.

Money and motivation

So it appears that at the upper level of the need hierarchy, when one is self-actualized, money in itself is no longer a source of motivation but rather a measure of achievement. Money in the physiological- and security-driven modes only motivates until the need is satisfied, but money as a measure of achievement will motivate without limit.

Irrelevant perks

An obvious and very important responsibility of a manager is to steer his people away from irrelevant and meaningless rewards, such as office size or decor, and toward relevant and significant ones. The most important form of such task-relevant feedback is the performance review every subordinate should receive from his supervisor.

During an interview: knowledge

The information to be gained here tends to fall into four distinct categories. First, you’re after an understanding of the candidate’s technical knowledge: not engineering or scientific knowledge, but what he knows about performing the job he wants—his skill level.

Project a candidate’s future performance

Within the hour or so at your disposal, you must move between the world of the past employer and your own, and project the candidate’s future performance in a new environment based on his own description of past performance. This managerial task is clearly tricky and high-risk, but unfortunately unavoidable.

Showing the true self as the interviewer

But I think the interview should be completely straightforward. Remember, a candidate is a potential employee. He will go away from having talked to you with a strong set of first impressions. If those are wrong and you hire the person, it will take a long time before they change. So show yourself and your environment as they really are.