High Output Management by Andrew Grove: Summary and Notes
“Remember that by saying “yes”—to projects, a course of action, or whatever—you are implicitly saying “no” to something else.”
Rating: 10/10
Related Books: Only The Paranoid Survive, A Manager’s Path, The Hard Thing About Hard Things, The Effective Executive, Managing Humans
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Table of Contents
High Output Management Short Summary
High Output Management by Andrew Grove is the definitive book on management and leadership. Drawing lessons from his career and experience as Intel’s CEO, Grove teaches how to manage teams, structure organizations, supervise, recruit, and much more. Filled with practical examples, it’s a handbook for the modern business-life. Every business student should read it.
Basics of Production
The basic requirements of production are scheduled delivery time, acceptable quality level, and the lowest possible cost.
When constructing the production flow, it’s important to start with the longest, most difficult task, and work our way back.
During production, fix any problem in the production process at the lowest-value stage possible.
Indicators direct your attention to what you are measuring. There are five important indicators in business:
- Sales forecast
- Raw material inventory
- Condition of your equipment
- Manpower
- Quality indicator
Companies control future output through customer orders or by forecasting future output.
Parkinson’s Law: work expands to fill the available time.
Management
The output of a manager is the output of the various organizations that are under their control.
Leverage: the measure of the output generated by any given managerial activity.
A manager can increase their output in three ways:
- Increasing the rate at which a manager performs their activities
- Increasing the leverage that is associated with various managerial activities
- Shifting the mix of a managers activities from lower to higher leverage
“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.”
Meetings are important. They are avenues through which managerial work happens.
There are two kinds of meetings:
- Process-oriented: where information is shared
- Mission-oriented: where a decision is made
Decisions
Making decisions is an important aspect of every manager’s work.
In companies that are based on know-how, important decisions need to be made on the basis of open discussion, and a clear decision when there is disagreement. When a decision is reached, everyone should give their full support.
Peer Group Syndrome: when everyone wants to agree with the group decision.
The peer group syndrome can be overcome if one of the members of a group has self-confidence. When there is no formal leader, the person with the most to lose should take charge.
“When knowledge and position power are separated, the sense of uncertainty can become especially acute, because the knowledge people are often not comfortable with the purely business-related factors that might influence a decision.”
Six Questions for better decision making:
- 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?
Planning
The planning process should consist of analogous thinking.
- Establish projected demand
- Establish present status
- Compare and reconcile the first and the second steps
To determine your present status, list your present capabilities and the projects that you have in the works.
As you make your plans, remember that the goal is to avoid future issues. Ask yourself: “What did I do today to avoid tomorrow’s problem?”
Management by Objectives (MBO): assumes at the short-range, that you should know quite well what your environment demands from you.
A successful MBO strategy addresses the following questions:
- Where do I want to go?
- How will I pace myself to see if I’m getting there?
Grove’s Law: all large organizations with a common business purpose end up in a hybrid organizational form.
The most important task for a hybrid organization is the optimum, and timely allocation of resources and the efficient resolution of conflicts.
“To make hybrid organizations work, you need a way to coordinate the mission oriented units and the functional groups so that the resources of the latter are allocated and delivered to meet the needs of the former.”
Modes of Control
Human behavior can be controlled by the following forces:
- Free market forces
- Contractual obligations
- Cultural values
“In a contractual obligation, management has a role in setting and modifying the rules, monitoring adherence to them, and evaluating and improving performance. As for cultural values, management has to develop and nurture the common set of values, objectives, and methods essential for the existence of trust.”
The Players
Management is a team activity and the most important role of the manager is to elicit peak performance.
A manager has to create an environment in which motivated people can flourish. In an MBO system, the management should set objectives very high so that, even when individuals try to achieve them, they only have a 50-50 chance.
“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.”
Performance appraisal is the single most important form of task-relevant feedback that supervisors can provide subordinates with. Reviews are meant to improve subordinates’ performance.
When delivering an assessment, there are three Ls to look out for:
- Level. Be totally frank with your subordinate
- Listen. Give each other time to express yourselves
- Leave yourself out. As the reviewer, leave your fears, insecurities, and everything else out of the review process
It is the role of the manager to train their employees. Training is a high leverage activity.
“Training must be done by a person who represents a suitable role model. Proxies, no matter how well versed they might be in the subject matter, cannot assume that role. The person standing in front of the class should be seen as a believable, practicing authority on the subject taught.”
