“High Output Management” by Andrew Grove

To avoid that, you need a raw material inventory. But how large should it be? The principle to be applied here is that you should have enough to cover your consumption rate for the length of time it takes to replace your raw material.

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.

The limiting step here should clearly be obtaining a conviction. The construction cost of a jail cell even today is only some $80k. This, plus the $10-$20k it costs to keep a person in kail 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 $80k 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.

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.

Some 98% of those applying are approved without any question. So if the embassy were to institute a sampling test of visas, 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. Moreover, the embassy could select the sample to be checked according to predetermined criteria. The visa processing could then work rather like the IRS. Through the checks and audits that the IRS performs, that government agency induces compliance among most taxpayers without having an agent look at every single return.

Stressing output is the key to improving productivity, while looking to increase activity can result in just the opposite.


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

So why are written reports necessary at all? They obviously can’t provide timely information. What they do is constitute an archive of data, help to validate ad hoc inputs, and catch, in safety-net fashion, anything you may have missed. But reports also have another totally different function. As they are formulated and written, the author is forced to be more precise than he might be verbally. Hence their value stems from the discipline and the thinking the writer is forced to impose upon himself as he identifies and deals with trouble spots in his presentation. Reports are more a medium of self-discipline than a way to communicate information. Writing the report is important; reading it is often not.

There is an especially efficient way to get information, much neglected by most managers. That is to visit a particular place in the company and observe what’s going on there. Why should you do this? Think of what happens when somebody comes to see a manager in his office. A certain stop-and-start dynamics occurs when the visitor sits down, something socially dictated. While a two-minute kernel of information is exchanged, the meeting often takes a half hour. But if a manager walks through an area and sees a person with whom he has a two-minute concern, he can simply stop, cover it, and be on his way. Ditto for the subordinate when he initiates conversation. Accordingly, such visits are an extremely effective and efficient way to transact managerial business.

Then why are they underutilized? Because of the awkwardness that managers feel about walking through an area without a specific task in mind. At Intel we combat this problem by using programmed visits meant to accomplish formal tasks, but which also set the stage for ad-hoc mini-transactions. For example. we ask our managers to participate in “Mr. Clean” inspections, in which they go to a part of the company that they normally wouldn’t visit.

Delegation without follow-through is abdication.

Making certain types of decisions is something managers frequently delegate to subordinates. How is this best done? By monitoring their decision-making process. How do you do that? … We ask a subordinate to think through the entire matter carefully before presenting a request for approval. And to monitor how good his thinking is, we ask him quite specific questions about his request during a review meeting. If he answers them convincingly, we’ll approve what he wants. This technique allows us to find out how good the thinking is without having to go through it ourselves.

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. This range comes from a guideline that a manager should allocate about a half-day per week to each of his subordinates. (Two days a week per subordinate would probably lead to meddling; an hour per week is not enough opportunity for monitoring.)

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. The key is this: understand that interrupters have legitimate problems that need to handled. That’s why they’re bringing them to you.

Everyone must decide for himself what is professional and appropriate here. A test might be to imagine yourself delivering a tough performance review to your friend. Do you cringe at the thought? If so, don’t make friends at work. If your stomach remains unaffected, you are likely to be someone whose personal relationships will strengthen work relationships.

But what is the fundamental purpose of a performance review? To improve the subordinate’s performance. The review is usually dedicated to two things: first, the skill level of the subordinate, to determine what skills are missing and to find way to remedy that lack; and second, to intensify the subordinate’s motivation in order to get him on a higher performance curve for the same skill level.

Justa s you would not permit a fellow employee to steal a piece of office equipment worth $2,000, you shouldn’t let anyone walk away with the time of his fellow managers.

Usually, when a meeting gets heated, participants hang back, trying to sense the direction of things, saying nothing until they see what view is likely to prevail. They then throw their support behind that view to avoid being associated with a losing position. Bizarre as it may seem, some organizations actually encourage such behavior. This is a terrible way to manage. All it produces is bad decisions, because if knowledgeable people withhold opinions, whatever is decided will be based on information and insight less complete than it could have been otherwise.

But regardless of what the task-relevant maturity may be, the manager should always monitor a subordinate’s work closely enough to avoid surprises. The presence or absence of monitoring, as we’ve said before, is the difference between a supervisor’s delegating a task and abdicating it.

“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 time offset between the manager’s work and the output of his organization was just about a year.

It is very important to assess actual performance not appearances; real output, not good form. Had the manager been given high rating, Intel would have signaled to all at the company that to do well, you must “act” like a good manager, talk like one, and emulate one – but you don’t need to perform like one.

Preferable, a review should not contain any surprises, but if you uncover one, swallow hard and bring it up.

I feel very strongly that any outcome that includes a commitment to action is acceptable. Complex issues do not lend themselves easily to universal agreement. If your subordinate says he’s committed to change things, you have to assume he’s sincere. The key word here is acceptable. It is certainly more desirable for you and your subordinate to agree about the problem and the solution…so up to a point, you should try to get your subordinate to agree with you. But if you can’t, accept his commitment to change and go on. Don’t confuse emotional comfort with operational need. To make things work, people do not need to side with you; you only need them to commit themselves to pursue a course of action that has been decided upon.

The best thing to do is to give your subordinate the written review sometime before the face-to-face discussion. he can then read the whole thing privately and digest it. He reacts or overreacts and then looks at the “messages” again. By the time the two of you get together, he will be much more prepared, both emotionally and rationally.

An interview produces the most insight if you steer the discussion toward subjects familiar to both you and the candidate.

Interview questions fall into four buckets:

  1. Technical/skills
  2. What he did with that knowledge
  3. Discrepancies
  4. Operational values

You can’t get away from relying on a candidate’s self-assessment. but that’s not a bad way to get direct answers to direct questions. If, for example, you were to ask, “How good are you technically?” the interviewee might be taken back momentarily but then clear his throat and say timidly, “Well, I think I’m pretty good.” As you listen, you’ll probably get a decent fix on how capable he really is. Don’t worry about being blunt; direct questions tend to bring direct answers, and when they don’t, they produce other forms of insight into the candidate.

Instead, I think management ought to face up to its own error in judgment and take forthright and deliberate steps to place the person into a job he can do. Management should also support the employee in the face of the embarrassment that he is likely to feel. If recycling is done openly, all will be pleasantly surprised how short-lived that embarrassment will be. And the result will be a person doing work we know from past experience he can perform well.