High Output Management by Andrew S. Grove: Summary and Notes
One sentence summary: High Output Management by Andrew S. Grove will teach you the basics of management. Andy shares many of the management principles he used to make Intel the largest semiconductor manufacturer in the world. Lessons include how to run successful meetings, how to recruit, how to fire employees, team management, and much more.
One paragraph summary: High Output Management by Andrew Grove is a classic on management. Andy was the CEO and Chairman of Intel during the company's phenomenal growth phase. The book covers his leadership style and management principles in general. You will learn what it takes to manage teams, manage oneself, the nature of the production process, how to run successful meetings, how to recruit, and much more.
Favorite quote from the author:
Few books cover the subject of management better than High Output Management by Andrew S. Grove, the guy who “drove the growth phase of silicon valley.”
Through his writings, books, teachings, and as Intel’s CEO, Andy was instrumental in guiding the global development of the electronics manufacturing industries. His accomplishments alone make him one of the great business leaders of the 21st century
What impressed me about High Output Management is how Andy simplifies the subject. You would think that as the head of a Fortune 500 company, he would approach the topic from the perspective of a high-powered CEO, but what Andy does is remarkable.
He starts his book by describing the operations of a fictional breakfast factory that sells boiled eggs, toast, and coffee. By approaching things this way, he makes the subject of management accessible to anyone, including novices. He also implies that whether you are the CEO of Apple or just serving breakfast, management principles remain the same.
Main takeaways from High Output Management by Andrew S Grove
Here are the top six lessons from High Output Management:
Identify the limiting step in your production process
Create a forecast for the future
The most important thing a manager can do is to manage their time
Focus on a few measures of output
Meetings are essential
Proper training is needed for a business to be sustainable
Lesson 1: Identify the limiting step in your production process
According to Andy, the limiting step is the step that determines the overall shape of the operation. If you take the example of a breakfast factory, the limiting step might be how long it takes to boil an egg. Everything else depends on this one activity, and you should plan your entire production around it.
Andy gives an example of the hiring process at Intel. It usually involves visiting several campuses and screening potential candidates. The limiting step for the company is hosting the students and paying for their accommodation and travel expenses. Thus, the company tries to limit the costs by screening the potential candidates on the phone first
Andy advises companies to construct their production flow from the longest, most difficult step and work their way back. He also says that problems in the production process should be fixed at the lowest-value stage possible. In other words, if the egg is rotten, it should not be cooked, let alone served to the customer
Lesson 2:Lesson 2: Create a forecast for the future
According to Andy, the best way to manage customer orders is to create a forecast for the future. As a manager of your business, you should be willing to take inventory risk; otherwise, you won’t be able to meet customer orders on time.
The best forecasting tool is the stagger chart. It shows the forecast for two succeeding months and relies on past forecasts to make the predictions more accurate. Using a forecast can tell you a lot about the nature of your business, especially if the orders are recurrent
Tips for creating a more realistic forecast:
Use short-time cycles because the more time you assign a task, the longer it is going to take — Parkinson's Law
Build some ‘slack’ into your predictions as few things happen as planned
Keep improving your prediction process. If any variable changes, make the necessary adjustments
Some crucial indicators to consider when creating a forecast include raw material inventory, quality indicator, condition of your equipment, and manpower availability
“Indicators tend to direct your attention toward what they are monitoring.” — Andrew S. Grove
Lesson 3: The most important thing a manager can do is to manage their time
Andy makes a clear distinction between the role and the activities of a manager. He says that the output of a manager is the result that a group under their supervision achieves. As such, the manager’s role is to lead an effective team.
Leverage here refers to the output generated by a specific activity. A manager can increase their leverage in three ways:
Increasing the rate at which they perform their activities
Increasing the leverage associated with each activity
Shifting from low leverage activities to higher leverage activities
When managers delegate some of their activities as part of increasing leverage, they can never wash their hands of a task. Andy says that delegation without follow-through is abdication. Even after you assign a task to someone else, you are still responsible for its accomplishment. You should monitor how things are going, and while you might think that monitoring constitutes meddling, it does not. It is just a way of ensuring that things are going in line with your expectations.
When making decisions, managers should answer the following six questions:
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?
Lesson 4: Focus on a few measures of output
Andy likens the production process to a black box. You can’t see everything that’s happening, but you can get fixated on a few output measures. The goal is to select several objective and quantifiable measures of output that are easy to review. These should tell you where the business is headed. Andy identifies several characteristics of a good indicator. It should cover the output of a work unit and not merely the activity involved, and it should measure a physical, countable thing.
Examples of effective measures of output include employees hired, transactions processed, items in inventory, and the number of sales. Andy says that such measures have many uses. The first one is that they provide goals for the group, and the second is that they provide some degree of objectivity. Finally, they provide a way to compare various administrative groups performing the same action.
Lesson 5: Meetings are essential
Many people decry meetings, but Andy doesn’t see them that way. He says that they are an essential part of running a business. Andy advises that a meeting should only be held if it is necessary and justifiable. Otherwise, it is a waste of time and money.
A meeting’s goal is to arrive at a decision, and the smaller the number of people attending, the better. Grove says the perfect meeting should not have more than eight people and that the person organizing the meeting should plan the agenda and keep everyone in the know.
If the task at hand is accomplished early, there is no need to hold a meeting longer than necessary. On the other hand, if no decision is arrived at, the team should plan another meeting in the future. Finally, after a meeting is completed, it is essential to keep everyone informed of the resolutions. The best way to do this is via an email that has clear indications of what was agreed on and the steps that should be taken.
Lesson 6: For any business to be sustainable, proper training is needed
No matter the kind of business you are running, you need to train your employees properly. Andy recalls a time at Intel when one of the employees failed to notice that a silicon fabrication machine was slightly out of tune. Why? Because while he knew how to operate the machine, he didn’t know how to recognize when it was out-of-tune. The mishap ended up costing Intel millions of dollars and delayed deliveries.
Andy puts a premium on training and says that a manager who trains his employees can increase his output tremendously. Training is one way that managers can improve their team’s performance; the other is by providing motivation. Training also serves as a way to create the next generation of leaders.
High Output Management by Andrew S. Grove is a classic book on management beloved by Mark Zuckerberg, Ben Horowitz, and other silicon valley titans. It contains timeless lessons on how to run a business successfully and how to manage teams. The book is easy to read as Andy knows how to make the lessons relatable.
Who Would I recommend the Book To?
High Output Managementis a book that every middle-level manager should read. Andy wrote it with them in mind. That said, the book is simple enough that anyone can read it.GET THE BOOK ON AMAZON
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