HighOutputManagement

This is a user-friendly guide to the art and science of management from Andrew S. Grove, the president of America's leading manufacturer of computer chips. Groves recommendations are equally appropriate for sales managers, accountants, consultants, and teachers--anyone whose job entails getting a grHIGH OUTPUTMANAGEMENTAndrew S GroveVINTAGE BOOKSA Division of Penguin Random House lLCNew YorkVINTAGE BOOKS EDITIONS, 1983, 1995, 2015Copyright C 1983, 1995 by Andrew S GroveForeword c 2015 by Ben horowitzAll rights reserved. Published in the United States by Vintage Books, a division of PenguinRandom House llc, New york, and in Canada by random House of canada, a division ofPenguin Random House Ltd, Toronto. Originally published in somewhat different form inthe United States by random House, a division of Penguin Random House LLC, New York1983Vintage and colophon are registered trademarks of penguin random House llcGrateful acknow ledgment is made to Fortune magazine for permission to reprint"WhyTraining Is the Boss's job, from the January 23, 1984, issuc of fortune.The Library of Congress has cataloged the Random House edition as follows:Grove. Andrew s.High output managementBibliography: p1. Industrial management. I. TitleHD31G7641985658.584-40529Vintage Trade Paperback isbn 9780679762881eBook isbn 9781101972366www.vintagebooks.com4.1AcknowledgmentsThe ideas in this book are the result of a collective effort--mycollaboration with many, many Intel managers over the years. I amvery grateful to all of them, because i learned everything i knowabout how to manage from them. I am especially grateful to gordonMoore, one of the founders of Intel, who recognizeed the buddingmanager under my engineer's skin long before I had any inklingmyseThanks are also due to a group of the companys middle managerswho cheerfully accepted the role of guinea pig who suffered throughmy first attempts to articulate these ideas and who also generouslyprovided me with experiences from their daily lives as managers. I'veused their examples to illustrate certain points in the book. Thesemanagers are acknowledged by name in the notesI owe special thanks to Grant Ujifusa, my Random House editor,who tirelessly hammered away at the rough edges of my ideas andprose and translated the latter into English-from the originalengineeringese to Pam Johnson, who ran the various revisionsthrough the word processor; and most of all to Charlene King, myassistant, who not only helped to pull the whole project together,from capturing class discussions to gathering illustrations, but alsomade sure that i did my work of running intel even as i was busilysplitting infinitivesContentsCoverAbout the authortle PageCopyrightAcknowledgmentsIntroductionFOPARTI THE BREAKFAST FACTORY1 The Basics of Production: Delivering a Breakfast (or a CollegeGraduate, or a Compiler, or a Convicted Criminal.)2 Managing the Breakfast FactoryPARTII MANAGEMENT IS A TEAM GAME3 Managerial Leverage4 Meetings-The Medium of Managerial Work5 Decisions, Decisions6 Planning: Todays Actions for Tomorrows OutputPART III TEAM OF TEAMS7 The Breakfast Factory Goes National8 Hybrid organizations9 Dual reporting10 Modes of controlPART IV THE PLAYERS11 The Sports Analogy12 Task-Relevant Maturity13 Performance Appraisal: Manager as Judge and Jury14 Two Difficult Tasks15 Compensation as Task-Relevant Feedback16 Why Training Is the Bosss JobOne More ThingnotesIntroductionI What happened after 1983I wrote this book in 1983. It was the result of twenty years ofmanagerial work during which i learned a variety of ways to makethings take place more effectively. What I learned were the basics ofmanagerial work, particularly as they pertained to middle managersMore than a decade has passed since, but i find that most of thethings that were useful then are still useful now the basics ofmanagement remain largely unaffectedHowever, two critical events took place in the 198os that alteredthe environment in which we managers do our work-and this mademe realize that an updated Introduction to this book was necessaryhose events were the Japanese memory onslaught and e-mailLet me explain their implicationsBy the mid-eighties, the Japanese producers of Dynamic RandomAccess Memories, or DRAMs for short-the most popular computermemory devices, used in computers of all kinds-had perfected theirtechnological capability and honed their manufacturing prowess tothe extent that they could take on the american producers(who hadpioneered the market and totally dominated it for the first fifteenyears of its existence). The mid-eighties were also when the personalcomputer revolution took place. And because personal computersrequire a lot of memory the Japanese dram juggernaut had a readymarket for its products centered in the United States. Everything wasprimed for an attackIntel, where I work, was one of the companies that got caught up inthis assault. In fact, Intel was one of the early producers of DRamsMore than that, in its earliest years, we had practically the wholemarket to ourselves. However, by the mid-eighties, competition bothfrom the United States and, increasingly, from Japanesemanufacturers whittled down our share of the market Under theferocious attack of aggressively priced, high-quality Japanese Dramswe were forced to retreat and cut prices to a level where being in theDRaM business brought us major losses. Ultimately, the lossesforced us to do something extraordinarily difficult: to back out of thebusiness that the company was founded upon, and to focus onanotherbusiness that we thought we were best at-themicroprocessor businessWhile this adjustment sounds quite logical and straightforward intheory in reality its implementation required us to move andredeploy a lot of our employees, let some of them go, and shutter anumber of factories. We did all this because under this strong attack,we learned that we must lead with our strength. Being second best ina tough environment is just not good enough.Ultimately, we-Intel and the U.S. semiconductor industrprevailed over the onslaught of the Japanese manufacturers. Intelgrew to become the largest semiconductor manufacturer in the worldand U.S. manufacturers recently surpassed their Japanesecounterparts overall. Nevertheless, in retrospect it's clear that thisassault was just one wave of a much larger tide-the tide ofglobalizationGlobalization simply means that business knows no nationalboundaries. Capital and work-your work and your counterpartswork-can go anywhere on earth and do a jobSome of us are fortunate to be residents of a country, the unitedStates, that enjoys one of the highest standards of living. The U.Smarket for goods and services is the largest in the world. And untilrecently, it has been easier to supply that market from inside theUnited states than from abroadToday, many markets outside the united States are growing fasterthan markets inside the u.s. and the domestic market can besupplied from anywhere in the world. For example, i recently boughta gore-tex jacket from Patagonia (the clothing manufacturer, not theregion in South America), and i saw that it was made in ChinaAmerican brand, American technology (the high-tech fabric wasinvented and made in the United States), and assembled to thespecifications of the reseller(Patagonia) in a foreign country.The consequence of all this is very simple. If the world operates asone big market, every employee will compete with every personanywhere in the world who is capable of doing the same job. Thereare a lot of them, and many of them are very hungryAnother consequence also follows. When products and servicesbecome largely indistinguishable from each other, all there is by theway of competitive advantage is time. and that' s where the secondcritical development of the eighties comes in -e-mailJust as the Japanese dram attack was the first wave of a muchreater tide. e-mail is also the first manifestation of a revolution inhow information flows and how it is managed.The informed use of e-mail-short for computer-to-computerelectronic messaging -results in two fundamentally simple butstartling implications. It turns days into minutes, and the originatorof a message can reach dozens or more of his or her co-workers withthe same effort it takes to reach just one. As a result, if yourorganization uses e-mail, a lot more people know what's going on inyour business than did before, and they know it a lot faster than theyused toLet me interject a bit of irony. Back in the eighties, when theJapanese seemed invincible, one explanation advanced for theirability to act quickly and decisively was the way Japanese offices wereset up In a Japanese office a manager and his subordinates all sitaround a big long table. People work on their own assignments butwhen they need to exchange information, everybody they work withsits within speaking distance, right around the same table. Soinformation is exchanged in minutes and everybody can be reachedwith the same effort as a result because of the ease with whichJapanese office workers communicate, they have, in fact, been slowto em brace electronic mailBut now the pendulum is swinging in the other direction. As