9 Management Lessons From the Book of a Legendary CEO

Andy Grove, Robert Noyce and Gordon Moore in 1978. Source: Intel Free Press

If you are reading this article on a computer, there are 80% chances that the CPU of it is powered by Intel. One of the main reasons for the overwhelming success of this American technology company has name and surname: Andrew Grove.

He was the third employee of a company that now employees more than one hundred thousand people, and became their CEO in 1987. He retired in 2005 and is considered one of the pioneers and builders of what is now the Silicon Valley in California.

He passed away in 2016, leaving a legacy of management improvement techniques and as a role-model in entrepreneurship. His book High Output Management, published in 1995, is still a best-seller and inspired this article. Here you will learn some of the greatest insights of the 1997 Man of the Year — according to Time Magazine — the legendary Andy Grove.

One of the central thoughts of Mr. Grove is that the output of a manager is the output of an organization. In modern verticalized corporations, middle and junior managers assume the role of merely passing information along.

The question that managers should ask themselves in this case are:

I) Are you adding real value? If you are only transmitting information and not aggregating any value, you are easily replaceable and your professional prospects are gloomy.

II) Are you trying new ideas, new techniques, and new technologies? Or are you waiting for others to figure out how they can re-engineer your workplace — and you out of that workplace?

Managers should continually look for ways to make things truly better in their departments. Every hour of the day should be used to increase the output or the value of the output of your team.

2 — How to understand why your team is not achieving good results.

When one member has a bad performance, make yourself the following question: if the person’s life depended on doing the work, could he do it? If the answer is “yes”, you have a motivational problem, because the capability is there, but lacks incentive to fully mobilizes it. If the answer is “no”, then, and only then, you have a capacity problem, which either requires training or reassignment.

This judgment drastically increases the focus on where a manager should concentrate his effort. Overall, a leader has two great leverages to increase result: motivating and training.

3 — Take the rotten egg out before the customer sees it.

In the book High Output Management, Andy illustrates some of his idea using the fictitious example of a breakfast factory. To keep a good reputation with customers, one of the concerns of the production line of the factory is to avoid any rotten egg to arrive at the customer table. In fact, bad eggs should be rejected even before reaching the breakfast assembly lines, while they are still being delivered by the suppliers. Never a rancid egg should arrive at the customer table because there the damage would be multiple times the cost of solving it earlier.

This is summarized by the rule that we should always try to heed is to detect and fix any problem in a production process at the lowest-value stage possible. This stage is almost always the earliest possible.

4 — For every indicator, have a counter indicator.

Indicators drive your attention to the thing they are measuring. Mr. Grove makes a good analogy: it is like riding a bike, you will probably steer it where you are looking. If you spend too much time measuring and analyzing your variable costs, you may neglect variable costs, or even worse: forget about maximizing revenues. Since indicators direct activities of managers and entire departments, it is important to have paired indicators to measure the effect and counter-effect of a decision.

Example: If you decide to reduce inventory, measure both your inventory levels and shortage backups. Lower inventories will release capital for further investments but will increase the risk of a product lacking if a supply-shortage happens. Measuring both together you can find a middle term with less risk.

If you ever read any book from Nassim Taleb, this may remind you of his Antifragility concept.

5 — A shared culture reduces bureaucracy.

A fast-growing business quickly can go down the road of bureaucracy and complicated, ever-changing rules. This happens because with new team members being hired all the time, it is difficult to make all of them compliant with company procedures, rules, and expected behaviors.

A shared business culture helps immensely with that. When the rules become practice, people start to comply by example instead of by decree. The newbies will follow the rest of the team in their approach with colleagues and customers, and processes can be simplified.

6 — How monitoring should be done.

Information is important for the decision-making process of a manager. How well a leader comprehends facts and understands the business play a vital role in being a role model and leading a team.

However, as important information is, the sourcing of it should not clutter or represent an obstacle in the routine of your employees. The more experienced or higher-performing team members should not waste their time reporting their day. That is why Andy Grove suggests:

How often you monitor should not be based on what you believe your subordinate can do in general, but on his experience with a specific task and his prior performance with it — his task-relevant maturity.

7 — Cut windows into the black box of your business

Imagine a business as a box, where the inputs enter on one side, the process happens inside and the outputs — your product or service — are delivered on the other side.

This is what Andrew Grove calls the business black box. And inside this black box is where the processes happen, and from there comes most of the unexpected interruptions or defects that can negatively affect our output.

We can’t control our customers, but we can control both our inputs and processes. A manager should do everything possible to reduce little stops caused by minor issues. He also should be prepared beforehand to react quickly and effectively to emergencies, so the problems caused by them are solved as quickly as possible.

Look for sources of future troubles by cutting windows into the black box of your business.

8 — Interviews should be about discovering motivations and attitudes.

Frequently, interviews are about technical aspects. While in some positions this is understandable, we should have in mind that:
I) Technical deficiencies can be solved with training.

II) Attitude and motivations are much harder to be tackled, and if possible at all.

The interview is a vital moment to discover what are the attitudes and reactions of the candidate. So Andrew Grove suggests questions like: What do you consider your most significant failures? What did you learn from them? — Why do you think an engineer should be chosen for a marketing position? (Vary this one according to the situation.) — What was the most important course or project you completed in your college career? Why was it so important?

9 — Answer correctly to “Do you have a minute?” and do not lose your talents.

Often middle and junior managers prioritize meetings and emails over their team concerns. This goes back to the point before mentioned that the priority of a manager is the output of his team and not the quality of his reporting. Imagine a situation where a subordinate stops you in the corridor and asks if you have a minute. He then tells you that he wants to leave the company.

In this situation, your reaction is crucial. Some managers would prefer to escape from the corridor, saying that they will talk together about that later. If your employee is leaving because he feels that he is not important enough, you just confirmed it to him.

Andrew Grove suggests a different way to handle this situation: Drop what you are doing. Sit him down and ask him why he is quitting.

Author: Levi Borba, founder of Colligere Expat Consultancy, former RM specialist for the world´s greatest airline, co-founder of Nearby Airport Hostel Warsaw and author of the books Moving Out, Living Abroad and Keeping Your Sanity and Starting Your Own Business Far From Home: What (Not) to Do When Opening a Company in Another State, Country, or Galaxy. You can check some of his articles here.

Subscribe here, for free, to my email list, and receive the digital book 20 Essential Hacks for Saving Money While Travelling. Discover the way to cheaper flight tickets and even an upgrade to Business Class! Written by an author that worked for years in some of the best airlines on the planet.

Former 5-Star airline specialist, founder of Small Business Hacks https://www.youtube.com/c/SmallBusinessHacks and https://expatriateconsultancy.com

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