Andrew Grove: The Innovator Whose Methods Supercharged the Silicon Revolution Business Masterminds Series By Robert Heller

Chapter One – Raising Management Output Goading, challenging, bullying and shouting he never relaxes the preassure for results There must be a clear understanding of the trade-offs between the various factors – manpower, capacity and inventory Without unremitting vigilance and strenuous action, success will corrode into failure The output of managers is the output of the organizational units under their supervision or influence A team will perform well only if peak performance is obtained from its individual members Business is a team activity. And it always takes a team to win – people contributing to a common output, not people working together in groups Information can be obtained in many ways: Internal reports Talking with people inside and outside the company Customer complaints Shift your energy and attention to whatever will most increase the output of the organization. For every activity performed by a manager, the output of the organization should increase to some extent – the greater the increase, the higher the leverage. Productivity can be raised by: Increasing the speed by which managers perform Increasing the leverage associated with the various managerial activities Shifting the mix of a managers activities from those with lower leverage to those with higher leverage High leverage can be achieved by: Many people being affected by one manager When one person‟s work or behavior over a long period of time are affected by a manger‟s brief and well-focused set of words or actions When the work of a large group is affected by an individual who supplies a unique key piece of knowledge or information A manager can also exert high leverage by an activity that takes only a short time but that affects another person‟s performance over a long time (eg: a properly prepared performance review) There is an “art” of management which 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 When delegating, the delegator and the delegate must share a common information base and a common set of operational ideas or notions on how to go about soling problems Sometimes we prefer not to delegate because we enjoy doing a particular task so we don‟t “let go” – this is okay as long as it is a conscious choice

A supervisor should ever use staff meetings to pontificate but use them to observe. the manager will find himself using his spare time to meddle in his subordinates‟ work Six to eight subordinates per manager is optimal with half a day each week allocated to each subordinate Handling interruptions: Don‟t hide away Develop standard responses for standard interruptions Schedule an open hour when anybody can come in Batch interruptions Handle the issues at staff meetings and “one-on-ones” The purpose of meetings are for managers to supply information and know how.Monitoring delegated tasks includes: Monitoring at the stage where least value has been added (eg: review rough drafts – don‟t wait for the final version) Vary the frequency of monitoring based on the delegate‟s experience with a specific task and their previous performance Go into details only at random Monitor delegated decisions by concentrating on the process the delegate has used in thinking them through Batch tasks together to be more efficient eg: set aside time to read all the reports Fill the time between time-crucial events with necessary activities that are not time-crucial Say no at the outset to any work beyond your capacity Don‟t load your schedule beyond the optimum level – one phone call can throw out your entire schedule for the rest of the day and beyond A manager should carry an inventory of tasks that he needs to do but not right away. facts and points of view . If not. usually a decision Only call a meeting if you: Know what you want to achieve Are sure that the meeting is necessary Are sure that the meeting is desireable Are sure that the meeting is justifiable There should be three stages to a meeting: Free discussion with no withholding of opinions Clear decision and clarity of expression Full commitment – everyone must give the decision reached by the group full support Status symbols do not promote the flow of ideas. guide the groups under their control and influence and make and help to make decisions One-on-ones are a tool to find things out. question and make decisions “Operation Reviews” are meetings where managers describe their work to other managers who are not their immediate supervisors and to peers in other parts of the company Mission-oriented meetings are usually ad-hoc and are designed to produce a specific output. learning and managing individuals Staff meetings allow peer interaction including decision-making and the supervisor can also learn from the exchange of views.

they also plan while the organization‟s overall planning body lies on a separate plane all together. say. otherwise the peers will drift towards group think The quality of the decision will be better if the following six questions are taken into account: What decision needs to be made? When does it have to be made? Who will decide? Who will need to be consulted before making the decision? Who will need to ratify or veto the decision? Who will need to be informed of the decision? Planning: What will the environment demand from you? Establish your present status: where will you be if you do nothing different from the way you are doing things now? What more or less do you need to do to satisfy the demands of the environment? A key question for managers is: what do I have to do today to solve (or avoid) tomorrow‟s problem? Planners cannot be those who are distant from the task ie: operation managers must come up with the plan because they are the ones who are going to carry it out Chapter 2 – Motivating the Team Into Action The game of management is a team game Management is a game where you have to fashion a team of teams and each team supports the other Organisations can either be totally mission oriented or totally functional – the two extremes tend to be mixed It is important to recognize expertise in an area and centralize that function. Intel is a hybrid organization with a mix of business divisions which are mission oriented and functional groups that can be viewed as if they were “subcontractors” – this gives Intel the ability to shift resources to respond to changes in corporate wide priorities Knowledge workers can be shifted across the board to provide assistance in many areas – this gives them considerable leverage The downside of this model is that there is a constant battle for resources The benefit is that individual units can stay in touch with the needs of their business or product areas and initiate changes rapidly when those needs change Grove‟s Law: all large organizations with a common business purpose end up in a hybrid organizational form Dual reporting: an employee has two bosses: one in the line role. The real-world solution is to seek a compromise between centralized and decentralized organizational structures. But on the other hand. and another in a functional capacity The two-plane concept: while most people work on an operating task. giving the individual branch manager the power to respond to local conditions can be highly beneficial.Equals need the leadership of a more senior manager. .

It sometimes can occur that a boss can find himself on a level below one of his subordinates (eg: the CEO can sit on a committee that is chaired by. the team is dissolved. you have to ask whether he is not motivated or is incompetent Maslow‟s theory: Motivation is closely tied to needs and the highest need is “self actualization” – the need to achieve full potential Fear of failure can be both positive and negative in terms of motivation – it can spur a person on or. Behavior inside teams can be controlled by three means: Free market forces Cultural values Contractual obligations Management‟s cultural role is to develop and nurture the common set of values. not potential There are 3 Ls in performance reviews: . once solve. the only way to measure the output of a manager is by the output of his team!) A good manager was likely a good subordinate at one time (a good coach is often one that was a good player at some stage) Task Relevant Maturity (TRM): a variable that determines the style to adopt in a particular situation: when the TRM is low. objectives and methods essential for the existence of trust by articulation and example Decrease CUS – complexity. Therefore it is impossible to determine if they are actually doing what they are paid to do Assess performance. when and how) with medium TRM the appropriate style is oriented to the inducudual with an emphasis on two-way support with high TRM the manager‟s involvement should be limited to establishing objectives and monitoring The responsibility for teaching the subordinate must be assumed by his supervisor and not paid for by the customers of the organization: internal and external ie. don‟t deliberately let a subordinate learn from his own mistakes Performance reviews are the single most important form of taskrelevant feedback that supervisors can provide The review will influence output for a long time which makes it one of the manger‟s highest-leverage activities The fundamental purpose of a performance review is to improve the employee‟s performance – use it to determine what skills are lacking and how to remedy it as well as to intensify the employee‟s motivation The biggest problem is that subordinates are often not clear as to what their main roles or activities are. the effective management style is structured and task oriented (tell the subordinate what. uncertainty and ambiguity The team will only perform as well as the individuals in it If a person is not giving his best. if the person dwells too much on the fear then they will become overly conservative A manager should not take any personal credit for the team‟s performance (but according to Grove. the head of a department) It is crucial to make transitory teams effective ie: teams created for the purpose of solving a particular problem and. say.

demanding excellent performance from all people and all systems Intel has always maintained a system of ranking and rating employees: outstanding. microcomponent operation systems and manufacturing. If CA fails to deliver the specified improvements. the impact on the group is very great indeed Money is a measure. Managers at Intel are obligated to take initiative with minimal upward “passing of the buck” but there is a strict budgeting regime which embraces all levels – every deviation must be explained Everybody has an annual and demanding objective called an IMBOS – Intel Management by Objective System Grove is relentless in pursuing better results. not a necessity ie: the amount of money that you are paying someone is not as important as the amount you are paying them compared to their coworkers Team training is one of the highest leverage activities a manager can perform. Training must be a continuous process rather than a one-time event Training must be done by someone who represents a suitable role model – an authority on the subject being taught Much deeper knowledge is required to teach the task than to actually do it (and the teacher will learn the most) Page 46 – Article: The Loss of Intel‟s Memory The first reaction to new but superior competition is often denial Intel‟s denial that the Japanese products were superior and cheaper lead to soaring stocks and dried up orders Grove asked the question: If we were to get kicked out and a new CEO brought in. finding fault and demanding improvements – and above all. It took Intel a year and lots of opposition to exit the memory market and push its microprocessor products (until now a secondary product) to an eventual sales figure of $29 billion Chapter 3 – Management by Confrontation Andrew Grove‟s style is confrontational Only the paranoid survive: those that are not constantly alert to threats become instantly vulnerable Tight control is one of Grove‟s management methods Combine immense delegation with intense control Grove prefers to have only a few people reporting directly to him so he delegated substantial authority to four senior vice presidents who headed the key activities: microcomponents.Level: level with the subordinate ie: be totally frank Listen: listen to what the subordinate has to say Leave: leave yourself out – it is important that you recognize that the performance review is about the subordinate. not the manager Star performers are those who contribute to the bulk of the work. dismissal follows . successful and improvement needed – improvement needed results in 60 or 90 days of corrective action (CA). what would he do? The answer was: Get out of memory and into something else – so that is what they did. Concentrating on your stars is a high leverage activity – if they get better.

This practice lasted for 17 years Grove was like a Shepard. this method of performance management is counterproductive) You are only as good as your last performance. Bob Noyce. Ted Hoff. See my article summary „Inverse Promotions‟) Intel had a system of getting latecomers to sign their names before the security guards would let them enter the building. who had since joined the team. The calculator market was slumping and Nikkon wanted a reduction in the price. There is also demotion (which is supposed to give the employee the motivation to succeed – but current HR theory suggests otherwise. The managers see the specific results (According to current HR theory. The microprocessor was Intel‟s for all time. herding his flocks in a particular direction but with ferocious dogs to bite the ankles of those who dared stray However tightly everything is controlled. The important ones are marked with AR (Action Required) and must be followed up immediately at all costs On one hand Grove is easily angered. Grove can be very aggressive in his behavior at meetings and has been known to insult staff in front of their peers.The ranking is based on an employee‟s degree of improvement and is only revealed to individuals in general terms. gave Nikkon a $60. Hoff was taken off the project to work on other matters but the ball was picked up by Fredrico Faggin who produced a working model in three months.000 refund on the basis that Nikkon surrender all rights to the chip with the only proviso being that they not sell it to other calculator manufacturers. Dismissal is not the only sanction. innovation runs remarkably free – important advances can be born anywhere in the company Microprocessors saved Intel from extinction Nippon contracted Intel to design several logic chips for a calculator. The Japanese were none the wiser and Intel had no idea how important an innovation Ted Hoff‟s idea was. proposed a design whereby all the circuitry could be placed on one chip and it could be programmed like a computer. The microprocessor market was seen to be “low-end” and unimportant and Grove was only spurred on to action after two of his employees left to start “Zilog” – a company which manufactured microprocessors. Zilog was outgunned and faded away into oblivion. but on the other hand he is highly cerebral Grove has a fetish for cleanliness and order and instituted unpopular office inspections „Constructive confrontation‟ is the idea Intel uses to bring problems out into the open and to debate and resole the issues pragmatically without arousing personal animosities The frankness and openness of discussions at meetings lead Intel to consider many varied options when they were faced with the memory crisis – there were many agonized discussions – no alternatives are left unexplored Intel is highly confrontational with its competitors as well (eg: three years of litigation with AMD) Keeping competitors out of the market is Grove‟s key strategy . an engineer. Grove also uses “Grovegrams” or “Andygrams” which are memos regarding specific tasks.

50. One share in 1971 was worth $23. realized prices. In June 1993. The 486 still had plenty of headroom and momentum and has been highly successful (now taking the shape of 1ghz+ Pentium 4 processors) The whole marketing platform would have been eroded with the dumping of Intel‟s traditional technology – competitors would have competed on an even field and Intel‟s advantage would have been eroded . despite that he was selling an inferior product “My hope and vision is that our technology is going to be the heart. you relinquish your options and the higher the shares rise. invulnerability. the acceleration in technology that has made microprocessors and personal computers more powerful and vastly cheaper. that same share was worth $4.Risking it all on RISC Intel‟s huge success was based on CISC technology (Complex Instruction Set Computing) which needed many more transistors than the newer RISC (Reduced Instruction Set Computing) Intel new that the RISC technology would need new software and would be incompatible with the older CISC chips (eg: 486) Grove decided to back the RISC i860 chip but the company was torn apart by controversy as to which chip to back Grove was not an engineer or computer scientist and the advice that he solicited from his staff was heavily biased – there were two warring camps each arguing for either CISC or RISC technology Competitors were also divided: Compaq opted for the 486 while Microsoft opted for the i860 In 1989. its net margins were the eighth highest among the giants while its growth in earnings per share hit 32. which was successful. the tighter the cuffs The phenomenal rise in the value of shares made many millionaires within Intel – it also cemented key talented personnel in the company Page 62 . Grove showcased the 486 in front of the entire computer world at a conference in Chicago.Grove kept Motorola out of the market with his 1978 “Operation Crush”. spine and framework of the entire computer industry” Grove uses paranoia as a tool to keep managers and engineers responsive to change Grove‟s use of the concept of “threat” is the driving force behind Intel‟s success.you leave Intel. A business model mainly hinges on sales volume. offset by higher and higher volumes 1989-99 saw investors pocket the rewards of a 44% annual growth in total return Despite massive R&D.385.2% per annum – ie: doubling every 2 years. A key ingredient in Grove‟s practice of management is enriching staff Stock options are very important in the organization‟s scheme of things. despite the millions of R&D poured into RISC development Six years down the track Grove thanks his lucky stars that he reverted to CISC technology. The three year gap between grant and ownership of an option serves as a golden handcuff . The overwhelming support was for the 486 ahead of the i860 and the decision was made then and there.

It was one of the most expensive false alarms in history Chapter 4 – Mastering Strategic Crisis The manager‟s prime responsibility is to protect the chunks of business that others want to take away from you once you are highly successful “Strategic Inflection Point” is the time in the life of a company where its fundamentals are about to change – full scale changes in the way business is conducted We can‟t stop changes and we can‟t avoid them – we can only get ready for them The strategic inflection point is comprised of major forces called “10X” ie: a tenfold increase in one of the six forces that impact on competitive strategy: Power. vigor and competence of existing competitors Power. and costly. the ultimate scientific manager concedes that instinct and personal judgment are the chief guides through the strategic turbulence The exact timing of the inflection point is uncertain. vigor and competence of customers Power. vigor and competence of potential competitors The strategic inflection point is where the curve stops curving in one direction and starts curving in another There are two signs that you are going through a strategic inflection point: You are aware of a troubling sense that something is different – things don‟t work the way they used to There is growing dissonance between what your company thinks it is doing and what is actually happening inside the bowels of the organization The division of opinion with the company about what to do will be held equally strongly. strategizing and motivating employees will become harder and almost impossible Once you have identified a strategic inflection point.Grove also says now that the advantages of RISC technology are much smaller now than they appeared then – the sacrifice would have been in vain. vigor and competence of suppliers The possibility that what your business is doing can be done in a different way Power. even in hindsight It is impossible to determine that a strategic inflection point is occurring if you are conditioned by the past If you are successful you are less willing to change and are thus more susceptible to the impact of a 10X force and strategic inflection points The cost of entering into a market where there are already competitors can be costly. almost like religious tenets Planning. act quickly while the company is still healthy Grove. But if you are entering into that market as a result of . vigor and competence of other firms in the same business system (complementors) Power.

identifying a strategic inflection point. those with emotional attachments to systems. as with Intel and the memory chip crisis. the cost over the long term will be practically irrelevant compared to the losses you could have incurred had you not made the change. the most effective method of solving a problem is to look at it from an outsider‟s objective and unemotional point of view New managers come unencumbered by emotional involvement and therefore are capable of applying an impersonal logic – existing managers who are able to do that will survive. it is natural for companies to differentiate themselves by specialization in order to make them world class Horizontal companies have to be the best in only one field and should also be more cost effective Sometimes. Grove‟s three rules for brute competing: Do not differentiate without a difference: do not introduce improvements that provide an advantage over the competition but give no advantage to the consumer Act first when a technology break or other fundamental change occurs Price for what the traffic will bear then work like the devil on your costs to make money at that level The practice of fixing prices above your costs often leads to a nice position which is not generally lucrative But as industry becomes more competitive. even if your initial reaction is that it is only hot air or rumor. These warnings will find you and it is a good idea to treat them seriously so as to be able to minimize negative impacts early . processes etc that they helped to create will go down with the company Basic crisis management principles: The strategic inflection point is not necessarily one point but can be a series of points spread out over a period of time ( a long tortuous struggle) The points provide an opportunity to break out of a plateau and catapult the company to higher levels of achievement Indecision magnifies the threat What is happening lower down the corporate chain without the direction of management can be crucial (eg: allocation of resources to microprocessor manufacture rather than memory chip manufacture without the specific knowledge or direction of upper management but as a result of daily decisions by middle managers) Devolved responsibility: salespeople are aware of shifts in customer needs much before management. financial analysts see the impact of fundamental change before management Listen to frontline information at all times and involve middle management in strategizing Separate the signal that there is about to be an inflection point from the noise: Is your key competitor about to change strategy? Is your key complementor about to change? Do people around you (including yourself) seem to have suddenly become decoupled from what really matters Take notice of all warnings.

the more staff need to attend Data are about the past. Grove finally made the decision to offer anybody new chips regardless of whether they were doing statistical analysis or playing computer games. you should be open to them Broad. the company had identified itself to PC customers as the prime supplier of computing. especially when it involves them directly Managers tend to go through three stages when strategic inflection points occur: Denial eg: they can‟t possibly make a product that cheap Escape or diversion: companies tend to start focusing on completely unrelated acquisitions and mergers when faced with major changes to their core business . The more complex the problem. Intel lost $475 million With its Intel Inside advertising campaign. strategic inflection points are about the future You have to know when to argue against the data and how to turn your experience and judgment in dealing with emerging trends The most important role of managers is to create an environment in which people are passionately dedicated to winning in the marketplace.000 years of spreadsheet use The CNN story was hostile and soon major newspapers joined in Users started demanding replacement chips. But when IBM stopped all shipments of Pentium powered systems Grove felt like Intel was under siege During the course of one horrific week.While you should limit your time spent on listening to random inputs. There are four kinds of fear that can assist market victory: Fear of competition Fear of bankruptcy Fear of being wrong Fear of losing Fear is the opposite of complacency – listen to warnings – because nothing fails like success and a good dose of fear may helop to sharpen a company‟s survival instincts Fear that keeps you from voicing good thoughts is poison Whatever success Intel has held in maintaining its culture has been instrumental in its success in surviving strategic inflection points Page 86 – The Crash of the Pentium Processor CNN came to cover a story regarding a floating point flaw in Intel‟s Pentium chip. Fear plays a major role in creating and maintaining such passion. Intel obliged for those whose computing involved statistical analysis or mathematics. Intel was also perceived as a high-tech giant and had to transform itself into a consumer company. complex and comprehensive debate should be held to solve complex problems. They then embarked on a whole new way of doing business Chapter 5 – Coping With Change Managers loath change. The flaw meant that an average spreadsheet user would run into a rounding error problem once every 27.

adjust to the new outside forces Frontline employees and middle managers are therefore implementing and executing actions that say one thing High level pronouncements continue to say the opposite This dissonance between what is said and what is done confuses people. they are managers who are automatically accorded a certain amount of respect because of their position. quite simply. not because of their knowledge . This can be overcome by: Loosening up the organization Allow different techniques. products. the strengths make good protection under which you can make changes far more easily than when the vital signs of your business have all turned south It is easier to see the need for tough change in somebody else‟s business than in your own The strong manager trusts his instincts “The valley of death” is Grove‟s phrase for the hostile landscape through which the business and its managers must struggle or die. sales channels and customers to be tried Tolerate the new and different Adopt a new maxim: “Let chaos reign!” A conservative management will find it nearly impossible to go through a phase of experimentation and chaos You can‟t suddenly start experimenting when you find you have a problem unless you have been experimenting all along Under a strong company. you will have to change the people – either train them up to be experts in the new business.Acceptance and pertinent action Handling change requires brutal realism and concentration on front line priorities The replacement of corporate heads is far more motivated by the need to bring in someone who has not invested in the past than to get somebody who is a better manager or a better leader in other ways. through their daily work. or replace them Managers tend to decline the offer of new training because they feel that they have no need to retrain because. “Inertia of success” is the term used to describe the executive that is reluctant to abandon the methods and the strengths that have brought them to a high executive position – this is dangerous and can reinforce denial The divergence between actions and statements is created by: Adapting to change with employees who. You can only emerge from the valley of death if you are able to visualize what the company should look like when it exits the valley on the other side The vision should come in a single phrase which everybody can remember and over time can understand to mean exactly what you intended This mental image is the essence of the company and the focus of its business The definition will hinge on what the company will not be How can you motivate yourself to follow a leader who seems to be going around in circles If you want to change the direction of your company.

Grove recommends to advance the pace of change and increase the magnitude of the reward The early movers are the only ones that have the ability to shape the industry and determine how the game is played by the others Grove will not avoid or redirect the focus because it dilutes commitment When managers are demoralized and nothing seems to be working. indifferent to rank and including individuals of varying background It can make and except clear decisions .Mangers have to learn to admit their ignorance in new areas Mastering change requires the willingness to learn Strategic actions and strategic plans: Strategic plans are statements of intention Strategic actions are already taken or are being taken Strategic plans sound like political speeches Strategic actions are concrete steps Strategic plans are abstract and usually have no concrete meaning except to management Strategic actions immediately affect people‟s lives Strategic plans deal with events far in the future and are thus of little relevance today Strategic actions take place in the present and thus command immediate attention Concrete changes in behavior always change culture. This is a powerful adaptive organization with two key attributes: It tolerates and encourages debate devoted to exploring issues. is worse than losing focus in many ways because it breeds confusion. proposed changes in culture by no means always change behavior The most effective way to transform a company is through a series of incremental changes that are consistent with a clearly articulated end result Resources should not be moved from the old task until full benefit has been obtained – but hang on too long and you can lose a new business opportunity. uncertainty and conflicting messages The need for clarity of direction increases as the change process develops You must reign in chaos in order to motivate your staff and lead your organization out of ambiguity and into an energized state which requires five steps: Stop ecperimenting Issue totally clear “marching orders” Commit the organization‟s resources Commit your personal resources Be a role model for change The ideal is to have an organization that happily supports debate and determined to improved. momentum or a new product idea If you try to change too early it is not nearly as bad as being late (in almost irreversible decline).

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