Professional Documents
Culture Documents
Grove
Andrew S. Grove was born in Budapest, Hungary in 1936. He graduated from the City College of
New York in 1960 with a Bachelor of Chemical Engineering degree and received his Ph.D. from
the University of California, Berkeley in 1963. Upon graduation, he joined the Research and
Development Laboratory of Fairchild Semiconductor and became Assistant Director of Research
and Development in 1967.
In July 1968, Dr. Grove participated in the founding of Intel Corporation. In 1979 he was named
its President, and in 1987 he was named Chief Executive Officer. In May 1997 he was named
Chairman and CEO, and in May 1998 he relinquished his CEO title. He stepped down as
Chairman in May 2005, and remains Senior Advisor.
Grove is credited with having transformed Intel from a manufacturer of memory chips into one
of the world's dominant producers of microprocessors. During his tenure as CEO, Grove
oversaw a 4,500% increase in Intel's market capitalization from $4 billion to $197 billion,
making it, at the time, the world's most valuable company. He relinquished his CEO title in May
1998 and remained chairman of the board until November 2004. Grove continues his work at
Intel as a senior advisor.
Dr. Grove has written over 40 technical papers and holds several patents on semiconductor
devices and technology. He taught a graduate course in semiconductor device physics at the
University of California, Berkeley for six years. He currently is a lecturer at the Stanford
University Graduate School of Business, teaching a course entitled "Strategy and Action in the
Information Processing Industry".
Dr. Grove has received an honorary Doctor of Science degree from the City College of New York
(1985), an honorary Doctor of Engineering degree from Worcester Polytechnic Institute (1989)
and an honorary Doctor of Laws degree from Harvard University (2000).
His first book, Physics and Technology of Semiconductor Devices has been used at many leading
universities in the United States. His books on managing include High Output Management
(1983), One-on-One With Andy Grove (1987), Only the Paranoid Survive (1996), and Strategic
Dynamics: Concepts and Cases, co-authored by Robert A. Burgelman, (2005). His
autobiography, Swimming Across, was published in 2001. An author of articles in Fortune, The
Wall Street Journal, and the New York Times, he has written a weekly column on management
which was carried by several newspapers, and a column on management for Working Woman
magazine.
Dr. Grove has been elected a Fellow of the IEEE and a member of the National Academy of
Engineering. He is the recipient of the IEEE Engineering Leadership Recognition award (1987),
and the AEA Medal of Achievement award (1993). In 1997 he received the "Technology Leader
of the Year" award from Industry Week, the "CEO of the Year" award from CEO magazine, and
was named "Man of the Year" award by Time magazine. In 1998 Dr. Grove was named
"Distinguished Executive of the Year" by the Academy of Management, and received the IEEE
2000 Medal of Honor award in 2000. In 2001 he was named as the recipient of the Lifetime
Achievement Award from the Strategic Management Society. In 2004, Dr. Grove was honored
as the Most Influential Business Person in the Last Twenty-Five Years by the Wharton School of
Business and the Nightly Business Report. That same year, he received the Ernest C. Arbuckle
Award from the Stanford University Graduate School of Business.
He has served as Patient Advocate at UCSF and was National Chair of the Campaign for UCSF.
He was a member of the board for the Prostate Cancer Foundation. Dr. Grove is an advisor to
the Michael J. Fox Foundation. He heads the Grove Foundation, a private philanthropic
organization and focuses on supporting research on Parkinson’s Disease.
The Andrew Grove and Bill Gates, chief administrative engineers of the digital revolution Digital,
Despite the fame went to Gates because of his revolution, among other reasons, the Grove
deserves the top spot, there is no doubt that the Grove and Gates genius in technology, but
Grove business manager led the wave that is unparalleled Great creativity, which was
highlighted by microprocessor. This created the success of Intel. And lead to more sales than
from sales of Microsoft. The Grove-line record is invaluable for the things that drives Intel and
gave clear advice and encouraging the new leaders who want to do the same, there is no higher
order than the cliffs in the area of management as a director or a strategic thinker Guide. In
1979, Grove was promoted to president, and, in 1987, became chief executive. By then Noyce
and Moore were pushing 60. They had masterminded an astonishing run of technological
breakthroughs: The first memory chip DRAM (dynamic random access memory), EPROM
(erasable, programmable, read only memory), and the first microprocessor. Just as important,
all four innovations had been exploited commercially to lucrative effect; for this Grove deserve
much of the credit. So, Intel sales and profit soared.
Chapter One – Raising Management Output
Andy Grove published high output management in 1983. Yet, despite the upheavals, grove
found that “most of the things that were useful in 1983 are still useful now; the basic
management remain largely unaffected”. That applies to the three ideas on which Groves book
was founded:
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
Shift your energy and attention to whatever will most increase the output of the
organization.
Leverage is a central concept for Grove. He works by an equation that says that for every
activity performed by a manager, the output of organization should increase to some extent.
The greater the increase, the higher the leverage. This has a direct link with the productivity,
which can raised by:
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.
Monitoring delegation
When delegating, the delegator must share a common information base and a common set of
operational ideas or notions on how to go about solving 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.
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.
Delegation is the one way of improving or increasing managers output per hour.
Time management.
Batch tasks together to be more efficient eg: set aside time to read all the reports.
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.
Six to eight subordinates per manager is optimal with half a day each week allocated to
each subordinate.
Handling interruptions
The more subordinates you have, the more interruptions you will experience. An experiment at
Intel revealed that the output of supervisors and know-how managers was limited primarily by
uncontrollable interruptions. Groove can only offer tips to deal with the problems:
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, 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, learning and managing individuals.
Staff meetings
Groove believe that staff meetings are also “key to good management” because they allow peer
interactions, including decision making; the supervisor can also learn from the exchange of
views.
Another category of Groove meetings is; “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.
Another category is; Mission-oriented meetings are usually ad-hoc and are designed to produce
a specific output, usually a decision.
Only call a meeting if you know the answer to the first question listed below and can answer
“yes” to the other three:
Know what you want to achieve.
Are sure that the meeting is necessary.
Are sure that the meeting is desirable.
Are sure that the meeting is justifiable.
Another necessity is to overcome an awkward fact; anybody who can make business decisions
also process “pride, ambition, fear, and insecurity”. In this context, the most common problem
is “peer group syndrome”. Groove discovered the “peer-plus-one” approach, meaning that
equal need the leadership of a more senior manager; otherwise the peer will drift toward
“group-think”.
The quality of the decision will be better if the following six questions are taken into account:
Grooves describe organizations in two extreme forms. Organizations can either be totally
mission oriented or totally functional.
The organization where the mission is dominated the organization is the epitome of
decentralization.
The entirely functional organizational is centralized.
It is important to recognize expertise in an area and centralize that function. But on the
other hand, giving the individual branch manager the power to respond to local
conditions can be highly beneficial.
The real-world solution is to seek a compromise between centralized and decentralized
organizational structures.
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.
Groove’s law
Grove’s Law: all large organizations with a common business purpose end up in a hybrid
organizational form.
For middle managers to succeed at this high leverage task, two things are necessary. First, they
must accept the inevitability of the hybrid organization from if they are to serve its workings.
Second, they must develop and master the practice through which a hybrid organization can be
managed. This is Dual reporting. Dual reporting: an employee has two bosses: one in the line
role, say, and another in a functional capacity.
Multiplane management
Status may well be turned on its head by the multiplane concept. Groove cited his own case.
When president of Intel, he also belong to a strategic planning group. In that capacity he came
under the group chairman, who was one of the division controllers, and who, in that role,
reported ultimately to Groove.
The two-plane concept: while most people work on an operating task, they also plan while the
organization’s overall planning body lies on a separate plane all together.
Behavior inside teams can be controlled by three means:
Free market forces
Cultural values
Contractual obligations
Fear of Failure
Fear of failure can be both positive and negative in terms of motivation – it can spur a person
on or, 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 only way to measure the output of a manager is by the output of his team!).
One fundamental of the management game , Grove believes is task-relevant maturity(TRM)
Task Relevant Maturity (TRM): a variable that determines the style to adopt in a particular
situation:
When the TRM is low, the effective management style is structured and task oriented
(tell the subordinate what, 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.
Performance review
Performance reviews are the single most important form of task-relevant 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.
There are 3 Ls in performance reviews:
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.
Committing to action
Money is a measure, 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).
Microprocessor saga
The results are well illustrated by sagas such as that of the microprocessor, the device that
literally transformed the World and saved Intel from extinction. Nippon contracted Intel to
design several logic chips for a calculator. Ted Hoff, an engineer, proposed a design whereby all
the circuitry could be placed on one chip and it could be programmed like a computer. 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. The Japanese were none the wiser and Intel
had no idea how important an innovation Ted Hoff’s idea was.
The calculator market was slumping and Nikkon wanted a reduction in the price. Bob Noyce,
who had since joined the team, gave Nikkon a $60,000 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. The microprocessor was Intel’s for all time.
Belligerent style
Grove can be very aggressive in his behavior at meetings and has been known to insult staff in
front of their peers.
Grove also uses “Grovegrams” or “Andygrams” which are memos regarding specific tasks. 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, but on the other hand he is highly cerebral. Grove has a
fetish for cleanliness and order and instituting regular and unpopular office inspections.
Grove’s personality thrives on confrontation. ‘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.
Agonized discussions
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).
A World of worries
“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, vigor and competence of other firms in the same business system
(complementors).
Power, vigor and competence of customers.
Power, vigor and competence of suppliers.
The possibility that what your business is doing can be done in a different way.
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.
Division of opinion
The division of opinion with the company about what to do will be held equally strongly, almost
like religious tenets. Planning, strategizing and motivating employees will become harder and
almost impossible. Once you have identified a strategic inflection point, act quickly while the
company is still healthy. Grove, 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, 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. But if you are entering into that market as a result of identifying a strategic inflection
point, the cost over the long term will be practically irrelevant compared to the losses you could
have incurred had you not made the change.
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, 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, as with Intel and the memory chip crisis, 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, those
with emotional attachments to systems, 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).
Bottom-up strategy
Devolved responsibility, in other words, had worked, not only tactically, but strategically. Grove
had come across a vital truth. 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:
The most important role of managers is to create an environment in which people are
passionately dedicated to winning in the marketplace. Fear plays a major role in creating and
maintaining such passion.
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 help 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.
Chapter 5 – Coping With Change
Although Grove’s “strategic inflection point” is among the most momentous examples of
change, there are others. He says flatly that “we managers loathe change, especially when it
involve us”. Managers tend to go through three stages when strategic inflection points occur:
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.
Inertia of success
“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.
This dissonance between what is said and what is done confuses people. This can be overcome
by:
Loosening up the organization.
Allow different techniques, products, sales channels and customers to be tried.
Tolerate the new and different.
Adopt a new maxim: “Let chaos reign!”.
Strategic actions
This commitment of resources to achieve strategic ends is “strategic action.” Grove contrast it
with strategic planning, and is convinced that “corporate strategy is formulated by a series of
such actions,” far more than by the conventional, top-down plans. These differences are critical:
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; 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.
Clarity of direction
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 experimenting.
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 improve.
This is a powerful adaptive organization with two key attributes:
It tolerates and encourages debate devoted to exploring issues, indifferent to rank and
including individuals of varying background.
It can make and except clear decisions.