Andrew S. 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 Best manager in the World

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 OutputAndy 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:

The principles and disciples of manufacturing apply to other forms of business enterprise, including most emphatically the wok of managers.

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

Shift your energy and attention to whatever will most increase the output of the organization.

Getting high leverage

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:

Increasing the speed at which manager performs Increasing the leverage associated with the various managerial activities. Shifting the nix of manager’s 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 is 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.

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.

Other methods include:

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 meetingsGroove 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.

Three stages of decisionIn practice, most organization makes key decisions in ad hoc meetings. Groove practices three stage processes;

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.

Peer group syndrome

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:

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?

Chapter 2 – Motivating the Team Into ActionAndrew Groove’s theories on management based on the conviction that “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.Organizational extreme

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.

The hybrid compromise

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 lawGrove’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 managementStatus 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

Developing the cultureManagement cultural role is to “develop and nurture the common set of values, objectives, and methods essential for the existence of trust” by articulation and more important, by example. Fostering the development of a group culture promotes the reduction of “the CUA factor”-the degree of complexity, uncertainty, and ambiguity. According to Groove;The team will only perform as well as the individuals in it. If a person is not giving his best, you have to ask whether he is not motivated or is incompetent.As a motivator, Grove heavily relies on behavioral scientist Abraham Maslow’s theory: Motivation is closely tied to needs and the highest need is “self actualization” – the need to achieve full potential.

Fear of FailureFear 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).

Chapter 3 – Management by ConfrontationAndrew Grove’s style is confrontational.Combative paranoiaEven Grove’s best known and highly emotional remark, “only the paranoid survive”, has a strong intellectual basis: the company that is not constantly alert to threats automatically becomes vulnerable.

Tight control is one of Grove’s management methods. The formula at Intel is to 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: micro components, micro component operation systems and manufacturing.

Freedom and controlManagers 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 from plan 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, finding fault and demanding improvements – and above all, demanding excellent performance from all people and all systems.

Ranking and ratingIntel has always maintained a system of ranking and rating employees: outstanding, successful and improvement needed – improvement needed results in 60 or 90 days of corrective action (CA). If CA fails to deliver the specified improvements, dismissal follows.The ranking is based on an employee’s degree of improvement and is only revealed to individuals in general terms. The managers see the specific results. These compare employees to each other and obviously identify those whose services can most easily be lost. (According to current HR theory, this method of performance management is counterproductive). You are only as good as your last performance. Dismissal is not the only sanction. There is also demotion.

Managing the hoursIntel had a system of getting latecomers to sign their names before the security guards would let them enter the building. This practice lasted for 17 years. Grove was like a Shepard, 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, innovation runs remarkably free – important advances can be born anywhere in the company.

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 styleGrove 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 discussionsThe 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 the marketKeeping competitors out of the market is Grove’s key and fundamental strategy. The longer that Intel has a market to itself, the more money it can make from its often huge margins, which are well over 80 percent on microprocessors. Grove kept Motorola out of the market with his 1978 “Operation Crush”, which was successful, despite that he was selling an inferior product. “My hope and vision is that our technology is going to be the heart, 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, invulnerability, the acceleration in technology that has made microprocessors and personal computers more powerful and vastly cheaper.

Making model profitsPersonal computers more powerful and vastly cheaper. A business model mainly hinges on sales volume, realized prices, offset by higher and higher volumes. In 1989-99 saw investors pocket the rewards of a 44% annual growth in total return. Despite massive R&D, its net margins were the eighth highest among the giants while its growth in earnings per share hit 32.2% 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. One share in 1971 was worth $23.50. In June 1993, that same share was worth $4,385. The three year gap between grant and ownership of an option serves as a golden handcuff - you leave Intel, you relinquish your options and the higher the shares rise, 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.

Chapter 4 – Mastering Strategic CrisisThe manager’s prime responsibility is to protect the chunks of business that others want to take away from you once you are highly successful.

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:

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.

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 ChangeAlthough 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:

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. 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.

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.

He is clear that divergence between actions and statements is created by: Adapting to change with employees who, through their daily work, 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. 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!”.

A conservative management will find it nearly impossible to go through a phase of experimentation and chaos.

Changing the people

If you want to change the direction of your company, you will have to change the people – either train them up to be experts in the new business, or replace them. Managers tend to decline the offer of new training because they feel that they have no need to retrain because, quite simply, they are managers who are automatically accorded a certain amount of respect because of their position, not because of their knowledge.

Strategic actionsThis 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.