What if you could learn from one of the greatest managers of all time?

Andy Grove was the CEO who turned Intel into the world’s largest semiconductor company. His book High Output Management is unique in that it is written not for top managers but for middle managers.

Here are his top lessons on the use of indicators.

Focus each indicator on a specific operational goal.

This is a common reason indicators are often useless.

We need a good reason for each indicator. We monitor indicators to reach goals. If we don’t link each indicator to a goal, we may wind up with many goals but no useful guidance.

If you don’t know why you are following a given indicator, what do you do when it trends in the wrong direction?

Measure the outcome and not simply the activity.

According to Andy, an effective indicator will cover the output of the work unit and not simply the activity involved. It’s easier to monitor activity than results, so that’s what many managers do. But there’s a difference, for example, between implementing a new feature in your software and achieving the impact the feature was intended to have.

Be prepared to act on your leading indicators. 

Otherwise, all you’ll get from them is anxiety.

Andy said that “CEOs always act on leading indicators of good news, but only act on lagging indicators of bad news.” When a leading indicator tells us that trouble is on the horizon, we tend to want to wait and see. We miss opportunities to solve problems before they get too big.

To have faith in our leading indicators we need to make sure that they’re reliable.