Andrew Grove

I’ve always been a big fan of Andrew Grove, the engineer who turned the inventiveness of Intel’s founders into one of the greatest money machines of all time. He’s also the author of two business books - High Output Management and Only the Paranoid Survive - that I have no hesitation in recommending. Grove has never lost his academic leanings despite his stunning record as a hard-nosed businessman.

That record combines remarkable continuity with an even more striking ability to make U-turns. The most celebrated of these was the decision, shared with chairman Gordon Moore, to abandon the company’s core business, the production of memory chips, and switch to dependence on microprocessors. Famously, while discussing the horrible losses forced on them by ferocious Japanese competition in memories, Grove asked a brilliant question;

‘Suppose we were fired, and two other guys took our places, what would they do? (my paraphrase). The answer was swift: ‘get out of memory chips’. So why didn’t they just walk out of the office, come straight back as the new men, and do precisely that? Which, of course, they did, with spectacular results for themselves, Intel, and the whole world. The ‘computer on a chip’ has revolutionised everything, and Intel’s strategy has been literally unbeatable.

Grove relentlessly built enormous ‘fabs’ round the world, state of the art factories that gave Intel a decisive lead in speed, quantity and cost of production. The few rivals existed at Intel’s pleasure. The economic lead was buttressed by heavy marketing to maintain the sovereignty of the brand, Any manager could be forgiven for believing that this hegemony would last for ever, and Craig Barrett, Grove’s successor did his best to sustain the status quo, with Grove as his chairman.

Grove has been a ’senior adviser’ since last year, with Paul Otellini taking over as CEO in May. In those few months the new man has embarked on remaking the entire company to make it fit for the new era. The basic microprocessor business is no longer the be-all and end-all. In an increasingly sophisticated market, end-uses are determining the shape and nature of demand. The new men are striving to broaden Intel’s reach, reshape its business alliance, and restaff its key echelons.

And what does the great man think of all this upheaval? He calls it ‘one of the best manifestations incorporating Intel values of risk-taking, discipline, and results orientation I have ever seen. I, for one, fully support it’. This was taken as an unequivocal endorsement by Intel’s top managers in April. But it was also a reminder, though a gentle one, that continuity of values is an essential foundation for change. As for the specifics, however, Grove was fully prepared to accept the end of the world-famous Pentium brand, of the strategic ‘Intel Inside/ advertising slogan, and of the fixation on the microprocessor.

All these were Grove’s babies. But there comes a point in every corporate life - Grove calls it the ’strategic inflexion point’ - when a changing environment demands that the company either changes itself, or gets changed by the impact of new and maybe deadly competition. To put that more positively, either you seize the new opportunities, or somebody else will.

Psychologically, it’s very hard, even for people far less successful than Grove, to accept that your day is done, and that others must find their own directions. In some cases (like the destruction of GEC/Marconi after the Weinstock era), those new departures have proved disastrous. But that’s something for which the old management must share the blame.