Lessons from Andy Grove

Lessons from Andy Grove

There is much to be learnt from the leadership style of Intel’s former CEO and current senior adviser, Andy Grove. At critical junctures, Grove has shown a remarkable ability to change with the times, moving from one role to another as the situation has demanded. His ego has not stood in the way when big decisions are involved. Despite being blunt and forthright, Grove has been open to constructive criticism.

A good example is when Intel executives Craig Kinnie and Dennis Carter confronted Grove, when he wanted to replace CISC with RISC. Engineers liked RISC because of its elegance. It required fewer transistors to accomplish most computing tasks. Grove had even appeared in an Intel video to promote RISC. Kinnie and Carter argued that launching CISC, would shorten the life of one of the most profitable franchises in business history. They won the argument.

How Intel moved into microprocessors is another good example of Grove’s ability to keep his feet firmly planted on the ground. Founder Gordon Moore had famously observed that the number of transistors than can be fixed on a chip tend to double every couple of years (later refined to 18 months). But intel never thought that Japanese firms, too, might master this process and turn memory chips into a commodity. So Intel was not prepared for the Japanese onslaught.

Intel’s top executives simply could not believe the growing evidence that they were being outcompeted in a market they had created. Intel believed its chips were in many of the best minicomputers and also in personal computers which were slowly taking off. Profits from other products helped to sustain the delusion that memories were a viable future.

Intel continued to be in a stage of denial until its profits declined sharply from $198 million in 1984 to less than $2 million in 1985. Grove and Moore had been agonizing over their dilemma for weeks. It was in the middle of this crisis, that Grove stepped back and reflected. He recounts in his book Only the Paranoid Survive: "I looked out the window at the Ferris wheel of the Great America amusement park revolving in the distance when I turned back to Gordon, and I asked, 'If we got kicked out and the board brought in a new CEO, what do you think he would do?' Gordon answered without hesitation, 'He would get us out of memories.' I stared at him, numb, then said, 'Why shouldn't you and I walk out the door, come back, and do it ourselves?'"

Another example of Grove’s ability to look ahead and not the past is when Dennis Carter came up with the idea of a large-scale consumer marketing campaign around the slogan "Intel Inside." This was at a time when the concept of branding was totally foreign to Intel. Some senior executives ridiculed Carter’s idea. But Grove gave the go ahead. Grove so loved the idea of building a consumer brand that he selected the name Pentium himself. An internal component soon became one of the most recognized brands in the world.

In recent months, Intel has indicated that it might totally revamp its branding strategy, pushing Pentium to the background. Again, Grove is backing these moves.

Most CEOs have pet themes. They refuse to drop them even when it becomes amply evident that these themes have become irrelevant. They can learn a lot from Andy Grove.