Andrew Grove brought Intel to world recognition with...
Andrew Stephen Grove (born September 2, 1936) was a Hungarianborn American businessman, engineer, author and the key personality who made Intel internationally famed. His bestselling book ‘Only the Paranoid Survive’ gives the background of his life.
Grove grew up as a Jew in Budapest, Hungary. During the Second World War, his life was a series of life-or-death stratagems aimed at surviving first the Nazis and then, after the war, the Soviet regime.
When the Hungarian uprising against the Soviet regime of 1956 was put down by the Red Army, the 20-year-old Grove and a friend fled by train to Austria, crossing the border via an unguarded route used by local smugglers. Finally, Grove was delivered safely to the United States by the International Rescue Committee.
Even though he arrived in the US with little money, Grove retained a ‘passion for learning’. He earned a bachelor’s degree in chemical engineering from the City College of New York in 1960, followed by a PH.D. in chemical engineering from the University of California.
After completing his PH.D. in 1963, Grove worked at Fairchild Semiconductor as a researcher and by 1967 had become its assistant director of development. His work there made him familiar with the early development of integrated circuits (ICS), which would lead to the “microcomputer revolution” in the 1970s. In 1967, he wrote a college textbook on the subject, physics and technology of semiconductor devices.
In 1968, Robert Noyce and Gordon Moore co-founded Intel. Grove joined them as the company’s director of engineering and helped get its early manufacturing operations started. Initially, Intel manufactured dynamic memory chips, DRAMS. In 1979, Grove became Intel’s President.
By 1985, with less demand for their memory, production problems and the challenges created by Japanese ‘dumping’ of memory chips at below-cost prices, Grove was forced to make radical changes. As a result, he chose to discontinue producing DRAMS and focus instead on manufacturing microprocessors.
Grove played a key role in negotiating with IBM to use only Intel microprocessors in all their new personal computers. In 1987, Grove was made CEO of Intel.
The company’s revenue increased from US $ 2,672 in its first year to US $ 20.8 billion in 1997. In the same year, Grove became Chairman and CEO. He relinquished his CEO title in May 1998, having been diagnosed with prostate cancer a few years earlier and remained Chairman of the board until November 2004. Grove continued his work at Intel until his death as a senior advisor and had been a lecturer at Stanford University. He died on March 21, 2016, at the age of 79.
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 percent increase in Intel’s market capitalization from US $ 4 billion to US $ 197 billion, making it the world’s seventh largest company, with 64,000 employees. Most of the company’s profits were reinvested in research and development, along with building new facilities, in order to produce improved and faster microprocessors.
When he was director of operations, manufacturing became Grove’s primary focus and his management style relied heavily on his management concepts. As the company expanded and when he was appointed chairman, he became more involved in strategic decision-making, including establishing markets for new products, coordinating manufacturing processes and developing new partnerships with smaller companies.
Grove once said, “We are making decisions about what the information technology world will want five years into the future.”
He created a culture within Intel that allowed innovation to flourish. As CEO, he wanted his managers to always encourage experimentation, test new techniques, new products, new sales channels and new customers and prepare for unexpected shifts in business or technology. He made a case for the value of paranoia in business. He became known for his guiding motto: “Only the paranoid will survive”. Grove explained his reasoning: A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation. Grove kept open channels of communication between employees and encouraged people to speak their minds. They termed this style ‘constructive confrontation’. Grove insisted that people be demanding on one another, which fostered an atmosphere of ‘ruthless intelligence’.
Grove was known as the ‘Father of OKR’ (Objectives and Key Results) Approach to Management. Google and the Gates Foundation rocked the world with OKRS. Larry Page, co-founder of Google, said, “OKRS have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organising the world’s information’ perhaps even achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”
What lessons can we learn from Groves? 1. Make decisions based on evidence
“Altogether too often, people substitute opinions for facts and emotions for analysis.”
Before taking any major decision, Grove pored over the research, reading case studies, cross referencing them and plotting the data to draw his own conclusions. He never based his decisions on the opinions of others. But he was always ready to change and adapt as new information and data become available. He believed what worked in the past might not be the best approach now.
2. Perception matters, too
“The ability to recognize that the winds have shifted and to take appropriate action before you wreck your boat is crucial to the future of an enterprise.”
Good decision-making is evidence-based but a decision-making strategy is generally carried out by humans and our occasionally less-than-rational cognitive processes. How we perceive something often affects the outcome.
In 1994, Intel successfully navigated the Pentium floating point bug by grasping that the world and its customers had changed. Intel initially determined that the error, which affected a small number of users, could be fixed over time. This approach was the logical but Grove decided that while not the most logical course of action, it had to offer to replace all Pentium processors for any customer who asked. This cost the company nearly half a billion dollars but saved the Intel brand.
Any decision-making strategy must consider both the evidence for and the perception of that strategy. Perhaps a strategy that relies on concentrating a position might outperform over time but if it’s too far out of the mainstream, investors or customers might abandon it at the worst possible moment and miss out on that outperformance.
3. Embracing fear is helpful
“Success breeds complacency. Complacency breeds failure. Only the paranoid survives.”
Too much fear can be a bad thing. It can lead to poor, short-sighted decisions or to no decision at all. With decision-taking, risk (fear) and return are linked: You can’t expect an attractive return without taking on some level of risk. So, we often try to ignore or mitigate the fear that comes with decisiontaking.
Grove knew that right amount of fear can sharpen the mind and keep us on our toes. Instead of eliminating all fear, he embraces it as a way to stay sharp and to avoid lulling himself into the intellectual trap of believing that what works now will always work going forward.groves says that markets are cyclical. The hot company or sector in the current environment won’t necessarily be the best performers in the next one. “It takes a lot of time and a lot of intellectual ergs. But, if we embrace fear, we will be readier for what comes next,” he adds.
4. The future favours the optimist
“In order to build anything great, you have to be an optimist because by definition you are trying to do something that most would consider impossible. Optimists most certainly do not listen to leading indicators of bad news.”
Grove has realized the importance of being optimistic, too. His own story reflected repeated triumphs over long odds. His sense of optimism was forged in response to unbelievable trials and hardship and helped propel him across the ocean to the United States, where he built his legacy.