October 04, 2004

Innovation: Great Stuff from Grove

Andy Grove on practical strategy
We were sitting around feeling sorry for ourselves. I asked Gordon something: What if the board fired us? (Laughs) The board wasn't going to fire us because the board didn't fire founders in those days. But theoretically, you could think about it. We lost $200 million on $1 billion in sales in all those years and had no strategy to make it better. If the board fired us and brought in a new CEO, what would he do?

Gordon said that he would get us out of memory -- without pausing. I stared at him and said: Why don't we go out the revolving door and come back as if we were the new CEO and do it ourselves? Literally, this conversation took place in exactly that way. And we were of the character to do that.

But it was almost unthinkable. You pretend to be a dispassionate person. But we kind of founded a company to build semiconductor memory. And all the previous -- almost 20 -- years of the company's existence revolved around memory. It was not just a thought exercise, it was a third of the company. Something like eight plants got shut down, almost 8,000 people laid off. Eight out of 20-something [plants]. It was a big restructuring.

Q: What lessons of management and innovation are there?
A: As for people management, I think living in a constructive and open culture in which people can speak their minds is crucial to getting to the right answer to things. But the debate has to stop at one point, and everyone has to accept the position and support it, whether or not they advocated for it. The shorthand inside Intel is "disagree and commit." It's O.K. to disagree. You don't have to be a sycophant, but you have to argue, get your best choice, and support it. Very simple concepts, very hard to live by.

Strategically, the most important learning that I have summed up in the years of teaching and studying our strategies, other people's strategies, is: Strategy is what you do, not what you say. You want to find out what some company is doing, look at what they do and infer it from this. Forget their strategic talk.