1: When former Intel CEO Andy Grove was in school, the instructor in his management class showed a scene from the World War II movie Twelve o’Clock High.
A new leader was brought in to reform a rogue squadron whose lack of discipline led to self-destruction.
“On his way to take charge,” Andy writes in his book Only the Paranoid Survive, “the new commander stops his car, steps out and smokes a cigarette, while gazing off into the distance.
“Then he draws one last puff, throws the cigarette down, grinds it out with his heel and turns to his driver and says, ‘Okay, Sergeant, let’s go.’
“Our instructor played this scene over and over,” Andy notes, “to illustrate a superbly enacted instance of building up the determination necessary to undertake the hard, unpleasant and treacherous task of leading a group of people through an excruciatingly tough set of changes—the moment when a leader decides to go forward, no matter what.
“I always related to this scene and empathized with that officer. Little did I know when I watched that movie that I would have to go through something similar in a few years’ time.”
2: In the late 1970s, Intel was riding high. The company specialized in memory chips and, as the first mover in the industry, was growing rapidly.
But then, in the early 1980s, Japanese manufacturers entered the market in a big way. “Their principal weapon was the availability of high-quality product priced astonishingly low,” Andy writes.
Yesterday, we examined what Andy calls “the valley of death.” The company was losing money rapidly, with no apparent way to compete against the Japanese.
“I learned with every fiber of my being what a strategic inflection point is about,” he writes.
In time, Andy learned “what it takes to claw your way through one, inch by excruciating inch.”
Intel exited “the business it was founded on,” he explains, “and refocused its efforts on and built a new identity in a totally different business—all in the midst of a crisis of mammoth proportions.”
Intel created the memory chip market. The company’s identity was tied to “memories.”
“Intel equaled memories in all of our minds,” he observes. “How could we give up our identity? How could we exist as a company that was not in the memory business? It was close to being inconceivable.”
As Andy discussed leaving memories, he could barely say the words.
“It was just too difficult a thing to say,” he remembers.
“Not only was I too tentative as I started discussing this course of action with colleagues, I was also talking to people who didn’t want to hear what I meant.
“As I got more and more frustrated that people didn’t want to hear what I couldn’t get myself to say,” he recalls, “I grew more blunt and more specific in my language.”
How did that go?
“The more blunt and specific I got, the more resistance, both overt and covert, I ran into. So we debated endlessly.”
Andy visited one of Intel’s remote locations and had dinner with senior managers.
“What they wanted to talk about was my attitude toward memories,” he recalls. “I wasn’t ready to announce that we were getting out of the business yet because we were still in the early stages of wrestling with the implications of what getting out would mean—among them, what work would we have for this very group of people afterward?
“Yet I couldn’t get myself to pretend that nothing like this could ever happen.
“So I gave an ambivalent-to-negative answer, which this group immediately picked up on.
“Does it mean that you can conceive of Intel without being in the memory business?” one of the managers asked.
Andy swallowed hard and said, “Yes, I guess I can.”
“All hell broke loose,” he remembers.
Intel had two beliefs “that were as strong as religious dogmas,” Andy writes. “Both of them had to do with the importance of memories as the backbone of our manufacturing and sales activities.
“One was that memories were our ‘technology drivers,'” Andy writes. “What this phrase meant was that we always developed and refined our technologies on our memory products first because they were easier to test. Once the technology had been debugged on memories, we would apply it to microprocessors and other products.
“The other belief was the ‘full-product-line’ dogma,” he shares. “According to this, our salesmen needed a full product line to do a good job in front of our customers; if they didn’t have a full product line, the customer would prefer to do business with our competitors who did.
“Given the strength of these two beliefs, an open-minded, rational discussion about getting out of memories was practically impossible. What were we going to use for technology drivers? How were our salespeople going to do their jobs when they had an incomplete product family?”
“The rest of the evening was spent going in circles around these two issues,” Andy remembers, with “the management group and I getting increasingly frustrated with each other.
“This was typical of discussions on the subject,” he writes.
Andy recalls a low point when he and the leader of the memories business agreed to halt new R&D but complete ongoing projects.
“In other words, he convinced me to continue to do R& D for a product that he and I both knew we had no plans to sell,” he shares.
“I suppose that even though our minds were made up about where we were going our emotions were still holding both of us back from full commitment to the new direction.”
The story Andy told himself was that “a major change had to be accomplished in a number of smaller steps.”
3: After extensive internal debate, Andy and the team at Intel finally accepted that a halfway decision would not work. They chose to exit the memory business, once and for all.
“After all manner of gnashing of teeth, we told our sales force to notify our memory customers,” he writes. “This was one of the great bugaboos: How would our customers react? Would they stop doing business with us altogether now that we were letting them down?”
So what happened?
“In fact, the reaction was, for all practical purposes, a big yawn,” Andy notes. “Our customers knew that we were not a very large factor in the market and they had half figured that we would get out; most of them had already made arrangements with other suppliers.
“In fact, when we informed them of the decision, some of them reacted with the comment, ‘It sure took you a long time,'” he recalls.
The lesson? “People who have no emotional stake in a decision can see what needs to be done sooner.”
More tomorrow when we look at what Intel did next.
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Reflection: When a strategy or product has become part of my identity, how willing am I to question it honestly—and even walk away—if the facts say it’s holding me back?
Action: Identify one belief, product, or habit I’ve treated as “non‑negotiable” in my work or life, and spend time this week examining it with outsider eyes—asking what I would do if I were starting fresh with no emotional attachment.
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