River Currents

Remembering Andy Grove: A Perspective on Leadership, Innovation & Culture

Posted by Oliver Sommer on Mar 29, 2016 12:53:56 PM
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Andy_Grove_leadership.jpgAndy Grove’s passing last week has already elicited many tributes and rightfully so he lived a remarkable life—the early part was characterized by survival. In his words: “By the time I was twenty, I had lived through a Hungarian Fascist dictatorship, German military occupation…a variety of repressive Communist regimes, and a popular uprising that was put down at gunpoint… Some two hundred thousand Hungarians escaped to the West. I was one of them.” He went on to become Intel employee number three and eventually rose to become CEO and Chairman. His tenure as CEO was marked by unparalleled success for Intel characterized by a compound annual growth rate of almost 30% but also featured several near failures that Intel was able to overcome.

In the vernacular of The River Group, Andy Grove was someone “who got it.” He had the ability to blend his views on leadership, strategic planning and execution with a talent framework that enabled Intel to thrive during his tenure. Three particular aspects of his legacy—his personal leadership, focus on innovation, and Intel’s adaptive culture—provide a unique perspective on how he built one of the most successful companies in the world during his tenure.

Leadership

Humility: In our recent global survey of CEOs captured in our Exchanges16 findings, a particular aspect that stood out as a self-identified requirement viewed as critical for success was humility. Andy Grove’s genuine approach has been well documented including his cubicle office and open communication approach with employees. He never believed that only he had “the answer” but that the answer would be shaped by input from the collective.

Experiential Learning: His personal leadership perspective was formed by being thrust into a management role in his early 30’s leading Intel’s manufacturing operations. His views on management were documented in his 1983 book, “High Output Management.” One of the most interesting aspects of this work is his focus on recruitment and team building including the importance of feedback in a one-on-one setting. He was able to create a framework that leveraged both his experiences and his need for structure in order to assess progress and adjust his approach—the art and science of management.

Succession Planning: When diagnosed with prostrate cancer leading to his exit as CEO in 1998, Intel had a strong succession plan in place that led to Intel veteran, Craig Barrett, assuming the role of CEO. The conventional view was that he would find it difficult to relinquish the reigns and act only in his capacity as Intel’s Chairman. However, he shifted his focus to the design of the Board/Management governance framework and properly defining the role of the Board.

Innovation

The need for digital transformation has challenged every industry and as such innovation has again become the topic of the day. At Intel, he carefully nurtured the ability to innovate by leveraging the same approach as for leadership—the blend of flexibility but with structure. In his 1996 book, “Only the Paranoid Survive,” he specifically wrote about his approach.

SIPs: The first aspect is identification of a strategic inflection point (or SIPs) typically shaped by the external environment requiring management action to seize on an opportunity or avoid extinction. Intel faced several SIPs in its evolution including in the mid 1980s when foreign competition in the memory chip segment led Intel to incur substantial financial losses leading its shift to focus on microprocessors—not an obvious bet at the time. The SIPs approach is based on Porter’s five forces framework which in Grove’s context was augmented by a sixth force that of complementors (e.g., in Intel’s case Microsoft during Grove’s tenure). Grove’s approach at Intel was to systematically evaluate these forces to proactively identify large shifts with the potential for outsized impacts.

Data-Driven Decision Making: The second aspect of Grove’s approach was applying a data-driven decision making process to take action. He was a pioneer in rigorous data-driven analysis to not only make decisions but also continually challenge the status quo. The seeming paradox of nurturing innovation but with a high degree of measurement was a hallmark at Intel requiring those that challenged the existing paradigm to bring the facts. In 2003, he remarked, “Figuring out what to do is important. But doing it and doing it well is equally important. And in the second category, the scientific, data-driven approach is absolutely well placed.”

Adaptive Culture

Intel’s culture was often characterized as a pressure cooker and Grove’s style sometimes as intense and demanding. But, it also reflected the intensity and in a sense, the fragility of the industry Intel operated in. An organization’s culture most often reflects the values of its leaders and one of the hallmarks of Intel during Grove’s tenure at Intel was its resiliency and ability to change its approach. One of the low points came in 1994 when Intel recalled Pentium chips that had a minor engineering flaw at a cost of $475 million. Intel had rebranded itself from an industrial company to a consumer products company with its “Intel Inside” campaign but failed to recognize the power of the internet and consumer concern over the chips as part of this shift. Grove’s reaction during and after the crisis was in large part shaped by those around him pushing back on how he wanted to handle the crisis. They forced him to re-evaluate his position and focus on regaining the trust of Intel’s customers and the public by helping him recognize a SIP had occurred—one that required Intel to rethink its role in the marketplace. While easy to place blame for his initial handling of the issue, the hallmark of his leadership style and Intel’s culture was in the collective ability to identify the right approach enabling Intel to recover and continue to thrive.


Grove was remarkably generous with his knowledge not only through his writings, his role in academics during his semi-retirement years, and his personal relationships with other leaders including Steve Jobs when he contemplated his return to Apple. Many of his writings are still very relevant and address the key challenges that leaders face today. In this context, his personal leadership was perhaps his greatest legacy in that he was able to shape and influence the thinking of those far beyond his personal reach at Intel including many leaders of one of the main hubs of innovation in the United States—Silicon Valley.

 

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