Exit Andy Grove
Time 's Man of the
Year announces he'll be stepping down as CEO of the most powerful chip company
on the planet, and the market doesn't even blink. In fact, investors send the
company's stock higher. What's wrong with this picture?
Actually,
the picture is just fine. In fact, in a curious way, the market's reaction to
Intel CEO Andy Grove's announcement is the best testimony to Grove's managerial
genius one can imagine. For what Grove succeeded in doing at Intel was this: He
made the company stronger than just him. His superfluity, in that sense,
becomes the measure of his mastery.
To be sure, "superfluity" overstates the case, since Grove
will remain at Intel as chairman of the board, while Craig Barrett, who will
become CEO May 20, has already been running much of the company's day-to-day
business as president and chief operating officer. As chairman, Grove plans to
continue playing a role in shaping Intel's long-term strategy, presumably
including its heavy investment in companies that are pushing the technological
edge. Grove's abdication of his throne also loses some drama from the fact that
in recent years his public image has become that of a long-range thinker rather
than a hands-on manager. Especially since there's no Mrs. Simpson in the
picture.
Since
Barrett was christened the heir apparent years ago, the succession should go
smoothly, and all indications are that he's a more than capable executive.
Still, Grove's announcement was certainly a surprise. There was no hint of it
in the press, and he's only a couple of years older than Barrett (though Grove
has had a much publicized bout with cancer). But there was nary a ripple of bad
news out of Intel when the announcement was made, and the sense of seamlessness
that Grove and Barrett have projected has transformed the whole thing into an
elegant passing of the torch ceremony.
In fact, there's something invigorating about
Grove's decision, precisely because he's going out at the top of his game. For
most of his career at Intel, Grove was, if not anonymous, then certainly
overshadowed by Gordon Moore and Bob Noyce, technological whiz kids who
co-founded the company in 1968. They were the visionaries, he was the
nuts-and-bolts guy. In the last three or four years, though, after Moore's
retirement (Noyce died in the 1980s), Grove was able to take on the visionary
role, even as he seems to have made a conscious choice to become a more public
figure. Magazines now wanted to know his thoughts about the future of computing
and the Internet. They became oddly fond of taking pictures in which his body
was occluded by shadow while his face would be softly spotlit, pictures that
made Grove appear to be a mysterious man thinking very deep thoughts. Which he
probably was.
This
transformation was also reflected in Grove's writing. In the late 1960s, he
published an acclaimed engineering text, Physics and Technology of
Semiconductor Devices . (That one just missed getting on the best-seller
list.) In the early 1980s, he published an exceptional book on management
theory, High Output Management , which combined a sophisticated
discussion of the way companies should be organized, with a surprisingly
convincing analysis of how to evaluate and motivate workers. Then, two years
ago, Grove published Only the Paranoid Survive , which lays out a kind of
Schumpeterian theory of major transformations in the business climate and tries
to explain how to deal with them.
Grove's basic idea is that there are "strategic inflection
points," moments where the entire framework in which business has been
conducted is transformed and companies must adapt or die. The arrival of
superstores in suburbia, the introduction of the stand-alone PC, the advent of
talkies in Hollywood: All these were strategic inflection points. In each case,
those companies that recognized the changes and adjusted to them flourished,
while those that didn't floundered and eventually went under.
As might
be expected, Grove's description of past strategic inflection points is more
convincing than his recipe for recognizing such moments in the future. But
what's especially striking is the way in which the evolution of his books--from
engineering to management to theories of change--tracks his evolution as a
public figure. The Andy Grove of High
Output
Management
couldn't have been Time 's Man of the Year. The Andy Grove of Only the
Paranoid Survive could.
In that sense, it's hard to see what more Grove
had to accomplish as CEO of Intel. The company's stock price isn't at its
all-time high but, in every other way, it's among the most productive,
profitable, and acclaimed companies in the world. (It's fourth on
Fortune 's most-admired-companies list.) And without giving too much
weight to Time , it's not likely that a corporate leader--other than Bill
Gates, of course--is going to garner more mainstream attention than a "Man of
the Year" cover. Ted Williams retired after hitting a home run in his last
at-bat. Grove's doing something similar, except that, thanks to the
chairmanship, he has the advantage of stepping aside gracefully without really
disappearing.
Still, there's a certain
irony in Grove's ascent to elder statesman, because the idea of him as shaper
of the future makes it easy to miss how much Grove and Intel were products of
what's now described as the corporate past. Intel is not, after all, a virtual
company. It doesn't outsource all its production. It doesn't have a brand name
as its only real asset. It doesn't have 10 people in its corporate headquarters
running the whole operation. It's not what management theorist Tom Peters sees
as the company of the future, a "floating network/crap game." Instead, Intel
makes real things. It builds enormously expensive plants that employ
blue-collar workers, even if they are wearing bunny suits. It invests heavily
in research and development. And it is hugely productive, which is to say that
it makes goods that are more valuable--in a real sense--than the sum of the
various things that go into making them.
To say that Grove is a
product of the past, then, is to say only that what Grove has done at Intel is
more like what Alfred Sloan did at General Motors than what CEOs of Internet
companies or Silicon Valley startups think they're doing today. Intel's success
under Grove, though, should give pause to advocates of this free-floating,
no-manager, no-employee, just-free-agents new economy we're supposedly living
in. For what Grove has done exceptionally well is manage. What has allowed
Intel to dominate its many competitors, who are perennially nipping at its
heels with computer chips that are supposedly faster or cheaper, is that Intel
does a much better job of making chips reliably and efficiently. And what has
made Intel such a stable company over the past decade has been Grove's ability
to plan for change and adapt to it while holding the overall framework steady.
The ease of Barrett's succession to CEO is the ultimate expression of this, of
course. As Noyce and Moore did before him, Grove led Intel brilliantly without
making it dependent upon him. He helped fashion an institution bigger than
himself. And that's why there's nothing at all wrong with this picture.
