Fable: The CEO Who Didn’t Understand The Business He Was In

There was once a famous chip company which was in trouble. So much trouble that it was bought by a company from an entirely different industry.

The new owners brought in one of its own executives, an ex-military man, to run the semiconductor company.

Early in his tenure the chief purchaser for General Motors arrived at the chip company’s offices to say hello to the new boss.

The word was sent down from on high to the guy waiting in the lobby – ‘I don’t meet with customers.’

The GM guy cancelled all the business he had with the chip company.

Moral: Courtesy counts



  1. I was at Fairchild when Schlumberger bought it. It’s a long time ago, but I can recall that no-one could figure out quite why they did it, but everyone hoped they had pockets full of cash that would be infused into the Fairchild Semi operations and bu us lots of new VAXes. Sadly it did not seem to go that way.

  2. > Mine’s a Talisker, please
    Sorted ..

  3. I’ve always suspected Schlumberger bought Fairchild for the stupidest of reasons: since they already owned Heathkit they thought that they “knew” the consumer and business electronics market and that with a possible transition to manufactured items, as opposed to kits, they’d be well positioned to dominate the industry.

  4. Yes indeed – I think the wee dram’s on me this time, if you’d care to name your poison..

  5. My tenure at Fairchild/Schlumberger started somewhat after this although I worked in the division that produced test systems to test integrated circuits. Schlumberger never did figure out why trying to run a Semiconductor company just like an oil field exploration company did not work. It must have been those American people!

  6. Fairchild, goodness – lessons to be learned..

  7. MOSTEK perhaps, a DRAM pioneer, who got bought by United Technologies Corporation ( UTC ) know more as a military contractor amongst other things. After this, MOSTEK rapidly slid down the slippery slope.

  8. Funnily enough Fred that was Fairchild after Schlumberger bought it and put a West Pointer Tom Roberts in charge. He cut out the ‘key man’ bonuses causing loads of key men to leave and pissed off the customers

  9. Interesting George, that must have been the period when the company became known as Slumberchild because the new management spent all its time installing hierarchical management structures while ignoring new product development – the antithesis of the Noyce style of management. Anyway, Schlumberger paid heavily for their stupidity – buying Fairchild for $400 million, spending another $1 billion on new fabs, then selling the company for $122 million.

  10. That’s extraordinarily good of you Fred, thanks very much. Mine’s a Talisker, please.

  11. You’re in very good company with that opinion, Scunnerous, Gordon Moore told me at the time: ““Schlumberger was a victim if hubris. They’d been successful with everything they’d touched, but they got Fairchild at a time of deterioration – I’d far rather start a company from scratch than try and fix a sick one.”

  12. Thsnks Fred

  13. Arrived today, Fred, very msny thanks indeed. I’m going to enjoy this

  14. I think everyone was a bit dazzled by the IC in those days, Keith, IC-manufacturing had got out from under the control of Big Business and Big Business wanted to get it back under its control.

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