Intel’s Gerstner Moment

In 1993, IBM realized it was in trouble. It had lost money for three years in ever-increasing amounts.

Its CEO and his predecessor were cautious men prone to ill-judged M&A. IBM had become risk-averse, bureaucratic and arrogant.


Important trends in the industry like distributed computing were ignored.


In its wisdom, IBM turned to Lou Gerstner, CEO of RJR Nabisco –  a food company.


“Culture isn’t just one aspect of the game – it’s the game,” Gerstner wrote in his book  about his time at IBM.


Gerstner said he had to return IBM to the culture established by its founder Tom Watson – giving customers what they want, a relentless competitiveness and big bets on the future.


Intel suffered one of the worst things that can happen to a company culture – it acquired a virtual monopoly – and that eroded Intel’s edge in competing in free markets.


Under Noyce, Moore and Grove Intel developed a fearsome ability to compete in any market it chose to enter. It did brilliant, opportunistic things like bringing the first flash chip to market before its inventor – Toshiba. It was universally admired.


“We hear footsteps behind us all the time,” Gordon Moore told me when he was running Intel, and Grove is famous for observing: “We in the semiconductor business know that only the paranoid survive.”


These were not comfortable men resting on their monopoly laurels, they fought for the company they founded, worried about threats to it, seized on opportunities for it.


After Grove, Intel became risk-averse, bureaucratic, arrogant and prone to ill-judged M&A.

Like IBM, Intel needs to be returned to its original culture.

So who’s the new Lou?

Tags: flash chip, semiconductor business

Related Tech News

Share your knowledge - Leave a comment