Progress of Intel Management - Term Paper Example

Leading Strategy Change Executive Summary "Sooner or later, something fundamental in your business world will change" Andrew S Grove, President and CEO Intel Corp., Intel went through a major overhauling in their operating methodology and approach to customers during the launch of their Pentium processor and when their campaign, "Intel Inside" was in progress. Intel became a household name. When the chip ran into a technical flaw, Intel had to face the wrath of the public. The management coped with the problem and came out of it, scathed alright, but successfully and turned the loss into an advantage. This paper presents a brief event history followed by an analysis of how Intel managed the day and capitalized on the change; the rules that they followed and the course that they charted. This again proved, most changes are not physical but in the mental state of men and women. Intel - The Corporation 1968 - Robert Noyce and Gordon Moore found Intel. (Intel Corp, 2006). Intel has seen rapid progress from that date till today, nearly four decades later. Intel has been known for its innovation. As a chip maker, they started doing RAM chips. In 1969, they launched 3101 Bipolar RAM. Soon they followed it up with innumerable number of inventions starting from the 4 bit microprocessors, EPROM chips, Microcontrollers, 8 bit microprocessors, chips for supercomputers, DRAMs and many other innovative products. It is the largest semiconductor manufacturer in the world. It makes the number one chip that is on more than 85% of the Desktop computers. Intel Corp., has grown from a small start up firm that wanted to innovate to a large mega corporation that was to be emulated. The History of Events - Leading up to the change The point of change that is to be looked at today is when Intel launched its all new Pentium Processor with much fanfare. We will take a close look at the sequence of events that headed for a change in the management doctrine in Intel. 1. Year 1993, Intel realized that their processors were predominantly employed, more than 90%, in making of the personal computers. They wanted to have the public know that it is their processor inside. Though most people talk of the Intel chip that goes into the processor and that the processor is the heart of the computer. Intel rolled out what they called as the Intel Inside logo. 1993 saw the launch of the campaign across the world in all countries. In China, they even had the cycle reflectors with Intel Inside logo for awareness. (Andrew S Grove, 1996). 2. Pentium was launched after much research in 1994. During the course of the testing exercise, it was found that Pentium had a floating point problem that occurred once every nine billion divisions. If this has to occur on a spreadsheet, it has to be used for nearly 27000 years. With this in mind, Intel went on to release the processor into the market. 3. Pentium evoked good response from the market. IBM adopted Pentium and so did others. But one response from a professor who did math calculations said that he found that there was a calculation error when multiple divisions were done. This escalated and the problem on the Pentium was blown into the media glare. 4. November, 1994 - media was fully on the Pentium FPU (Function Point Unit) calculation error. Every magazine, techie or otherwise, reported the event. CNN covered the whole episode. The net result was that the people suddenly and over night declined to accept the chips. By December, 1994, IBM stopped shipping PCs with Pentium Chips. 5. In order to restore confidence with the people, Intel corrected the chip and replaced every one of the bad chips already sold to all those who asked for a replacement. This meant replacing millions of chips costing over $475 million. Managing the Change - Loss and Later The change that happened in Intel needs to be closely studied. Intel CEO, Mr Andrew S Grove, calls the change that shook Intel out of its perceived safety as Strategic Inflection Point. This changes the course of a company either takes it to the next level in performance or if the company does not respond puts it down the drain. After the huge loss that Intel Corp endured, the change that happened over night at Intel was due to a crisis. Change induced by Crisis not by Strategy. However, this crisis came about because of the twist in the strategy that the company has to undergo. In the aftermath of the major crisis, when Intel burnt out nearly half a billion dollars, they went ahead to redesign and re-launch a very successful Pentium processor chip later on. The design was better done and the launch was more customer-oriented. The white papers on it where more widely circulated than just the manufacturers. Originally, it was only the manufacturers who bought the chips that went through these white papers and specifications of the chips before fixing it up in their personal computers. But now, the end users have taken note of what is happening inside their PCs and whether they are getting the right kind of chip inside. This leads to a more educative launch of every product. People have started demanding once the chip was found to be satisfactory. This had a dual effect. One, effort to spread the news the other, once successful, the product moved in the market in a better way. After the lessons learnt from the loss that they suffered, Intel ensured that all product launches are preceded by an appropriate information campaign to all the people concerned. Until now the product was designed and made by Intel in their own Lab. There was hardly any requirement capturing from the users to design an ideal chip. It was more a thought driven innovation that lead Intel from one chip to the other. But now, Intel consulted people, did surveys on how or what the people expected out of the chips that Intel makes. This then, was assimilated and incorporated in the new designs wherever feasible. Intel moved out of its isolated operation to the customer centric and customer driven operation. It is moving more and more towards such an operation as in the case of a number of other companies. This change has made Intel to grow further in its sphere and continue to dominate the world chip manufacturing industry. What Changed - Theory and Practice Let us now put together the entire event that occurred and started as a crisis which Intel went on to handle; suffered a loss. This was then modified and the company made a strategic move to improve their approach to the customers, a major change in their working environment. This led it to a better and a stronger position in the world market. Theory: Changes are driven by two phenomenon based on which changes are characterized either as Strategic changes or Crisis Lead changes. Change Kaleidoscope model (Julia Balogun, 2003) can be applied to the scenario that was existing at Intel during the process of this change. The change context was thrust upon the company by 1994 when their flagship product launched with much fanfare hit the market. The negative reaction that they got from the public reflected heavily on all spheres of life as far as Intel was concerned. It affected them personally with their relationships; with every customer; with suppliers with family and with friends. This seem to have ramifications all around them. The company could not ignore and the customers had to be listened to. The change was thus forced upon the company and the company had to respond to this. On the other hand, the Organizational context that had to take this change was very innovative a well oiled machine that could address these issues immediately and acclimatize themselves to the changed scenario at the earliest. The organization was agile and could 'turn on a dime', in the words of its President, Andrew Grove. The employees of the company had a relationship with the company that is deep rooted and therefore when the crisis struck the works, it was a coordinated work that emanated from every one of them. Bringing in a change was not difficult. It was only a question of the right change to be ushered in. More important, the people in on the crisis did not realize that they were on the change path. They took the decisions that were important and needed for the company's existence and growth. The change was literally brought in over night. They company which did not service any end customer and used to deal with only engineers of another company who could understand and implement the changes in their design, now had to set up servicing centers across the country and had to offer explanations to everyone of the customers who was unhappy. A customer support setup was evolved with in a span of one week. This was then retained and a plan was put in place to support the customers of the company. For a successful change to happen, in theory the kaleidoscope model talks of the following skills to be present in the company that is embarking on the change mission. 1. Power: The company needed the power to implement the change. In this case, the power that is needed was very much present in the company and there was no major need to use the power either. 2. Time: This was naturally not in favor of the company. Intel had to do it literally over night as mentioned earlier. Time becomes a constraint and needs to be planned in such a way that the required time lines are met by the people of the company. 3. Scope: A well defined scope for the change needs to exist. This was evolved in the company by having repeated meetings and a discussed well thought out strategy was inked which had a clear scope mentioned as a part of it. 4. Readiness: The company was agile, young at heart and was very committed to its approach. This being the first time they were facing the public, the company was more inclined towards producing its best customer face possible. 5. Capacity: Intel did not have the needed manpower though its production process could be harnessed to produce the needed results in terms of new replacement chips. But people had to be mobilized from other departments and requested to take up emergency assignment positions to take care of the required capacity. 6. Capability: Intel had all the needed capability, technically, financially and on the management end as well. 7. Diversity: Diversity of the problem and the issues that might arise when a change is implemented needs to be mitigated. In this case, the diversity of the issues was mostly external to the company and not internal. This naturally, was far easier to handle only the external needs had to be managed and administered. 8. Preservation: All changes that are brought into force needs to be followed through and the change needs to be preserved so that the effect is maintained and carried forward. In order to do this successfully, in the case of Intel, though it all started as a fire fighting issue and a change forced by the crisis, soon the strategy part took over and the right kind of structure preservation was done to ensure that the changes brought in play remained so. The center of the kaleidoscope model has the following change types: 1. Design Choices 2. Change Path 3. Change Style 4. Change Target 5. Change Role 6. Change Levers Intel in this major Strategic Inflection Point, went through a change in all of them. Design choices were now dictated by the customers, which until now was decided by their research scientists. The path of the company got altered and it went through the customer way. Styles were altered along with the targets since they had suffered a major loss. Every person including the President went through a change in their role and the levers also got altered; what gets pulled up and what goes down has got totally altered in this scenario. The kaleidoscope model explains the changes and the change management that has happened in Intel in the taken up case. Management Analysis - Bold, Brave and the Will The management of the company that is facing a change should first be convinced that the change they are contemplating is needed for the company. The leader at the helm of the affairs, need to be strong willed to take on the issues that might come up during the course of the change process. The leader has to analyze the change and the effect of the change on the company and its business model. The people process model (Julia Balogun et al, 2003) advocates the methodology to link up the human resources goals with the short and long term goals of the company and then take an appropriate decision in line with this. On closer analysis, it is found that taking the long term objective of the company into consideration, it is imperative that such a change is brought about in the company. The leadership of the company was dynamic and had been bold and taken decisions that they were willing to hold on to towards the success of the organization. It is important that the leaders had the qualities as reflected in the implicit theories and models. (Robert Wood, 2001). These models suggest while leading a change the manager needs to be technically savvy and a good humanistic. ( Rosabeth Canter, 1999) The management also has to consider the cultural effect on the issues that could come about due to the changes that are being contemplated. When these changes are brought into force, it is the operational methodology and process changes that would go for a major shakeup and the management was not anticipating any cultural change or handicap in the exercise. Therefore, this was not taken up for a major consideration. The company had by itself an internal culture that went with the innovation, swift in their reaction to a customer need and they took minimum time to make sure that things are in order and good shape. (Saunders et al, 2003). This it was found the company did and could literally with no ingress of fresh human resource to augment to their need immediately they could solve the problem. However, when the strategy was in force and implemented, then the changes were brought about and new resources were added to staff. This culture played a very important role in putting things in order. Concluding Remarks From the analysis that has been done and modeled in line with the theory, the practice has not gone too out of it. As a matter of fact it has not gone out of the theoretical aspects of the change management. (San-Marie Aucamp, 2002). Though it is hard to consider or find out whether the management had gurus who would have sat with them to make up a clear model during the days of fire fighting that the Intel Corp did to take care of its emergency. However we find that the practical solutions that they went about evolving did result in a good model fitting into the theoretical suggestions made by a number of researchers in the field. References 1. Andrew S Grove, 1996, Only the Paranoid Survive, Harper Collins Publishers, pp 11-22. 2. Intel Corp., 2006, available at: http://www.intel.com/museum/corporatetimeline/index.htm 3. Julia Balogun, et al., Dec 2003, Exploring Strategic Change, Financial Times-Pearson Education. 4. Robert Wood, 2001, Implicit Theories of Managers, Centre for Corporate Change, Australian General School of Management. 5. Rosabeth Moss Canter, Summer 1999, The Enduring Skills of Change Leaders, Leader-to-Leader, No.13, Summer 1999. 6. Saunders, et al, Dec 2003, Exploring Employees' Reactions to Strategic Change Over Time: The Utilization of an Organizational Justice Perspective, Journal of Management, pp 66-86. 7. San-Marie Aucamp, 2002, Identification of Mental Models of Managers, University of Pretoria, available at: http://upetd.up.ac.za/thesis/available/etd-08272003-102454/unrestricted/dissertation.pdf Read More