Fundamentals of Management 7th Edition by Ricky Griffin

Exercise 13

Inside Leadership at Intel
Intel is the largest maker of semiconductor chips in the world. It dominates its industry, producing twice as many chips as its nearest competitor and selling almost $100 million worth of them every day. For over 40 years now, one of the company's most valuable resources has been its leadership. Intel has had five CEOs since it was founded in 1969, and although each has naturally brought different strengths and taken different approaches to the job, each has contributed to Intel's remarkable record of continuous success.
Bob Noyce, a physicist with an aptitude for technology, started Intel in 1969 with chemist-physicist Gordon Moore and served as its CEO until 1975. As a leader, Noyce was known as a loyal and charismatic risk taker who had a knack for knowing when his people knew what they were doing: He was general manager at Fairchild Semiconductor when its scientists invented the integrated chip in 1959, and as head of Intel, he oversaw the development of the microprocessor by researcher Ted Hoff in the late 1960s. "The people that are supervising [a project]," he once said, "are more dependent on their ability to judge people than they are dependent on their ability to judge the work that's going on." Known affectionately as the "Mayor of Silicon Valley," Noyce also epitomized the image of the casual California high-tech executive. He had no use for corporate jets, gaudy offices, or even reserved parking spaces and preferred a relaxed working environment in which bright employees were given the freedom to do what they were hired to do. Under his leadership, Intel developed a culture that emphasized technical proficiency over fiscal performance.
When Noyce stepped down in 1975, Gordon Moore took over as CEO and held the post until 1987, when he became chairman of the board. Back in 1965, Moore had set forth the now classic Moore's Law-the observation that the number of transistors on a microchip will double every two years-and when the new company was founded, he naturally assumed the role of chief technology innovator. From the start, Intel scientists were committed to proving the validity of Moore's Law, and they've always been fairly successful at maintaining the pace, delivering next-generation silicon technology and new processor architecture on an almost yearly basis. Today, Moore's Law is institutionalized as Intel's "tick-tock model," which is designed to put technology innovation on a reliable and predictable timetable.
Moore's leadership style was quite similar to Noyce's but-if possible-even more committed to hands-off management and the primacy of technology. According to his successor, Andy Grove, "Gordon is rational, technically based, [and] minimalist in terms of intervention. When he has something to say, it's usually worth listening to." Much of what Gordon had to say, he said to Grove, whom he promoted to president in 1979 and who actually ran the company along with Moore until the latter's retirement. "Much of [my success] is due to standing on his shoulders," says Grove, who has always extolled the value of the mentoring relationship. "If he hadn't been there," Grove admits, "I would have been a happy, productive engineer … but I don't think I would have ended up running the company."
At the same time, however, Grove acknowledges the conspicuous differences in leadership styles-he himself is decisive and sometimes arrogant-and makes it clear that he thinks his was the style the company needed when he took over as CEO in 1987. He likes to refer to management theorist Peter Drucker's idea that CEOs can be identified by one of three chief roles: According to Grove, Noyce was Intel's public face or "front man" and Moore its "thought man"; he himself is a "man of action." "If I had relied on [Gordon's] leadership style," he says, "I would have been in deep trouble because [Gordon was] not an activist. My role was to be exactly the opposite [of Gordon]."
In 1985, Grove announced that Intel was staking its future on a product which, ironically, it had itself introduced back in 1971-the microprocessor, which had been biding its time in such applications as timing traffic lights. When IBM selected the Intel processor for its PC line, the company was set to begin an extremely profitable ten-year run. In 1992, profits topped $1 billion for the first time, and for Grove's 11-year tenure as CEO, Intel grew at a compounded annual rate of 30 percent. By the time he stepped down in 1998, Grove had overseen an increase in Intel's market capitalization from $18 billion to $197 billion-a gain of 4500 percent.
When Craig Barrett succeeded Grove as CEO, Intel was the most valuable company in the world. A specialist in materials science, Barrett joined Intel in 1974 as a technology development manager, and in successive positions at the VP level, he headed the company's manufacturing operations. In the 1980s, as Intel faced increasingly stiff competition from Japanese chipmakers, Barrett developed a manufacturing strategy called "copy exactly," which called for the perfection of engineering processes at a single plant before rolling out the same method in another facility. The strategy allowed Intel to avoid costly flaws in the production process. "It wasn't until we got the Japanese competition in the mid-1980s," Barrett recalls, that "we figured out how to combine technology with manufacturing and exist as a manufacturing company, not just a technology company." When he retired as chairman in January 2009, his successor as CEO, Paul Otellini, remarked that Barrett's "legacy spans the creation of the best semiconductor manufacturing machine in the world."
How had Barrett risen through the ranks to become CEO? "Just luck," he quips, though he's quick to add that "we were able to turn manufacturing around. That caught the eye of Andy [Grove] and Gordon Moore." As chief operating officer from 1993 and the company's fourth president from 1997, Barrett had also developed a working relationship with Grove, who remained with the company as chairman and senior advisor, much like the one that Grove had enjoyed earlier with Gordon Moore. And like Grove, Barrett credits the difference in leadership styles as a critical factor in his success in the top spot: "Andy and I," says Barrett, "are very different in style…. Andy has a pretty instantaneous opinion…. I'm more of a classic engineer and a data-driven guy. Faced with a problem, I wait for the data and analyze the problem. Andy probably gets frustrated with that approach because he wants to take action. That drove me to do my part of the equation a bit faster. It was very complementary."
Barrett turned over the CEO job to Paul Otellini in 2005. With a background in finance, Otellini is the first non-engineer to lead Intel, but he's had a lot of experience in computer hardware: From 1993 to 1996, as general manager of the Peripheral Components Operation and then of the Intel Architecture Group, he was responsible for chipset operations, microprocessor and chipset business strategies, and giving technical advice to Andy Grove. He served as COO from 2002 to May 2005, when he became CEO. He announced that he would "restructure, repurpose, and resize" the company and has since moved to eliminate redundant jobs, to simplify operations by reducing the total number of products, and to sell off noncore and unprofitable businesses. He's also initiated strategies designed to bring new products to market more quickly.
Apply the path-goal theory of leadership to Intel's succession of CEOs: Which kind of leader behavior best applies to each CEO-directive, supportive, participative, or achievement oriented?