Intel's toxic culture

Original author: Jean-Louis Gassée
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The author is Jean-Louis Gasse, executive director of Apple Computer (1981–1990), founder and CEO of Be Inc. (1990–2002).

Who wants to be Intel's new CEO? It would be nice to add to the job description the impossible task of destroying the corporate culture, which missed the mobile revolution from the premise that this is a disadvantageous direction.

Returning from a family holiday in Saint-Tropez, I think someday to write about the magic of this place and Ramatuelle , where obscene consumption is combined with refinement and secret corners hidden among hills and winding paths.

From the pleasant relaxation in Saint-Tropez, I was led out by the news about the dull defenestration of Intel executive director Brian Krzhanich, who was biased for using his official position for personal purposes (violation of Intel’s non-fraternization policy, literally for violating Intel’s ban on fraternization). . In simple terms, he had a relationship with an employee. I do not know anything except scant information in the mediaand I will leave the conspiracy theories that the Board of Directors used the alleged violation as a cover for poor performance. But pay attention to the court euphemism chosen to describe the alleged violation, a hint of fraternization with the enemy ...

After the departure of Krzhanich, discussion of the results of Intel resumed. From the point of view of the stock market, things are going well: over the past 12 months, Intel shares have risen by more than 50% (even after the departure of the CEO) versus a 25% increase in NASDAQ. And in its difficult to understand wisdom Wall Street seems more optimistic about the future of Intel than Apple: P / E Intel (price-earnings ratio, a measure of market expectations) is 22 versus 18 for Apple.

Despite minor financial difficulties, Intel is perceived as a kind of “rich loser” because the company missed the mobile revolution - a good example of a company that fell victim to the sometimes controversial theory of “disruptive innovations” .

Two competent analyst explain the application of this theory to Intel.

Ben Thompson, author of the respected Stratechery bulletin , points out Intel's toxic obsession with current profits [as usual, edited and underlined by me]:

“Intel has spent the last few years maintaining its profitability, focusing more and more on high-level Xeon processors sold to cloud providers. Of course, this approach is good for quarterly reports , but it only deepens the hole in which the company is located in relation to almost everything else. And now the most unpleasant: the company seems to be on the verge of losing performance benefits even in high-level applications. ”

Stephen Sinofsky , former president of Microsoft Windows, and now a partner at venture capital firm Andreessen Horowitz, often compiles his @sinofsky tweets into articles on Medium, and in a recent article he analyzes many of Intel's errors:

“Too often, with the onset of disruptive innovation, we techies focus on the product. In my opinion, it is almost always necessary to enter a market where innovations are de facto taking place . The problem is that even if a company has a product for this market and competition, a new market almost always means a decrease in revenue and / or profits, so this solution looks like self-destruction as a whole . And keep in mind: it doesn't look like the company really sees the impact of this new platform on its revenue. ”

Although I agree with these apt remarks, I want to look from another point of view:

“The matter is neither in technologies, nor in money, but only in human emotions”.

This exaggeration, of course, risks over-psychologizing the discussion, but I mean that human emotions control everything else. Money or lack of it does not lead to financial collapse, human madness leads, numbers just follow it. To confirm it is enough to refer to the classics of human culture from Greece and other countries.

Strong human emotions are connected with what we call Culture - this in itself is a vague, soft word, which I will try to concretize when applied to the Intel problem.

Culture is a system of permits for emotions, thoughts, words and actions. Culture develops inside us as taste buds: our taste education begins with mother's milk and accumulates over time. The problem with acquired tastes, especially in the realm of ideas, is that they go beyond the confines of consciousness: the raw data is filtered, evaluated, and tagged before being transmitted to conscious “rational” processes. Metaphorically, try to take someone grown on flakes and hamburgers to the restaurant Red Guide , serving snails, picking meat (calf glands - calf lane), trippa (Italian dish from beef tripe, the first section of a four-chamber stomach cows - comment lane.) brains ... delicacies in one culture - garbage in another.

Let's go back to Intel. The official story of missing the mobile revolution says that Steve Jobs, pleased with the choice of x86 for Mac, suggested that CEO Paul Otellini create the first iPhone processor, but was refused. Years later, Otellini, with honor, took responsibility for the rejection of the iPhone chip, saying that he did not “see” the scale of the possibilities.

Perhaps Otellini really did not believe that Apple would sell a huge number of iPhones — at that time it was unknown. But can he unconsciously reduce sales to the iPod? More strikingly, why couldn't Otellini "see" the hundreds of millions of phones that Nokia, RIM / Blackberry, and Windows Mobile licensees sold? In 2005, Nokia sold 265 million devices, and their number grew rapidly. So far, not at the price of personal computers but in amounts comparable to PCs.

When the iPhone phenomenally came on the scene in 2007, Intel clung to the line of the party: the most important thing is the well-known advantage of Intel in production. The drawbacks of the x86 architecture — power consumption, excessive complexity, lack of SoC integration — will be overcome — and Intel will rush to the front of the mobile front.

Just as old cultures no longer “see” their origins, Intel’s subconscious hid the true source of x86 excellence: this is the market that it controlled through the Windows monopoly. The best production technologies became Intel’s “conscious” explanation, but the truth was that in the PC era, incompatible Windows microprocessors simply could not compete and had to lower prices. The worst part of the culture dictates Intel to believe in their own history, at least until it stops working, when uninvited guests, such as TSMC , come up with competitive technologies. How else to explain the sale of ARM-architecture XScale Marvell in 2006?

Insightful readers will see that my psychologically-based study of Intel’s problems (only some problems, because there are others) is just an alternative description of a company that failed due to being stuck in current profits. It's true. But I believe that the emotional, cultural aspect is also important. In other spheres of life, we see how annoying facts are concreted into counterfactual beliefs and paralyze our actions. In the world of technology, we have seen how the Microsoft OS licensing culture rejected the “free and open” Android model before it was too late. Imagine a world where in 2007 instead of scoffing at the price of Apple's iPhone, Microsoft a week before the announcement of Android made its own offer: free and open Windows Mobile OS.

As Peter Drucker said , culture eats strategy for breakfast.

Who wants to take on the challenge of changing the 50-year-old Intel culture?

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