The man who put Intel inside

IN HIS book, “Giants of Enterprise”, Richard Tedlow of Harvard Business School argues that America has an extraordinary ability to produce business titans. Italy produces a disproportionate number of great opera composers, he writes, and Russia an abundance of great novelists. America’s unique genius lies in nurturing business heroes. Whether this remains true in the future as American capitalism becomes mired in red tape, protectionist pressure mounts, and business dynamism shifts to the emerging world, is open to debate. But Andy Grove certainly stood squarely in this great tradition.

Just as Andrew Carnegie helped to usher in the steel age and John D. Rockefeller the oil age, Mr Grove, Intel’s former boss, who died this week, helped to bring about the computer age. And just as Carnegie and Rockefeller worked their magic by building organisations rather than inventing new products, Mr Grove, though a brilliant technologist, worked his by building Intel from a startup into the world’s dominant semiconductor firm. Like Carnegie and Rockefeller, he built huge plants employing thousands; but whereas they flaunted their wealth and power, Mr Grove laboured in a cubicle no different from those of his employees.

Mr Grove’s genius was as an organisation-builder and manager rather than as an innovator. His most obvious quality was his fierce intelligence. He could be difficult—hot-tempered when confronted with idiocy, prickly when challenged. He believed in the value of “creative confrontation” (which sometimes meant screaming matches). His successful management book, published in 1996, was called “Only the Paranoid Survive”. Possessed of a fierce work ethic, he drove his subordinates as hard as he drove himself. But this combination of characteristics was exactly what was needed in the infant semiconductor industry. He joined Intel in 1968 as its first employee, after it was founded by Robert Noyce and Gordon Moore. He became Intel’s president in 1979, its CEO in 1987 and, when he stepped down from the CEO job in 1998, having earlier been diagnosed with prostate cancer, he remained its chairman until 2005.

The semiconductor industry, then as now, was defined by incredibly rapid change. Mr Moore suggested (first partly in jest and then in seriousness) that the industry was governed by a law whereby the number of components that can be crammed onto a chip doubles roughly every two years. Companies had to run at top speed just to stay in the same place. A succession of competitors in Japan, South Korea and China tried to topple Intel. During Mr Grove’s 37-year career there the company courted disaster on several occasions: in the early 1980s, for example, he introduced an advanced chip, the iAPX 432 microprocessor, that was supposed to reshape the industry’s future but turned out to be far slower than its competitors. But he had a genius for coming back stronger than ever. He masterminded Intel’s switch from memory chips to microprocessors and, with Bill Gates, established the “Wintel” monopoly in personal computers, in which Intel’s processors and Microsoft’s Windows operating system became an unbeatable combination.

Mr Grove achieved all this by embracing management methods that are now so common that they pass without comment, but were then strikingly new. He attacked corporate hierarchy and devolved power to front-line workers. He combined this with an obsession for measurement and performance-related rewards: top performers got juicy stock options; and weak performers were shown the door. Under the slogan “Intel inside”, he ensured that the firm’s processors became branded goods, not commodities. Under his leadership it increased annual revenues from $1.9 billion to more than $26 billion and made millionaires of hundreds of employees.

His career is a testimony to the wisdom of America’s liberal immigration policy. He could hardly have had a worse start in life—he was born into a Jewish family in Budapest in 1936 and managed to survive both the Holocaust and then the Hungarian Communist Party. A childhood bout of scarlet fever left him almost deaf. (His hearing was corrected in middle age after several operations.) He fled to America in 1956 when the Soviets invaded his homeland, Anglicised his name from Andras Grof, and enrolled in the City College of New York, which was then both free and meritocratic. He graduated at the top of his class in chemical engineering, despite struggling with poor English and impaired hearing; then took a PhD in the same subject at the University of California, Berkeley. He claimed that he moved to California because he hated eastern winters but his quest for sun also put him at the heart of a new industrial revolution.

A drunken rat in 1960s Berkeley

Mr Grove’s career is also a testimony to America’s ability to spot merit even if it comes in the oddest of packages. Grove was not an obvious catch in 1963. He then spoke with a strong Hungarian accent. He adopted the manners of a resident of radical, mid-1960s Berkeley. By his own admission he was a “hotheaded 30-year-old running around like a drunken rat.” But Mr Moore saw the genius behind the quirky persona. For decades the Intel Trinity—Messrs Grove, Moore and Noyce—drove the semiconductor revolution in large part because they were such different people united only by a respect for raw IQ. Noyce was a visionary. Mr Moore was a technological virtuoso. Mr Grove was also a technologist but, to the surprise of many who knew him, he turned himself into a management genius, supplying Intel with drive and discipline and turning it round when it got into trouble.

America was good to the young Andy Grove, providing him with a refuge from totalitarianism and then a first-class education. In return Andy Grove was good for America, by helping it to remain at the very heart of the semiconductor revolution. His career was a parable as well as a triumph.