Andy Grove and the mysteries of the inflection point

It begins like a classic HBS case study. Andy Grove and Gordon Moore are sitting in Grove’s office at Intel. They are deeply unhappy.  Intel is caught in a price war with the Japanese. 

Here’s how Mr. Grove describes what happened next:

I looked out the window at the Ferris wheel of the Great America amusement park revolving in the distance, then I turned back to Gordon and I asked, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Gordon answered without hesitation, “He would get us out of memories.” I stared at him, numb, then said, “Why shouldn’t you and I walk out the door, come back and do it ourselves?

It’s an amazing moment.  Intel’s most senior managers bring themselves to make the right decision, but only by contriving to step outside of themselves.  Grove is saying "what would we do if we weren’t us?"  He and Moore Grove and Moore have been in the memory chip business for so long, it is difficult for them now to see that it is, for Intel, over, and that the time has come to move on.  

This is the problem with a corporate culture.  It contains much of the cunning and intelligence of the corporation.  But it also contains deep seated assumptions that blind the senior decision maker.  "What we do" has become "who we are" and only be pretending to be someone else can Grove and Moore set themselves free.  As Grove puts it, "Intel equaled memories in all of our minds. How could we give up our identity?"

Grove has a pragmatic grasp of culture.  He sees it here in the corporation culture that constrains the senior manager.  And he has a feeling for how to manage cultural moments, as he demonstrated with his "what if" scenario with Moore.  

He is acutely sensitive to the way his "strategic inflection points" can work silently and invasively.

"New rules prevailed now—and they were powerful enough to force us into actions that cost us nearly half a billion dollars. The trouble was, not only didn’t we realize that the rules had changed—what was worse, we didn’t know what rules we now had to abide by."

And when he talks about this sort of thing, he is talking about culture.  More exactly, he is talking about a set of understandings and practices that have embedded themselves in employees and the corporation.  Grove talks about them as "rules" but if they were precisely this, they would be visible to employees, more obvious when changing, and easier to acquire when changed.  

Give the guy a break.  He’s an engineer.  A deeply gifted engineer who had quite a lot to do with the fact that I can now communicate with you in this manner and the machine on which I am now typing furiously.  So lighten up a little.

Still, a guy this astronomically smart would be smarter still if he had a formal idea of what culture is.  He would understand its formal properties.  He would be still more skillful in detecting cultural factors as causes and consequences of the inflections he describes so well.  

References

Grove, Andrew S. 1999. Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company. Crown Business.  (first passage is around location 1176 in the Kindle edition of this book; second passage is c. location 1184; third passage, 359)

Acknowledgements

Thanks to several people on Twitter who recently encouraged me to read this book.  I would mention you by name, but I can’t seem to retrieve our conversation.  If you read this, please identify yourselves.  Also, does Twitter have an archive?  

One thought on “Andy Grove and the mysteries of the inflection point”

  1. A few points on this story might be apposite:

    1) By the time Intel formally got out of memories (actually just DRAM–they had a flash memory business later), middle managers had already whittled down the capacity allocated to that product category to a tiny fraction of what it had once been. They simply made more money making other stuff, especially microprocessors. So in a way, Grove and Moore were ratifying decisions the organization had already “automatically” made based on financial profitability measures.

    2) “Walking out the door and coming back in” is reminiscent of taking the “outside view,” a concept in behavioral decision theory that involves looking at statistical patterns across multiple examples rather than fixating on your theories of cause and effect within your one example. Where the inside view might say, “based on the tasks and my understanding of their difficulty, this project should take 3 weeks,” the outside view would say “most people who try to do projects like this take 8 weeks.” The outside view entails admitting that your internal understanding is incomplete and asking how your decisions would look to an unbiased observer.

    3) Culture-as-identity and culture-as-taken-for-granted-beliefs both are naturally sticky. Changing the former requires threatening one’s self-image and changing the latter requires noticing that which you normally don’t examine and in fact base all your reasoning on. If it were easy to change, would it really be culture?

    3)

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