Intel has stumbled. The stock price has declined 25% this year. The company has cancelled a succession of high-profile projects. The competition, Advanced Micro Device, has taken a lead or two in product development. For two decades the most formidable Silicon Valley company, Intel suddenly looks mortal.
No mystery here. Intel is caught in an age-old difficulty: making the transition from a technology-centric company to a consumer-centric one.
As long as the game was about faster chips, Intel was preeminent. The corporate culture was dedicated to very smart people making very fast chips. In the words of the New York Times, “Until recently, selling Intel chips was easy: faster was better.
But now the industry is becoming consumer centric. Everyone, IBM and HP, have taken a bead on the home and especially the living room. As Fred Zieber says, “There may be a tremendous global war for control of the living room. For its part, the NYT says, Intel now seeks to make “complete systems aimed at both computing and consumer electronics markets.
What a difference the consumer difference makes. When technology-centric, the corporation can turn in on itself. But when consumer-centric, the corporation must open up to who the consumer is, what the consumer needs and how the technology will be used. In the language of the Intel motto, its no longer “all inside.
To its credit, Intel understands the importance of the technology-consumer transition. In May, it will appoint its former head of marketing, Paul S. Otellini, as CEO. Dan Hutcheson, president of VLSI Research Inc., says, “As [Otellini] came into power, Intel tried to become a more aggressive marketing company. Otellini has called for a consumer orientation.
But its a tough transition and lots of charlatans who would be happy to help. I did a project for a company, one dominated by engineers, and I watched in astonishment as they had called in a corporate culture guru who was there to help make them more sensitive to the consumer. The gurus “idea was that these engineers needed to be more empathic, intuitive and feminine.
Oi! Why is it that marketing types keep insisting that the secret of consumer centricity is to move from the left brain to the right brain, from rationality to intuition, from pragmatism to dreaminess, from maleness to femaleness.
In fact, there is no important difference between the way marketers and engineers think. The best ones are identical. Both of them like to go to the edge of what we know and peer over. Both marketers and engineers are, to use the famous phrase of Levi-Strauss, “searching after that other message, the one not now implicit in the code.
Contrary to popular opinion, engineers may be more creative than marketers. They move from orthodoxy to creativity without a seconds thought. No need to urge these people to ‘think outside the box. They spend their lives there. Or, as my client said with, anxious disapproval of her engineering colleagues, “Every time I live the room, they start building a machine. Precisely, machines is how they think. I’ve also worked with HP engineers and they were Teflon, sliding between ideas with not a trace of effort or difficulty.
But, finally, there is a challenge for Intel here. To be consumer centric, they must add new rules of discovery. Its still necessary to make chips go faster. (Though, God knows, this should be enough. IBM is promising a chip called “Cell that performs 16 trillion mathematical operations a second. Yes, ‘trillion.) Its now necessary to find out what the consumer wants to do with this extraordinary processing power. The living room may be the new competitive objective, but it is also from an engineering point of view terra incognito.
What is happening in the living room cannot be coxed from a slide rule, or its latter day equivalent. It cannot be surmised from our own living room. It must be found out, and this means leaving the rationalities of the lab. Now its necessary to step off orthodoxy twice, once from technological edge AND again from the domestic edge. The first takes us into the realm of pure technical possibility. The second into the digital home the consumer is in the process of creating.
Forget left brain and right brain, rationality and intuition, engineers are plenty lateral enough. But they must now factor in the end user and this mean taking up residence in the consumers life, or at least the consumers neighborhood, or at least paddling by from time to time in the ethnographers dinghy.
This is another way of saying that rocket science just got a little more difficult. Consumer centricity requires of wedding of the engineers creativity with the consumers creativity. Not so very difficult, but it is something that requires a substantial change in the present rules of engagement.
Can Intel do it? If they can make itself a global leader in semiconductors and creates revenues of more than $30 billion a year, I guess the answer has to be yes. The only thing that can screw things up is the advice of a marketing consultant.
References
Bulkeley, William M. 2004. IBM to Unveil a Powerful Chip for Home-Entertainment Market. Wall Street Journal. November 29, 2004. (for Zieber quote)
Markoff, John. 2004. The Disco Ball of Failed Hopes and Other Tales From Inside Intel. New York Times, November 29, 2004. (all other quotes and details, gratefully acknowledged) here
Grant, I’m very surprised you didn’t mention the People and Practices group at Intel.
http://www.intel.com/research/exploratory/papr/
Home to some major brainies like Ken Anderson, Tony Salvador, Genevieve Bell, Eric Dishman and others.
Tony gave a presentation at the recent About, With, and For conference (http://www.aboutwithandfor.com) that described, among other things, how the work his group does gets transferred to other parts of the organization.
http://www.id.iit.edu/events/awf/fullschedule.html#pres01 for the abstract and http://www.id.iit.edu/events/awf/speakers/t_salvador.ppt for the slides.
Of course, Grant, your point is about the overall product development effort at Intel and I don’t think these folks would disagree with you at all (Tony showed me the usability labs sitting unused, abandoned from a previous effort to be a consumer products company with amazing products like the Play line – including a really really easy video camera for kids), but at least let’s acknowledge that Intel does some top work in understanding the consumer.
I find the strategy interesting, in fact. The group doesn’t work for product teams, they are fairly self-directed and then disperse their information to the audiences that they create internally.
I believe they get enormous PR value out of this work, like any great R&D effort, if you can show you are doing really far-reaching, far-seeing stuff, people have GOTTA believe it plays back into the regular stuff you do, right?
Again, it’s tangential to your point, but probably worth fleshing out the story to acknowledge that particular group of folks.
Grant,
The issue of “flavors of creativity” is a pivotal one today. We’ve been enraptured by “types,” “brain dominance,” and categories of all kinds; all facile ways of making sense of human complexity. My psychologist colleagues and I are accountable for this disgrace. I call it a disgrace because it divides people into simplistically conceived groups that provide license to stereotype, overlook and manipulate.
More difficult is seeing beyond superficial (or even deeply structural) differences to more fundamental similarities. In my work with designers, I’m constantly pushing us to recognize the similarities that lie beyond differences.
The “cultural guru” who urged the engineers to become more “empathic, intuitive, and feminine” would have had as much success as trying to turn bluebirds into redbirds. Not gonna happen. Nor should it. Both can fly, nest and sing just fine.
Nice post.
Steve, you have fleshed it out beautifully for me. Thanks. I guess having anthropologists on staff doesnt mean that you build what they learn into the marketing effort. And I know several anthropologists who work for corporations who appear to know nothing and care less about the marketing effort. Still, you are right, they have some talented people there. Thanks, Grant
Tom, Thank you and very well said. The similarities are more interesting and useful than the differences. Hey, when are we going to have that coffee? Best, Grant
Great post Grant. I’m sure there are other engineers turned marketers out there besides myself. But one of the problems with most engineering-driven companies is just that – they’re not market-driven enough. I’m not saying that the engineers themselves will step inside the skin of customer and live in their world – but someone inside the company better be and then translating that into product spec. For a customer-centric view starting at the discovery phase, you might enjoy “Beyond the Brand” by John Winsor.
Evelyn’s so right. Taking customer-up info and translating that into products that tightly integrate technically–>functionally–>emotionally is no easy task. I’m involved in such a project right now for one of my clients.
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This is a very interesting post. It is difficult to disentangle Intel’s strategy problems from its execution problems at this point. The Itanium fiasco and AMD’s successful development of a backward-compatible 64-bit chip is not primarily a symptom of inadequate consumer understanding–it’s a matter of getting beat on traditional technology strategy and design skills. Furthermore, a huge part of Intel’s business is selling chips for servers and other non-consumer products.
To the extent that the end-user PC market is becoming saturated and people are less willing to pay for additional clock-speed increments, then Intel indeed will have to find new sources of value to keep its fabs running producing new chips. I do not believe, however, that this is the right moment for Intel to make a huge investment in cross-training its design engineers in the details of consumers’ lives. The reason is that Intel’s infrastructure requires that they produce chips with a very large market, which of necessity must contain a wide variety of specific end-user situations. There is no way for them to master the scores or hundreds or thousands of niches that would be needed to add up to their current sales level, much less to produce specialized versions of their chips for even a coarse grouping of these niches.
Intel makes general-purpose chips intended to be used in a wide variety of circumstances because its capital stock and management systems are optimized for that sort of mass-market strategy. They need to look for new generally desirable features for their microprocessors (hence the Centrino campaign) and pray for new applications that can be enabled by greater clock speed (perhaps non-annoying voice recognition for the PC). This search does not preclude innovative thinking about user needs, but such thinking is likely to be in the mode of looking for big things that can be used for many different purposes rather than finely-tuned offerings for specific consumer needs.