Chairman, Intel Corporation
Born: September 2, 1936, in Budapest, Hungary.
Education: City College of New York, BS, 1960; University of California, Berkeley, PhD, 1963.
Family: Son of George (dairyman) and Maria (bookkeeper); married Eva Kastan (homemaker), 1958; children: two.
Career: Fairchild Semiconductor Research Laboratory, 1963–1966, research engineer, transistors; 1966–1967, section leader, surface and device physics; 1967–1968, assistant director, research and development; Intel Corporation, 1968–1979, vice president and director of operations; 1979–1987, president; 1987–1998, chief executive officer; 1998–, chairman of the board.
Awards: Honored by American Institute of Chemists, 1960; Achievement Award, Institute of Electrical and Electronics Engineers (IEEE), 1969; J. J. Ebers Award, IEEE, 1974; Merit certificate, Franklin Institute, 1975; Townsend Harris Medal, City College of New York (CCNY), 1980; Engineering Leadership Recognition Award, IEEE, 1987; Enterprise Award, Professional Advertising Association, 1987; George Washington Award, American Hungarian Fund, 1990; Achievement medal, American Electronics Association, 1993; Citizen of the Year, World Forum of Silicon Valley, 1993; Executive of the Year, University of Arizona, 1993; Person of the Year, PC magazine, 1993; Heinz Foundation Award for Technology and the Economy, 1995; John von Neumann medal, American Hungarian Association, 1995; Steinman medal, CCNY, 1995; Statesman of the Year, Harvard Business School, 1996; CEO of the Year, CEO magazine, 1997; International Achievement Award, World Trade Club, 1997; Cinema Digital Technologies Award, Cannes Film Festival, 1997; Computer Entrepreneur Award, IEEE, 1997; Man of the Year, Time , 1997; Technology Leader of the Year, Industry Week , 1997; Distinguished Executive of the Year, Academy of Management, 1998; Medal of Honor, IEEE, 2000; Lifetime Achievement Award, Strategic Management Society, 2001.
Publications: Physics and Technology of Semiconductor Devices, 1967; High Output Management, 1983; One-on-One
with Andy Grove, 1988; Only the Paranoid Survive, 1996; Swimming Across, 2001.
Address: Intel Corporation, 2200 Mission College Boulevard, Santa Clara, California 95052-8119; http://www.intel.com.
■ Andrew Steven Grove, universally known as Andy Grove, began making his mark while he was at Fairchild Semiconductor Research Laboratory, by helping solve the problem of inconsistency in the responses of silicon chips to electricity. When he went to work at Intel Corporation, he was expected to direct the young company's engineers, but he quickly became the de facto chief operating officer. Grove organized the factories, called "fabs" (for fabrication plants), that made semiconductor chips, and it was Grove who set the corporate tone for Intel for three decades. He had a hand in every major development at Intel, which meant that he was part of almost every major event in the history of the manufacture and sale of computers from 1970 well into the 21st century. Partly because of his foresight, leadership, and relentless hard work, computers found their way into the lives of almost every human being on earth, affecting the lives of billions in large and small ways and making Grove one of the most influential businesspeople in history.
The title of Grove's 1996 book Only the Paranoid Survive sums up much of Grove's management philosophy. He came by his paranoia naturally: it was essential to his survival. He was born András Gróf into a not religious Jewish family in Budapest, Hungary, which was ruled by a military dictator whose government persecuted Jews. That Gróf was not a Jewish surname may have helped his family avoid some of the worst of the persecution. As a small child, Grove had scarlet fever, which not only nearly killed him but also rendered him partly deaf. With the advent of World War II and Germany's invasion of the Soviet Union, Hungary abandoned its official neutrality and joined the Germans. In 1944, when the war went badly for Germany, the Nazis overthrew the Hungarian government, fearing that the Hungarians were about to make peace with the Soviets. The rounding up of Jews for death camps and slave labor soon began. Grove's father was forced to serve in the German army at the Eastern Front, where he endured appalling tortures for the amusement of German soldiers. Grove and his mother hid under false names with a Christian family; almost every day was a close call, as soldiers snatched Jews off the streets and out of their homes. Then the Soviets fought their way into Budapest, bringing with them more persecution (and the rape of Grove's mother).
Grove wanted to be a journalist, but he discovered that journalistic success depended on the whims of political correctness, and he decided to enter a field where subjectivity would not affect judgments about his work; he chose to study chemistry. In 1956 Hungarians tried to replace their Communist government with a democracy, and the Soviet Union in vaded their nation. There was fighting in Budapest's streets as young people tried to repel soldiers and tanks with small weapons and bottles filled with gasoline. Soviet troops began snatching young men and imprisoning, torturing, or killing them. Grove and his best friend, Janos Lanyi, fled to Austria, dodging Soviet troops, crawling in mud, afraid all the way. He had lived 20 years under murderous oppression, surviving by always remaining alert to the possibility that even a simple attempt to purchase a loaf of bread could cause him to disappear along with many other young Hungarians.
The International Rescue Committee helped Grove immigrate from Austria to the United States, where he lived in the Bronx with an aunt and uncle who had immigrated in the 1930s. He quickly Americanized his name to Andrew Grove. A worker for the International Rescue Committee gave him a blank check to purchase a good hearing aid. Years later, in 2001, Grove would donate the proceeds from the memoir of his childhood, Swimming Across , to the International Rescue Committee.
Grove attended City College of New York from 1957 to 1960, spending his evenings poring over his class notes with a dictionary to understand difficult English words. When he was not in class or studying, he worked as a busboy. While at work he met Eva Kastan, who was then a waitress (and also a Hungarian refugee). After Grove graduated from City College, the couple moved to California, where Grove attended Stanford University, focusing on fluid mechanics and earning his PhD in only three years. Grove's hard work and his keen, creative mind earned him a reputation for brilliance and gave him his pick of jobs with elite American technology companies. He chose to go to work for Fairchild Semiconductor Research Laboratory, a subsidiary of Fairchild Camera and Instrument Corporation, in California.
Two of Grove's bosses at Fairchild were Robert Noyce coinventor of the integrated circuit, and George Moore, the coiner of Moore's Law, stated that computer chips would double in power and be halved in price every eighteen months. In 1968 Noyce and Moore established Intel, raising $2.3 million in start-up capital from the venture capitalist Arthur Rock—who would earn over $500 million for his investment. The first scientist Noyce and Moore hired was Grove.
When Grove joined Intel in 1968, he was put to work managing the engineers who researched and developed semiconductors for Intel. Grove brought with him the personal traits that had helped him survive dictators and mass murderers and had enabled him to earn a BS in three years and a doctorate in three more. He was interested in every detail of the operations of Intel, regardless of whether it was directly related to his management of engineers. He spent long hours studying the math and experimental science behind Intel's products.
Almost immediately evident was his passion for orderliness. He expected every part of Intel's laboratories and "fabs" to be clean, earning the nickname "Mr. Clean." He wanted statistics on everything his employees did, forcing them to work until midnight to record every detail Grove wanted—there were no personal computers to help them, so they had to do every calculation by hand and slide rule. Grove used the statistics to monitor trends in productivity. This practice proved invaluable when Intel faced competition in the 1970s, 1980s, and 1990s, because it allowed Intel to maintain a high standard of quality in most of its operations; it also revealed where Intel was likely to lose money rather than make money.
Not everything Grove did was productive. For instance, in 1971, he ordered all Intel employees to sign in with the time of their arrival at work. He stationed security guards at entrances to Intel's buildings to enforce the policy. Grove did this out of frustration with employees' showing up at odd hours. What happened, however, was that employees who arrived bright and early for meetings in one building would be recorded as late when they later went to their offices in another building. Then, too, employees who had been working 14-hour days and 100-hour weeks switched to eight-hour days and 40-hour weeks and stopped working weekends. Despite the decrease in productivity caused by the policy, Grove did not withdraw it until June 1988, and in 1994 he reinstated the "late list."
Another problem some employees faced was Grove's explosive temper; he harangued and yelled at them, often in front of other employees, a tactic he called "constructive confrontation." He had a quick mind and could think faster than most people, and he sometimes rejected employees' proposals by shouting them down with reasons the proposals would not work. Sometimes he was mistaken, and if the proposals were good ones, he might apologize and even admit that he was wrong—but Intel lost employees who felt humiliated by Grove. Some of the shouting may have been a result of Grove's deafness; he had trouble hearing until a series of operations repaired his eardrums in the 1970s and 1980s.
There was method to Grove's style, even though his approach to management superficially seemed to be leadership by intimidation. In fact, Grove studied management as intensely as he studied science. In the 1970s he faced a volatile market for computer chips; Intel was just one of many firms trying to build markets for their technology. To make Intel one of the successes required building a demand for its particular products and staying ahead of other manufacturers in the development of ever more powerful chips. Grove approached these demands with a ruthlessness that characterized his entire management career. For instance, he instituted an unending series of productivity reviews for every Intel employee. He studied every aspect of production and found ways to quantify it: how many dollars were earned for Intel by an employee's performance or how many problems were solved by a given employee. Part of his strategy for management by paranoia was to make it clear to all employees that the bottom 10 percent in his ratings could expect to be fired every year.
This evaluation process provided data that Grove could use to build models of success and failure for Intel as a whole. The data also gave him clues to which aspects of Intel's operations needed to be improved and which operations should be emulated by the rest of the company. He created a corporate culture in which employees strove to stay out of the bottom 10 percent, because they believed that there would always be someone behind them ready to take their jobs if they failed to perform well. Meanwhile, Grove compensated for the 10 percent turnover rate (which soared to 25 percent in the fabs, as employees quit because of the stress of the evaluations and productivity demands) with vigorous recruitment of new college graduates. He, Noyce, and Moore were brilliant recruiters, and Intel's position at the cutting edge of technology was a powerful lure for new graduates. Further, Grove made sure that management employees stayed in touch with their old professors to learn of the brightest students in their colleges.
Grove also refined the evaluation process with what was called Intel's Management by Objectives (IMBO). In this process, the company drew up a statement of what each individual employee was expected to achieve in a quarter; the objectives achieved were recorded so that an employee could see the percentage of objectives, "IMBOs," he or she was achieving. The IMBOs could be unreasonably high, reflecting Grove's view than nothing is too good to be improved, but part of the beauty of the system was that the number of IMBOs required could be adjusted when statistics showed the target to be too high.
Another important aspect of Grove's management philosophy was the meeting. To Grove, meetings were essential to Intel's productivity, and during the 1970s he honed his techniques for running meetings. Every meeting had a specific starting time and duration, and people who arrived late were sometimes shut out. The meeting's leader, usually Grove himself, would make sure that discussion focused on a clear, written statement of what the meeting was meant to accomplish. The meeting could be about a low yield of viable chips in a fab, about marketing a new product, or about getting departments to cooperate with one another more efficiently. At the end of each meeting the results were quantified and measured against the meeting's objectives.
Grove's ideas on efficient and productive meetings were explained in his first book on management philosophy, High Output Management , and through that book they became part of the corporate culture of uncounted American businesses. Yet Grove had more to offer than theoretical and applied management techniques. In spite of his notorious temper, he was usually an affable man known for his bright smile and personal warmth. He applied these traits to a newspaper column he began in 1984 for the San Jose Mercury ; it was a "Dear Abby"-style advice column in which he explained how people could survive the day-to-day grind of work, and it touched on subjects from personal efficiency to how to get along with coworkers. These columns became the basis for another book, One-on-One with Andy Grove , a guide to surviving the corporate jungle.
In the early 1980s Intel's fortunes dropped. The main source of Intel's income was the DRAM (dynamic random access memory) chip that Intel had pioneered and turned into an essential component of computers. The Japanese corporations Fujitsu, Hitachi, NEC, and Toshiba invested heavily in research into DRAMs, and by 1979 Fujitsu had a 64K (64,000 bits of memory) DRAM chip ready for the mass market, beating Intel to the 64K level by two years. The Japanese also invested in industrial espionage, trying to steal the secrets of American chip manufacturers, and Fujitsu copied Intel's 8086 microprocessor, the heart of the emerging personal computers for the mass market. Grove did not back down from fights, and he sought ever better ways to improve Intel's products and to cut production costs. But he refused to believe that the Japanese companies were more efficient manufacturers than Intel, and that refusal set Intel back, because the Japanese fabs were, in fact, superior to most American plants in getting the most out of their resources. Whereas Intel would have a success rate of 50 percent to 80 percent—in terms of functional chips at the end of the manufacturing process—Japanese corporations were achieving 80 percent to 98 percent success rates.
By 1985 Intel was in desperate straits, losing money because the Japanese corporations were dumping their chips on the American market—selling below cost in order to drive competitors out of business. For instance, a Hitachi directive ordered its salespeople to undersell everyone in America by at least 10 percent, no matter how low the price went. Eventually this placed Grove, then Intel's president, and Moore, Intel's chief executive officer, in the painful situation of having to make cuts in Intel's manufacturing process. Grove directed the end of Intel's manufacturing of DRAM chips, laid off more than three thousand employees, and focused the company on making microprocessors. To this task Grove brought all of his considerable intelligence and experience, using the courts to stop the copying of Intel's microprocessors and developing efficient processes for creating more powerful microprocessors, following Moore's Law of doubling power and halving cost every eighteen months. The result was the 80386SX chip that in 1989 became the fundamental processor in most of the world's computers.
When he became CEO in 1987, Grove brought the manufacturing expert Craig Barrett up from Intel's ranks to become president. As a team, Grove and Barrett streamlined Intel's manufacturing process, and they made every Intel fab a duplicate of every other Intel fab, allowing improvements to be applied universally to the manufacture of chips. This suited the business climate that was evolving partly as a result of the improving inventory control that Intel's microprocessors allowed. Corporations were cutting overhead by reducing or eliminating their inventories and taking delivery of the products they needed only days before they were to be used. Intel could tell customers exactly when new, more powerful chips would be available, and thus it was able to adapt to customers' schedules even a year and a half in advance. In 1992 Intel profits topped $1 billion, and it was the dominant manufacturer of microprocessors.
In 1994 Intel hit a bump in its road of success. A college professor discovered that Intel's new "pentium" chip had a flaw in making long division, and he published exactly what the flaw was. Grove knew that the flaw would affect a computer's calculations only once in tens of thousands of years of constant use, so he had Intel promise to replace only those chips used in computers making exceptionally complex calculations, mostly in scientific research. But that made it appear that Intel was not committed to making its microprocessors of the highest quality. Eventually, at the cost of $475 million, Intel promised to replace all the flawed chips with new ones in which the flaw had been eliminated. It turned into a public relations victory for Intel, restoring confidence in its products.
During the 1990s Intel's gross revenues averaged increases of 25 percent per year, with profits soaring by 40 percent per year. When Grove retired as CEO to become chairman of the board, his share of Intel was worth several hundred million dollars, but he lived modestly, eschewing many of the trappings of great wealth and power. He even had to jockey for a parking space in Intel's Santa Clara lot, just like every other employee. He had become one of the world's most admired businessmen, and his business course at Stanford was always crammed with students. At Intel he focused on helping shape Intel's future, working with the new CEO, Barrett, to diversify Intel's holdings and product line to meet a changing global economy. By 2004 Intel's microprocessors ran 80 percent to 90 percent of the world's computers, and the "itanium" chip, a special project for Grove, was expected to be a big winner as the processor of choice for large computers. The new chip ran at 4.5 gigahertz (4.5 billion calculations per second) and put Intel's technology far ahead of its competitors at that time.
See also entry on Intel Corporation in International Directory of Company Histories .
Buderi, Robert, Engines of Tomorrow: How the World's Best Companies Are Using Their Research Labs to Win the Future , New York: Simon & Schuster, 2000.
Jackson, Tim, Inside INTEL: Andy Grove and the Rise of the World's Most Powerful Chip Company , New York: Dutton, 1997.
Ramo, Joshua Cooper, "Man of the Year: Andrew S. Grove—a Survivor's Tale," Time , December 29, 1997, pp. 54–67.
—Kirk H. Beetz