Intel Corp the computer chip manufacturer has made its brand synonymous with microprocessors; it has built this image through sheer dedication for innovation. Intel has always stayed ahead of competition with hardly any company being able to keep parallel with it in the race for building the fastest micro processors. Until now Intel has recognized the microprocessor and computer chip manufacturing as its core business area and the company’s primary objective has remained “Being the first to manufacture the fastest comp0uter chip”, thus for more then 30 years Intel has restrained form diversifying its product line.
Paul S Otellini the new CEO and a successor to the former CEO’s Andy Grove and Steve Barrett has brought about a major change in Intel’s product line and its overall brand image. Otellini believes that a well recognized brand such as Intel must make efforts to explore new opportunities outside its core business interests and gradually diversify by adding new products to its catalog. Otellini’s emphasis is on innovation through understanding, he believes that the product design team must understand how people use technology and what they want form technology? A product designed with this knowledge will undoubtedly meet consumer expectations.
Under Otellini the company has embarked on a major transformation of its product line, apart from computer chips for PC’s and servers Otellini intends to produces chips for mobile phones, home entertainment system and health monitoring systems. Otellini has brought a significant change in the company’s brand image, for first time in over 30 years Intel’s corporate logo has been altered and a tag line “Leap Ahead” has been added to it.
Changes at Intel
Otellini had embarked on a change of epic proportions one that required reorganization from top to bottom. Changing the company’s core objective was the most significant change that Otellini brought about. Instead of being a company whose objective is to upgrade and mass produce computer chips for PC’s and servers Intel will now cater to a wider cross section of electronics industry beginning with home entertainment systems, health care monitoring system and mobile phones. Instead of selling computer chips the company would now sell chips bundled with software and related technologies.
To facilitate a change of such magnitude a total makeover of the organizational structure was necessary. A major percentage of Intel’s workforce constituted of engineers who specialize in computer chips and microprocessors, so additional skills were brought in, the recruits were pooled from varying functional areas and the new work force now comprised of Sociologists, Doctors, and Ethnographers etc.
The organizational structure was reformed keeping in mind the company’s objective to diversify. The design engineers were reassigned to different product segments, and all design teams were required to comprise of chip engineers, software developers, marketers and market specialists. This was a major departure from the traditional approach where design teams constituted solely of engineers. All along marketing and product design were treated as distinct functions and the marketers had to sell whatever the design team came up with. Otellini had started the practice of hiring top management from outside sources. The new chef marketing executive Kim was a former vice president of marketing for Samsung. This new trend helped to bring in valuable expertise.
All this change was not appreciated by all sections of employees, in the older setup engineers were treated as the cream of the work force but the new set up put them in equal footing with other employees. Otellini used his style of direct management to appease the unsatisfied groups.
Outcome of Change
By implementing its new strategies Intel was able to revamp its existing product line with
more successful products. The company came up with Vjjy chips for use in home entertainment PC’s, this product was intended to replace TV, and DVD players. Intel launched an exclusive range of microprocessors for Notebooks, recognized by the brand name Centrino these chips are extremely energy efficient. The Pentium series of processors was gradually phased out and replaced by Dual Core and Core 2 Duo models.
Under Otellini’s leadership Apple for the first time started using Intel’s chip in its computers. New partnerships were founded with computer manufacturers such as Sony Vaio. The new Vjjy chips are increasingly used by PC and Notebook makers in high end entertainment computers. Intel has also started manufacturing highly energy efficient computer chips for use in servers.
Comparison of Grove and Otellini’s Strategic Planning
Andy Grove the former CEO of Intel had a targeted approach to the core business interests of the company. Under his leadership Intel had discontinued manufacturing of memory chips and had concentrated all efforts on microprocessor business. Otellini however was determined to create more opportunities for the company by diversifying its product line. Grove had always prioritized engineering function over marketing while Otellini believed in synchronizing both departments for optimal results.
There was a significant difference in management style adopted by both the CEO’s. Grove adopted a confrontational style with his immediate subordinates, thus he was feared and subordinate managers restrained from expressing their opinions during meetings. Otellini used a subtle management style, this helped him gain his subordinates opinions for making key decision.
Otellini had made major changes to the company’s advertising policies and brand image, he had made $2.5 billion investment for advertising. During Groves rein the company had paid large sums to computer makers to advertise the Chip maker’s brand, so Grove had a very distinct policy for advertising.
Both the CEO’s have been successful in maintaining Intel’s Numero Uno position in Microprocessor business. Grove had recognized the need for a major revamp of Intel’s corporate image and had supported Otellini’s vision whole heartedly.
Edwards, C. (2006). Inside Intel. Business Week, New York January 9, 2006, Issue 3966, page 46