Strategic changes are hard

I’ve been pondering the problem of how to make a reasonably-successful organisation that’s been going for half a century realise that it may need to make some major shifts to address the challenges it will face in the next half-century. Headline: it ain’t easy. So then I started thinking about organisations that have managed the switch. Apple and the iPhone is one, I guess. But then I remembered that I’d once done an interview with Gordon Moore, the co-founder of Intel — a company which made that kind of radical switch when moving from making semiconductor memory to making processor chips. And that wasn’t easy either.

I then happened upon on a famous essay – “Seven Chapters of Strategic Wisdom” by Walter Kiechel III — which discusses the Intel experience. Here’s the relevant bit:

Just how difficult it is to pull this off, or to make any major change in strategic direction, is wonderfully captured in “Why Not Do It Ourselves?” the fifth chapter in Andrew S. Grove’s Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company, published in 1996. Grove tells how in 1985 he and Gordon Moore realized that Intel, the company they led, needed to get out of the business on which it was founded, making semiconductor memory chips, to concentrate instead on microprocessors. The reaction they encountered as they navigated their company through this “strategic inflection point” won’t surprise anyone who has tried to effect change in an organization. “How can you even think of doing this?” came the chorus from the heads of the company’s memory-chip operations. “Look at all the nifty stuff we’ve got in the pipeline” (even if we are losing our collective shirt to low-cost Japanese competitors).

Grove and Moore persisted, even though the effort entailed shutting down plants, laying off thousands of employees, and giving up what many thought of as the company’s birthright. Intel’s subsequent success in microprocessors, beginning with its celebrated “386” model, would soon make it the world’s largest semiconductor company. Read over the tale of what it took to get there if, in a delusional moment, you’re ever tempted to think that putting strategy into practice is easy, even a seemingly emergent strategy.