It was a subtle signal. Sometime in the mid-1970s there was a shift in how Intel managers were treated by their peers in Japan. Where before they had been shown lavish respect, now they came back with the vague feeling that they were being viewed with a newfound derision. Something had changed.
That report from the frontlines was a harbinger of the coming Japanese supremacy in the market for computer chips. , at the time Intel’s main business. The story is told by Andrew S. Grove , Intel’s chairman, as an example of how hard it can be for executives to adapt to shifts in an industry.
It took Intel’s top management, Grove confesses, several more years to realize that Japanese companies had used their strength in precision manufacturing to beat Intel at its own game, making and selling memory chips.
Such moments, when changing circumstances turn a winning strategy sour, are crucial in the history of any company. These moments amount to what Grove calls a “valley of death”. If a company is not nimble enough to rethink its strategy while it still has the assets and strength to change and adapt, it is doomed to wither or die….The ability to be flexible, to take in new, even painful, information without tuning out in self-protection, and to respond nimbly is essential…..
At Intel the dominant assumption into the 1980s was that they were a memory company selling chips, even though by then their share of that market had shrunk to around 3 percent. Barely noticed was the sidework that would become their new core business-microprocessors, or what we all now know as- Intel Inside.