Chipping Away at Intel Throughout his tenure as Intel’s fourth CEO, Barrett faced numerous organizational changes that were necessary for the company’s survival, but ultimately affected how stakeholders viewed his effectiveness. During the first three years of Barrett’s term as CEO, major changes were made to reorganize the company’s business units and corporate culture. There are several factors, both internal and external, that served as the catalyst for change during Barrett’s tenure, from the 2001 collapse of the IT market to the fact that his new position in the organization meant that organizational changes were imminent for the thousands of individuals Intel employs. Even though, Barrett’s performance under these pressures was successful, there are some things he could have done differently to ensure that the Intel’s shareholders and employees alike understood and accepted his changes with ease.
Discuss the different changes at Intel over the first three years of CEO Barrett’s tenure. During his first three years as CEO of Intel, Barrett made several dramatic changes to the organization, to ensure that shareholders retained their capitol and he kept his position with the organization until retirement (Palmer, Dunford & Akin, 2009). One of the most notable changes Barrett made to Intel’s operations was the reorganization of their business units. According to the CEO, in order to remain successful, Intel needed to avoid duplication of its products and services, promote coordination, and increase flexibility by decentralizing and delegating decision making authority (Palmer, Dunford & Akin, 2009). These changes allowed the organization to react to market changes quickly and effectively, and even simplified operations because Intel was no longer competing with itself in certain markets. However, these changes left many analysts confused. As the frequent changes to Intel’s business units yielded little return in the beginning, it caused the organization’s stakeholders to question the company’s motives (Palmer, Dunford & Akin, 2009), rather than understand why the organization made these changes.
Identify three significant environmental pressures for change faced by Intel under CEO Barrett’s leadership. Under Barrett’s leadership, there were three environmental pressures that served as a catalyst for change within Intel’s operations. Market decline caused by events such as the September 11, 2001 attacks, the slowing economy, and the possibility of war caused numerous IT companies to find other ways to remain relevant in the technology market. To counteract the effects of market decline, Barrett decided to expand Intel’s portfolio by producing information and communication appliances, and providing internet related services to consumers (Palmer, Dunford & Akin, 2009). This allowed the organization to compete in a variety of markets, rather than rely solely on their ability to manufacture quality chip processors. Hyper-competition is another factor that pressured Barrett to pursue change at Intel. The technology market is extremely competitive, and as a result Intel discovered that they were once competing with some of their biggest customers and even its own business units by selling similar products to the same customers (Palmer, Dunford & Akin, 2009). To rectify this, Barrett merged several of Intel’s business units into one entity, thus suspending redundancies within the organization and alleviating resources for other organizational endeavors. Reputation is the final pressure that affected Barrett’s decision to implement change at Intel. Prior to his tenure as CEO, Barrett’s predecessor, Grove, molded Intel into a successful global technology company. However, due to certain external circumstances Intel began to lose its position as a market leader. Under Barrett’s leadership, stock prices fell and their fiercest competitor, Advanced Micro Devices, was producing a processor chip that performed more effectively than Intel’s Pentium III chip (Palmer, Dunford & Akin, 2009). Therefore, it became Barrett’s obligation to maintain Intel’s position within the technology industry that his predecessors worked so hard to achieve, by reorganizing the entire organization to adapt to the changes of a dynamic market.
Identify three significant internal organizational pressures for change faced by Intel under CEO Barrett’s leadership. Intel faced multiple internal pressures that incited Barrett to make changes within the organization. Several of Intel’s business units were redundant, which caused the organization to ultimately compete against itself in some markets. As a result, Barrett decided to integrate and collaborate its various business units in an attempt to create economies of scale across the organization (Palmer, Dunford & Akin, 2009). This allowed the organization to provide its products and services to consumers more efficiently because certain resources are no longer tied up producing similar products for separate components. The new broom pressures also acted as a cause for change at Intel during Barrett’s tenure. When an organization welcomes a new member of senior management, change is soon to follow. When Intel appointed Barrett as their new CEO, he made drastic changes to push the organization outside its comfort zone and into new endeavors, such as producing information and communication appliances and providing Internet services (Palmer, Dunford & Akin, 2009). However, to ensure that employees remained comfortable and the organization still recognizable during the transition, Barrett also kept some of Intel’s old customs like routinely upgrading their microprocessor performance (Palmer, Dunford & Akin, 2009). Identity is the final internal pressure that caused Barrett to make organizational changes during his time with Intel. Prior to his tenure as CEO, Intel’s perspective seemed to be based on the organization being the only competition in the marketplace, which left much to be desired in regards to their relationship with consumers. As a result, Barrett moved to change the organization’s corporate culture, to refocus Intel’s priorities to its most important driving force, the consumer (Palmer, Dunford & Akin, 2009). Barrett understood that without consumer support, Intel would not survive because they would be unable to deliver valued outcomes and incomes, to shareholders.
Evaluate CEO Barrett’s performance under these pressures and discuss what he may have done differently. Barrett was a successful CEO of Intel, despite the many external and internal factors that presented a challenge for him. Throughout his tenure, Intel remained a profitable organization, even after the 2001 collapse of the IT industry due to the September 11 attacks, and even managed to maintain its position as the market leader in chip manufacturing (Palmer, Dunford & Akin, 2009). However, to further promote buy-in, there are some things Barrett could have done differently, such as creating a sense of urgency among stakeholders. Distributing customer satisfaction surveys and financial performance reports to employees would demonstrate Intel’s weaknesses to stakeholders (Kotter, 1996). The information collected would be useful as Barrett moved to change the organization’s culture, since this is no easy task, the urgency created would grab stakeholders’ interests and push them to react sooner rather than later. In addition, requiring employees to speak regularly to unsatisfied stakeholders, whether it is with customers, suppliers, or shareholders, would have encouraged them to see the bigger picture (Kotter, 1996). During Intel’s transition, it was apparent to employees and consumers alike that the organization was experiencing some instability. These conversations would allow management, the drivers of change, to explain the changes in an attempt to convince stakeholders that the outcome of their actions outweighs the negative impacts of the organization’s unstable adjustment period.
References
Kotter, J. P. (1996). Establishing a sense of urgency. In Leading change. (pp. 35-49). Boston, Massachusetts: Harvard Business School Press.
Palmer, I., Dunford, R., & Akin, G. (2009). Managing organizational change: A multiple perspectives approach (2nd ed.). New York: McGraw-Hill.