Andy Grove Speaks... Fixing the Ladder of the American Dream

Intel's Five Stages for Dealing with Problems

Good speech by Grove at Stanford's Graduate School of Business. Intel's approach to dealing with problems is also on the money for social and corporate issues:

Grove Challenges the GSB to Remake the American Dream
February 2004

STANFORD GRADUATE SCHOOL OF BUSINESS — Andy Grove has challenged the Business School to take a leading role in putting some missing rungs back in the ladder leading to the American Dream.

The chairman of Intel recalled a chance meeting recently with a woman named Polly who had been a technician at Intel in its early days. "She said 'I want you to meet my daughter, She's a school counselor and has a PhD in psychology. Intel put her through school,'" Grove recalled. Then she added "Intel also put her son through school. He's an engineer."

Later, Grove said, "I had this image of the American Dream being a ladder, a ladder where Polly starts as a technician at Intel and two generations of accomplished professional people are the result of her work and her opportunity to do a fairly significant job for a startup company. The problem is that a rung or two are being taken out of that ladder and the generational climb is going to be interrupted."

When Grove, a Business School lecturer, and management professor Robert Burgelman teach the MBA elective Strategy and Action in the Information Processing Industry they describe the strategic inflection point, a critical period of huge changes in one or more forces guiding an industry. These periods create tremendous opportunities but also threats to companies that cannot change or are too slow in recognizing the need for change.

Today businesses are faced with "the mother of all strategic inflection points," Grove told the audience at the Business School's February dinner honoring him with the 2004 Arbuckle Award. The inflection, he said, is being caused by the advent of global networks allowing demand for intellectual work to flow out of the United States to countries like India with well educated workforces. This comes at a time when industry is struggling with self-created internal threats that hamper its ability to survive the strategic inflection such as the new wave of corporate criminal conduct and of governance issues. "The key task of governance is to apportion the responsibility for and management of the company, distinguishing the corporation from the personal fiefdom or piggy bank of its managers," said Grove.

However, he said the most serious problem facing American business is its value system. Strong corporate cultures develop strong control mechanisms with less need to supervise and develop policies and procedures for every situation.

"There is an assumption that our business culture and values got worse because of the bubble," said Grove, who with Burgelman has taught his Business School course through two business cycles, the Internet boom, and the following bust. "But I really wonder if that's true.

Society's expectations of business have gotten tougher and more discriminating, he said, but the nation is not responding well to these demands. "We all know that in the absence of strong corporate cultures, companies turn bureaucratic, our business mechanisms, roles, infrastructures become ossified and less competent. Today, this is happening at the very time we as a business society face the strongest competition yet from a lean, hungry, well educated workforce well served by a modern infrastructure.

"I can only describe this as the perfect storm. Coping with the storm requires doing what is necessary for the rungs to be there and for the American Dream to continue.

"At Intel, we see five stages for dealing with a new problem: First you ignore its existence; second is denial; third you blame others for it; fourth you assume responsibility for it, and fifth — a solution is coming. I think it is safe to say we are past the ignore stage and are straddling the deny and blame others stages. It is mandatory for us to figure out ways to assume responsibility and look for solutions.

"What could be a better mission for the Stanford Business School, in association with Stanford Law School, Engineering School, the Hoover Institution, etc., than a unifying mission to move us to stage five and lead the way to an intellectual prescription for putting rungs back in the ladder of the American dream?"