Intel's Innovator Leads the Revolution

His day could not get any worse.

It was 1971. The 35-year old chemist was halfway across the world in Penang, Malaysia talking up investors for his company, Integrated Electronics. Investors were getting nervous and now, on a narrow dirt side road outside the city, his car came to a grinding halt, stuck in the mud.

The rays beat down on that hot summer day, as the engineer and his crew tried to jar the car loose from a rut in the road.

Others might have surveyed the scene and asked why they were investing in a developing country with little apparent potential.

But not Andrew S. Grove.

His company, now known popularly as Intel, thrived and its product, the silicon microchip, was big.

An immigrant who survived Nazism and Communism, Grove built a company that has survived the vicissitudes of the most fast-paced business in the new economy.

Grove's built-in drive to succeed, combined with an aggressive business attitude and knowledge of the market propelled Intel to the head of the computer revolution and made Grove, who will deliver today's Class Day speech at Harvard Business School, one of the world's richest and shrewdest men.

The Making of the Mogul

Grove's speech is only one of a long list of accomplishments and awards he has received over the span of his remarkable career, which began when he emigrated to America in 1956.

Born in 1936 in Hungary as Andras Grof, Grove and his family, who were Jewish, survived World War II by assuming a fake name and hiding in Budapest with a Christian family. When his country was invaded again by the Soviet tanks, Grof changed his name again to Andrew Grove and fled to come to America to pursue his dreams of finding an education and a career.

He blew through the City College of New York (CCNY) and then the University of California-Berkeley, amazing his professors with his desire to constantly sharpen his intellect.

His ambition landed him a job at Fairchild Semiconductor, a growing California company that had a reputation for snatching rising engineers. But Grove did not stay with Fairchild long--the lab provided him with a much better connection.

His boss, the famous chemist Gordon Moore, discovered the secret value of silicon. In 1965, he and his colleagues discovered that little pieces of the element could store and transfer electronic data without emitting energy that would overheat, and ultimately destroy, any computer of practical size.

Computer scientists had been plagued for years by overheated transistors that regularly threatened to explode, and Moore had the solution. In 1968 he created a company to manufacture silicon devices which could conduct electricity without explosive side effects. He called the company Integrated Electronics.

Moore knew that these devices, which he dubbed microchips, would redefine the way people used computers--and change the way the world operated forever. Moore also realized that he needed bright and capable young minds to help him, and so brought along his best colleagues from Fairchild.

One of them was the shaggy-haired Grove.

"This is truly an unusual individual. Whoever hires him will be very lucky," Grove's thesis advisor wrote to Moore in 1963.

Grove's devotion to his work, from CCNY to Fairchild to Intel, has been the hallmark of his career. His determination to make his product the best and other products fail came in handy when Moore was looking for a successor--something both of them soon realized.

The Ultimate Manager

Since silicon is derived from sand, it was essentially limitless and, more importantly, relatively cheap to produce.

But the personal computer age had not caught on yet, so many companies did not yet realize the possibilities of the new silicon microchips.

Grove had his product and he could make it cheaply. He just had to sell it.

Grove traveled constantly, building factories and searching for investors, including his 1972 trip to Malaysia. He was driven by what seemed like a built-in success mechanism, one that led him to drive himself and Intel to the brink of total domination of the computer market--and the emerging global economy.

Moore and Grove both knew the young Hungarian refugee was Intel's rising leader.

In 1970, the two were walking in the Washington, D.C. zoo. According to a 1997 Time magazine article, Moore turned to Grove and said then "One day you'll run Intel."

In 1979 Grove became the president of Intel, and in 1987, CEO. The company was his.

The Man Behind the Mask

Almost all those who know Grove intimately describe his intensity with a mixture of awe and admiration.

"He has a fundamental intellectual curiosity," says Joshua Cooper Ramo, who wrote Time's 1997 Man of the Year article on Grove. "When there are problems to be solved--whether it is scientific, like how to make a better semiconductor, or business-related, like how to build a business from scratch or where to build a multi-million dollar plant, he will solve them."

And he will solve them at any cost. A fierce competitor, it was Grove who coined the term "Only the Paranoid Survive." Although a takeoff on the famous words of Social Darwinist Herbert Spencer, the phrase--which became the title of his 1994 best-selling book--has become a sort of mantra for the go-getters of the New Economy.

When other computer companies struggled through a slowdown in the U.S. economy and fierce competition from the Japanese in the early 1980s, Grove bucked an industry trend and refused to fire his workers. Instead, he asked them to work harder: more hours, more efficiently and no extra pay. Not exactly Santa Claus--but it worked

Even so, the economy's slowdown almost killed Intel and led Grove to develop his theory of "strategic inflection points (SIPs)." According to the philosophy, every company occasionally faces do-or-die moments.

"It is a time in the life of a business when its fundamentals are about to change," Grove wrote in his book. "That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end."

Such an opportunity looked Grove squarely in the eye in the mid-1980s. Intel was attached to its computer memory chips, known as DRAMs. But the company watched warily as the market was invaded by sleeker and cheaper DRAMs manufactured by Japanese competitors who persisted in undercutting Intel's prices, trying to drive the company out of business.

Intel faced a SIP, and Grove had to make a decision. His choice eventually earned Intel a fortune and gave him a reputation as the managerial master of Silicon Valley.

Completely changing the face of Intel, Grove set his assembly line to produce microprocessors instead of simple memory chips. Intel soon came out with the 386 microprocessor, which became an instant hit. And by the mid-80s, the personal computer, or PC, was becoming mainstream. In 1981 IBM made the little-publicized decision to use Intel chips in its PCs. Now, as the computer age exploded, Intel began to take off--and the rest was history.

"It was the first time I was involved in a major strategic decision," Grove told USA Today in 1996. "From the DRAM situation, I learned more about how these things work, how I handle them and how I handle other people."

Grove capitalized on his mentor's "Moore's Law," which says that as silicon chips became smaller and smaller, companies will be able to produce more and more, and computers will run faster and faster.

He used it to slashed prices, and as PCs with "Intel Inside" began to dominate the market, he left the competition behind.

By the early 1990s, Intel was the world's foremost producer of microprocessors, supplying 90 percent of the world's computers with their juice.

Yet Grove and Intel were not out of the woods yet. Intel faced its biggest--and most public--crisis in 1994. After introducing the new Pentium processor, the fastest microchip yet created, Intel engineers found a bug in their new product. At first, Grove did not bend. Refusing to see the public relations implications, he decided to selectively replace only a few computers containing the problematic chip.

"I was one of the last to understand the implications of the Pentium crisis," he writes in his book. "It took a barrage of relentless criticism to make me realize that something had changed and that we needed to adapt to the new environment."

Grove soon realized that in the computer revolution, consumer discontent could kill a product. Reversing his previous strategy, Grove declared he would replace computers containing Pentium chips. The move cost Intel nearly $475 million, but the company rebounded from the temporary crisis with major publicity--and celebrity for its CEO, Andy Grove.

Those who know him say Grove will never let up and will continue to adapt his company to the constantly changing computer revolution.

"There is a huge element of competition to him," says Ramo. "He takes nothing for granted."

In an industry only a decade old, a shrewd manager cannot afford to.

"It's a mind-bendingly lethal industry," Ramo says. "And a lot of people don't survive. Grove is a survivor."