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    A Perspective on Intel’s New CEO: The Best of a Set of Bad Choices

    By
    Rob Enderle
    -
    January 31, 2019
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      Intel.Bob.Swan2

      Intel has named Bob Swan, its interim chief executive officer, as permanent CEO, and the market isn’t happy. This effectively gives Intel three chief financial officers: Chairman Andy Bryant, who is an ex-Intel CFO; Swan, who was the previous CFO; and the new actual CFO.

      You could add that the firm has several other CFO types on the board, making leadership excessively control-focused. This is like taking a car that is crashing a lot and focusing on putting in redundant brakes: On the positive side, you’ll stop the crashing; on the negative side, it may not make it off the starting line.

      Now, having said that, this may actually be what Intel needs right now, because the former CEO, Brian Krzanich, pretty much trashed the firm, and it needs to be reformed into something that someone can manage. A CFO, or a team of them, isn’t a bad choice if you want to restructure a company that was badly damaged. But they’ll be focused on fixing the damage; strategy will either be something they’ll avoid like the plague or do really badly, because CFOs aren’t known to be product or market visionaries. If they were, they’d never have wanted to be CFOs.  

      Intel’s Biggest Issue Remains Its Board

      There were several serious problems when it came to select a new CEO.  First is the makeup of Intel’s board, which is far from technical and only has one qualified electrical engineer on it (and she is an academic and likely at least partially selected for diversity). Ideally, Intel’s board should be heavy in microprocessor engineers, telecom engineers and/or automotive engineers with a focus on the automotive electronics. This would give the company a strong management foundation in the key markets Intel is currently pursuing and create a strong senior advisory team for the CEO. 

      Intel’s board reminds me of Siemens when I worked there in the early 1990s. That company couldn’t execute a product strategy to save its life, but it was absolutely brilliant regarding cost control and financial portfolio management. As a bank, the firm would have been brilliant; as a technology company, it was a bit of an embarrassment. 

      Secondly, as noted earlier, Intel is a bit of a hot mess right now. Its latest financials indicated weakness in most of its operational areas, likely resulting from the prior CEO’s excessive focus on cost cutting to spike share value. Coupled with what appears to be a poorly staffed board, any CEO candidate who was highly capable and well qualified would have passed on this opportunity, realizing that regardless of his or her execution, they’d likely not serve a full term because execution would be problematic. 

      So, a far better plan–assuming young enough age and a desire to run Intel–would be to wait until the next opportunity in the hope that Swan will reform the board, reduce Intel’s complexity and basically get the Intel car back on the track.  Swan is just as unlikely to serve a full term, and this would allow a new CEO a higher probability of success. (Realize that, since co-founder Andy Grove, no Intel CEO has truly departed voluntarily, which is a problem in and of itself when it comes to hiring a new one). 

      Thirdly, Intel has an unusually harsh culture that really doesn’t like or support outsiders. This would add significantly to the problems faced by a new CEO and, added to the others, would almost assure failure. This culture problem won’t be easy to fix and may remain after Swan moves on as one of the biggest detrimental problems that will need to be corrected in the firm.

      Of the firms I’ve covered, both Uber and Tesla may be worse, but Intel is in the bottom three regarding being a Great Place to Work. However, it does remain a good reference on a resume’, and this kind of culture problem can be fixed if it gets adequate focus.

      Wrapping Up:  Why Swan is Probably the Best Choice Intel Could Make

      Given Intel’s problems, board and culture, having Swan step into the role of CEO is likely the best of a set of bad choices. Whoever took the job is unlikely to serve a full term, regardless of their performance, thanks to Intel’s endemic issues but could be capable of assuring the success of their successor.

      For that role, particularly given a finance-heavy board that will still be called on for support, a CFO may be ideal interim CEO, because CFOs are pretty good at fixing structural problems with a firm. In the biggest turnaround in which I was ever involved at IBM, while Louis Gerstner–the CEO hired from Nabisco–got most of the credit, it was Jarome York, the CFO the board hired before Gerstner, who did the initial heavy lifting and assured IBM’s future. A powerful CFO can make a huge difference in a turnaround, and Intel needs a turnaround desperately. 

      So, while Swan isn’t ideal long term, tactically as part of a two-step recovery process, he may be about as perfect as the company can get. I don’t expect Swan to go down in history as the best Intel CEO, but if he does his job right, the man or woman who follows him may be.  

      Rob Enderle is a principal at Enderle Group. He is an award-winning analyst and a longtime contributor to QuinStreet publications and Pund-IT.

      Rob Enderle
      https://enderlegroup.com
      Rob Enderle is a principal at Enderle Group. He is a nationally recognized analyst and a longtime contributor to eWEEK and Pund-IT. Enderle is considered one of the top 10 IT analysts in the world by Apollo Research, which evaluated 3,960 technology analysts and their individual press coverage metrics.

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