Intel's CEO gets blunt about poor execution

Shape up . . . or else

Intel's CEO Craig Barrett has chastised workers, in a memo sent last week, for an unacceptable string of delays and manufacturing problems that threaten to undermine the company's position as the leading chip manufacturer.

In an uncharacteristic move, Barrett chided all 80,000 Intel staffers for issues such as the Grantsdale chipset recall and delays with Intel's mobile processor line. Some analysts have suggested that as chipmakers deal with more complex manufacturing processes, they could start to see a greater influx of problems creep up. Barrett, however, placed blame for the snafus right on Intel's managers and urged them to improve . . . or else.

I recently spoke to Intel’s senior managers about our execution. Yes, I spoke bluntly and directly, because to me there is nothing more essential to Intel’s success than its culture of Operational Excellence and our performance to values such as Discipline, Results Orientation, and Customer Orientation. I spoke bluntly also because it is part of our culture to address our problems with honesty and to resolve to fix them. Our business is complex and we have set high expectations for ourselves. Therefore it is critical that everyone – beginning with senior management, but extending to all of you – focus intensely on actions and attitudes that will continue Intel’s strong track record of technology leadership leading to outstanding company performance and satisfied customers. Finally, I was direct because I wanted senior managers—whose job it is to set expectations to all of you and to provide direction and coaching—to have no doubt about the need to improve our performance.

There are many reasons for these (product delays and manufacturing issues), but in the end the reasons don’t matter because the result is less-satisfied customers and a less-successful Intel. I believe, as you do, that this is not the Intel we all know and that it is not acceptable.

(Sadly, we had to find out about this note from a Reuters reporter. Shame on you, readers. Where is the love?)

So what exactly is Intel going to do to fix the problems? Well, the company expects to keep a closer eye on manufacturing teams and to set up a series of checks to make sure teams are meeting deadlines and that their product is up to snuff.

"This will not be a short-lived focus; we have plans to continue to review expectations and performance in the future," Barrett added in the memo.

It's hard to feel sorry for Intel. The company's mistakes are certainly not hurting sales too terribly. In its most recent quarter, Intel chalked up a paltry $38m loss to the Grantsdale recall. And, in fact, management said their biggest problem was being too efficient, as Intel's production overstepped demand - and high demand at that.

"You see more of these problems when demand is high," said Intel spokeswoman and Itanium survivor Barbara Grimes. "If you look at our earnings, clearly demand is high. These problems tend to show up when you are dealing with high volumes, high growth and ramping quickly."

While Intel's dominance in the chip game is not likely to be challenged soon, Barrett does have a right to worry. Rivals such as Samsung and TI have been making impressive gains against Chipzilla. And, on the server front, Intel is facing fresh competition from AMD. Is Intel feeling this pressure? Apparently so. ®

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