Interview: Richard S. Tedlow
Tedlow is the Class of 1949 Professor of Business Administration at the Harvard Business School, where he is a specialist in the history of business. He received his BA from Yale and his MA and PhD in history from Columbia. He came to the Harvard Business School on a fellowship in 1978 and joined the faculty in 1979. From 1979 through 1982, he taught First Year Marketing. His involvement in marketing has continued, and he has been a member of the faculty of the “Strategic Retail Management Seminar,” the “Top Management Seminar for Retailers and Suppliers,” “Managing Brand Meaning,” and the “Strategic Marketing Management” executive education programs.
From 1978 to the present, he has been involved in the HBS’ Business History program. In 1992 and 1993, he taught a course entitled “Business, Government, and the International Economy.” He has also taught in numerous executive programs at the Harvard Business School as well as at corporations, including programs in marketing strategy and general management. His published works include Giants of Enterprise: Seven Business Innovators and the Empires They Built, The Watson Dynasty: The Fiery Reign and Troubled Legacy of IBM’s Founding Father and Son, and more recently, Andy Grove: The Life and Times of an American. His latest book, Denial: Why Business Leaders Fail to Look the Facts in the Face — and What to Do About It, was published by Portfolio/The Penguin Group (2010).
Here is an excerpt from my interview of Tedlow. The complete interview is also available.
Morris: Let’s discuss your biography, Andy Grove. The subtitle refers to “the life and times of an American.” To what extent is Grove an exemplary American?
Tedlow: In some ways, Grove is the classic American success story. He was a refugee from oppression. Born in Hungary in 1936, he first had to survive the Nazis and then the Communists. He arrived in the United States at the age of 20 and discovered it to be a true meritocracy. It is the meritocratic element of his story which makes Grove an exemplar of America at its best.
Morris: Grove has frequently used the term “inflection point.” In a business context, what is it?
Tedlow: For Grove, an inflection point is a turning point in the history of a business. It is a moment of truth. If you make the right decision, you put your company on the path to future growth. If you make the wrong decision, you face decline.
Morris: In your opinion, what was the most significant “inflection point” for Intel?
Tedlow: My choice is the decision to serve as the sole source for the 80386 microprocessor in 1985 and 1986. Up until that time, it had been mandatory in the computer industry that component suppliers to the dominant firm (which was IBM at the time) licensed their technology to competing manufacturers. This process allowed IBM to play one supplier off against another and to control prices. When Grove took the leap of informing IBM and the rest of the industry that Intel was not going to license the technology for its 80386 microprocessor, this was a genuine inflection point. It was a “bet the company” decision. Because Grove made it and made it work, Intel became one of the leading firms in computing.
Morris: Grove is often identified as being one of the most effective corporate CEOs in the 20th century. Why?
Tedlow: Andy Grove became the CEO of Intel in 1987. At the end of that year Intel had a market capitalization of $4.3 billion. Grove stepped down as CEO of Intel in 1998. At the end of that year, the company had a market capitalization of $197.6 billion. This increase in value represents a compound annual growth rate of 42 percent over an eleven year period. Few if any other CEOs can point to such a record.
Morris: Of all that you learned about Grove during your extensive research on his life and times, what do you consider to be most revealing of the man?
Tedlow: It was very interesting for me to discover that although he drove the people who worked for him very hard, he drove himself harder. He well understood the old saying that the speed of the boss is the speed of the gang.
Morris: To those who are preparing for or are only recently embarked on a business career, what lessons in leadership and management can be learned from Andy Grove?
Tedlow: Grove’s method of decision-making combines both discipline and creativity. He makes “data-driven gut decisions.” I believe that combining those two facets of decision-making is more than merely valuable. I believe it is essential.
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If you wish to read the complete interview, please contact me at interllect@mindspring.com.
A Quote for the Day – from Douglas Rushkoff (on the segmenting of America)
We must face facts. We are living in a world with no discernible mainstream.
Douglas Rushkoff, 2004 recipient of The Neil Postman Award for Career Achievement in Public Intellectual Activity
From his book Get Back in the Box: Innovation from the Inside Out
The “auteur model of innovation”
In the “Week in Review” section of The New York Times (Sunday, January 31, 2010), Steve Lohr discusses Steve Jobs and his commitment to innovation at Apple. Years ago, Jobs explained that he was only interested in “insanely great ideas.” Since his return to Apple in 1997, Lohr observes, the fashionable recipe for nurturing new ideas — the more ideas, the better, generated by open innovation and extensive collaboration that leverages “the wisdom of the crowd” — seems to have been replaced, at least at Apple, by another approach, “one more elitist and individual. This approach is reflected in the company’s latest potentially game-changing gadget. The iPad tablet, unveiled last week.”Lohr credits John Kao (author of Jamming: The Art and Discipline of Business Creativity and, more recently Innovation Nation: How America Is Losing Its Innovation Edge, Why It Matters, and What We Can Do to Get It Back) with devising the concept of the “auteur model of innovation.” Movies created by powerful directors (e.g. Ingmar Bergman and James Cameron) are clear examples, as is Steve Jobs in the business world. “Yes, there is a team at Apple but the vision is personal,” according to Lohr. “His is not a product-design philosophy steered by committee or determined by market research. The Jobs formula, say colleagues, relies heavily on tenacity, patience, belief, and instinct. He gets deeply involved in hardware and software design choices, which await his personal nod or veto.” Moreover, Jobsasserts that “the truly outstanding designers, engineers and managers [he hires] are not just ten percent, twenty percent or 30 percent better than merely good ones, but 10 times better.”
Commentaries provided by observers such as Steve Lohr, Ken Auletta, and Leander Kahney do indeed raise questions about whether or not Apple can continue to generate “insanely great ideas” once Jobs is no longer involved in what has been until now, a uniquely productive “creativity factory.”
Random rules for ideas worth spreading
Here is some of Seth Godin’s most valuable advice.
If you’ve got an idea worth spreading, I hope you’ll consider this random assortment of rules. Like all rules, some are made to be broken, but still…
• You can name your idea anything you like, but a google-friendly name is always better than one that isn’t.
• Don’t plan on appearing on a reality show as the best way to launch your idea.
• Waiting for inspiration is another way of saying that you’re stalling. You don’t wait for inspiration, you command it to appear.
• Don’t poll your friends. It’s your art, not an election.
• Never pay a non-lawyer who promises to get you a patent.
• Avoid powerful people. Great ideas aren’t anointed, they spread through a groundswell of support.
• Spamming strangers doesn’t work. Spamming friends doesn’t work so well either, but it’s certainly better than spamming strangers.
• The hard part is finishing, so enjoy the starting part.
• Powerful organizations adore the status quo, so expect no help from them if your idea challenges the very thing they adore.
• Figure out how long your idea will take to spread, and multiply by 4.
• Be prepared for the Dip.
• Seek out apostles, not partners. People who benefit from spreading your idea, not people who need to own it.
• Keep your overhead low and don’t quit your day job until your idea can absorb your time.
• Think big. Bigger than that.
• Are you a serial idea-starting person? If so, what can you change to end that cycle? The goal is to be an idea-shipping person.
• Try not to confuse confidence with delusion.
• Prefer dry, useful but dull ideas to consumer-friendly ‘I would buy that’ sort of things. A lot less competition and a lot more upside in the long run.
• Pick a budget. Pick a ship date. Honor both. Don’t ignore either. No slippage, no overruns.
• Surround yourself with encouraging voices and incisive critics. It’s okay if they’re not the same people. Ignore both camps on occasion.
• Be grateful.
• Rise up to the opportunity, and do the idea justice.
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Review: Think Big Act Small
Think Big Act Small: How America’s Best Performing Companies Keep the Start-up Spirit Alive
Jason Jennings
Portfolio/The Penguin Group (2005)
Jennings is a staunch and eloquent advocate of this principle: Do much more and do it much better, faster, and do it with less. OK, but how? The answer to that question was revealed by rigorous and extensive research that he and two associates (Brian Solon and Greg Powell) conducted. They began with 70,000 companies as candidates for designation as the best performing companies in the U.S. Among all of them, which have increased their revenue and profits by at least 10% for ten years or longer? Only nine qualified: Cabela’s, Dot Foods, Koch Industries, Medline Industries, O’Reilly Automotive, PETCO Animal Supplies, SAS Institute, Sonic Drive-in, and Strayer Education.
Back to “How?” Jennings identifies ten “Building Blocks” which, in combination, explain why each of those in an obviously mixed bag of companies has been and continues to be a best performer (i.e. among the top one-hundredth of 1% of all U.S. companies). It would be a disservice to both Jennings and to those who read this brief commentary to list them and then comment on each out of the context within which Jennings so skillfully presents them. Suffice to say that all organizations (regardless of their size or nature) need to have all ten Building Blocks as a core foundation on which to increase their revenue and profits by at least 10% and then continue to do so year after year after year.
How revealing that the CEOs whom Jennings and his research associates interviewed indicate little (if any) interest in any of Sun Tzu’s deception strategies…nor in what their competitors are up to, for that matter. They seem wholly preoccupied with sticking to their own “knitting,” focusing on what their companies can do best, how to do it even better, and thereby deliver even greater value to their customers. Also, each seems determined to nourish and enhance the quality of life as well as standard of living of everyone involved in the enterprise. This is precisely what Jennings means when referring to building communities, Building Block #9. Employees, customers, and allies should be viewed as “partners” and treated as such.
Ultimately, one of the most formidable challenges for those in any organization is to achieve and then maintain an appropriate balance of “thinking BIG” while “ACTING small.” Hence the importance of Section Three, “The Quad: A Self-Evaluation and Ranking,” in which Jennings “breaks down the title of the book into four scenarios, each represented by a quadrant”:
TSAS Think Small, Act Small
TSAB Think Small, Act Big
TBAB Think Big, Act Big
TBAS Think Big, Act Small
He applies this template to each of the ten Building Blocks. It remains for each reader to complete the self-evaluation, one that helps to measure her or his own organization’s current situation. The details of this exercise are best revealed within the text, pages 189-201. I highly recommend this book for reasons previously indicated but also because I cannot recall a prior time since the Great Depression when it was more difficult for companies to increase their revenue and profits by at least 10% for ten years or longer.







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