January 27 2020
Lessons unlearned: From Intel to Path
13 February 2012

The complaints started small but rapidly escalated. Management came off as clueless and callous and the critics piled on. Seemingly overnight, a crisis was born.

Path 2012?

Try Intel, 1994.

In October of that year, Professor Thomas R. Nicely, then teaching at Lynchburg College in Virginia, discovered a flaw in Intel's chip. He posted his findings on a cyber bulletin board, hoping others might know what was causing the problem. A few weeks later, Intel got first wind of the problem after the trade journal Electronic Engineering Times ran a story prior to Thanksgiving.

It was the beginning of a corporate boondoggle that remains seared in Intel's and the industry's collective memory.

"We started to address the report but it wasn't looked upon as any ultra-big problem because within the industry, everyone knew there were errata on chips and that you do work-arounds and fix them," recalled Howard High, who handled Intel's communications in the matter.

But this time the old playbook didn't work. The World Wide Web was now attracting attention and the story spread over the transom in a way that caught Intel off guard. Looking back, Intel's dilemma was amplified by the success of its "Intel Inside" push on television and other media. That campaign did a great job fostering brand recognition for a computer chip of all things. It also fostered a perceived relationship with consumers and they were unhappy.

"We were following our normal procedures for dealing with this but the story hit the Internet--which until then had been used by fairly technical people. Now a new set of people were participating." (One side note: Andy Grove, at the time Intel's president, did not have a direct Internet account. One of the company's engineers actually posted statements for him.)

When people returned to work, the festering resentment that built during the long weekend spilled over.

"We were floored. For average users, our engineers told us that the problem would not even manifest itself in an actual outcome. Users might experience it once every 27, 0000 years," High recalled.

What Intel failed to understand at the time was the implied promise it was making. Story after story dinged management for being out of touch as Intel inexplicably failed to understand that consumers were holding it to the implied promise of its advertisements.

It took about a month but Intel eventually recognized that beyond an engineering problem, it was dealing as much with a communications and customer support challenge. Eventually, Intel agreed to set aside $475 million to swap out the chip for any PC owner who sought a replacement P5, an expensive lesson for a company where engineering's dictates had pride of place.

It's the consumers, stupid
Chuck Mulloy, a current Intel executive who then worked for rival Advanced Micro Devices, noted that the days when companies could make decisions without keeping their ears to the ground are over.

"You really have to pay attention," he said. "If you have a relationship with consumers, then you have to realize there are expectations. The customer won't always be right but you have to treat them with respect."

But old dogs sometimes do learn new tricks. When Intel discovered a glitch with a chipset used with its "Sandy Bridge" microprocessors in January 2011, the company jumped all over it. Intel stopped shipments and put a fix in place. The news barely caused a murmur and then disappeared from the news cycle.

Lesson learned--at least at Intel.



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