Earlier this year when I wrote an article on the importance of executive succession planning, the company cited again and again as an example of successful succession was Intel.
So I wasn't too surprised to see a SiliconValley.com story crediting Intel's turnaround to CEO Paul Otellini, now in his fourth year as the chipmaker's leader. Among the challenges he's tackled are "a string of questionable business ventures and product missteps" and unwelcome regulatory scrutiny that recently led to Intel being slapped with a $1.45 billion European antitrust fine.
Otellini's successor, Craig Barrett, got Intel's manufacturing operations in top shape but spent more than $10 billion unsuccessfully trying to move into new business areas, such as communications and consumer electronics. During a 2004 industry event, Barrett got down on his knees to offer an apology to partners for late delivery of chips, reports SiliconValley.com.
Enter Otellini, Intel's first CEO with no doctorate or deep technical expertise. He does have a degree in economics and an MBA and had managed several units at Intel, including global sales, before becoming president and chief operating officer. While many CEOs of tech companies are major geeks, Roger Kay of Endpoint Technologies Associates says that becomes less important as a business grows:
... As things get going, it's more about packaging and product development, market-oriented stuff. So the type of background he had is appropriate to the job that needs to be done now at Intel.
I also wonder if Otellini doesn't relate to his business colleagues a little better than his predecessors. As I wrote in May, some folks think there is a classic technology personality type -- which may not mix well with non-techie types.
As I wrote in my story, Intel has promoted CEOs from within for 40 years and has a highly structured succession process. Intel's board of directors plays a leading role, mandating that CEOs retire at 65 and insisting on long lead times for successors. Intel director David Yoffie told Business 2.0 magazine that the board plans for executive changes at least a decade in advance and regularly reviews the performances of two dozen or so senior managers. He called choosing the CEO the board's "single most important role." Intel CEOs and their successors typically work closely together, with the CEO gradually handing off day-to-day duties.
Involving the board in succession planning, having CEOs and successors work together, and evaluating potential CEOs with long-term strategy in mind.-- all seen at Intel -- are three of the best practices recommended by the folks I interviewed for my succession story.