Intel Shuffles Its Executive Deck and EMC Draws an Ace

Rob Enderle

For those that follow Intel or EMC or are interested in corporate governance, the house cleaning that went on there yesterday is actually kind of interesting. There are three aspects of this announcement: Two reflect on Intel's organizational structure and ongoing litigation, and the third on EMC and its operations.

 

I'm working from the premise that there was a trigger event that aggregated all announcements -- the most likely is Pat Gelsinger's departure for EMC. At his level, Gelsinger's move required both companies report the change and likely was the trigger event.

 

Intel: Path to CEO More Clear

 

For Intel, this appears to create a simpler top-level organizational structure where there are two day-to-day managers effectively running the company: Sean Maloney and Dadi Perlmutter. Both executives are widely credited with helping turn around Intel this decade, Dadi from a product perspective and Sean from a sales perspective. Intel often (though not always) tends to reward executives that make big contributions. Andy Bryant, who now heads manufacturing operations, is effectively below these two men but could contend for the CEO job at some future date.

 

For some time, Patrick Gelsinger was thought to be in the running for the top spot, but it seemed clear about two years ago that Perlmutter and Maloney were positioned better and Gelsinger was probably not in the running.


 

Paul Otellini, Intel's current CEO, now begins the process of phasing himself out, initially dropping out of day-to-day operations in the "strategic focus" role of a soon to be ex-CEO.

 

EMC Gets a New Ace

 

It's funny how titles tend to advance. A few years ago, President meant you ran the company; now it means you run part of it. One wonders if, at some future date, we will come up with a new title called Over Chief Executive Officer (OCEO), and CEOs will be where Vice Presidents once were. In any case, Pat Gelsinger now starts working at EMC over its most important division, storage products, and will effectively be sharing the operations of the company with Howard Elias, who will own services, consulting and backup storage.

 

Joe Tucci, like Paul Otellini, will now begin to phase himself out and has put in place a stated three-year goal to step out of the CEO role, likely in favor of either Elias or Gelsinger. I doubt even he knows yet whom he will pick and a lot will have to do with how both men perform over the next several years.

 

For Gelsinger, who really doesn't have a storage background, his success will depend heavily on his personal support staff. They will be initially called on to close the knowledge gap. He is a very capable executive, but he has been in the same unique environment for around 30 years and EMC isn't much like Intel. However, he has shown an ability to adapt to vastly different jobs over his career and, if given the time to learn, has strong strategy skills that should play well once he is fully up to speed in his new role.

 

I've known Pat for well over a decade and he is one of the strongest to have come out of Intel. Background aside, Joe likely made a good choice here.

 

Intel's General Counsel Risk

 

Intel is facing some daunting litigation and epic fines in the EU for alleged anti-competitive behavior. The sudden departure of its General Counsel, Bruce Sewell, may be problematic because the timing and wording suggest his termination came suddenly and likely for cause, which doesn't bode well for the pending litigation.

 

Much of the actual nuts and bolts are generally outsourced to other firms, which will continue to execute, but the General Counsel sets strategy and coordinates the various resources. Sudden breakage at a high level suggests bad news that the executive staff has not disseminated yet. Granted, it could have nothing to do with the case and it is unfortunately not unusual for an executive to make a bad decision in another area that could force a sudden change. For instance, I've watched an impressively large number of executives get fired for dating or doing inappropriate things with subordinates or other employees on company property over the last couple of years. He may have simply found another job, but the timing is really strange and the wording (or lack of it) suggests otherwise.

 

In any case, a good General Counsel is supposed to help you get things done without being fined or landing in court. That clearly wasn't the case with Intel and a number of governments. Therefore, regardless of who was at fault, that likely meant a change was needed. On my list of jobs not to want is General Counsel for an aggressive, dominant company. I figure if the stress didn't kill me, I'd be fired, maybe both.



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