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Why AMD Is Eclipsing Intel: Dr. Lisa Su vs. Brian Krzanich

Rob Enderle

I ended up last week at the AMD pre-CES event in Las Vegas and was struck by how much better the firm is executing than Intel, which more typically overshadows it. AMD is vastly smaller than Intel and Intel is so dominant that the only ways Intel could be overcome is if the market moved without it or Intel simply kicked back and stopped competing. In a way, over the last five years, both things have happened, to a degree. The market pivoted to more of a mobile framework. Smartphones have become the latest must-have computing product, and virtually every PC OEM and parts vendor has tried to make that pivot and failed. This weakened Intel the most because it was the most dominant. AMD did make a pivot to console gaming and semi-custom parts which, while it didn’t make the mobile pivot either, allowed the firm to remain relevant.

While Intel seemed to chase, and fail, in a variety of efforts ranging from efforts with makers to efforts with wearable devices and drones, AMD focused back down on PCs and, as that market recovered, AMD gained unusual momentum. In addition, Intel (following an unfortunate trend in U.S. corporations in general) cut much of its strategic efforts to assure dominance (IDF and most outward-facing efforts) in an effort, which was successful, to increase tactical (quarterly) results. The result was that while AMD continued to pound away with what has historically been a fraction of Intel’s resources, Intel cut its own efforts enough to bring AMD into near parity.

This is being showcased this week as AMD rolls out updates to the Ryzen platform and the Epyc products continue to gain momentum. (Currently, both appear to resist a new security problem better than Intel’s parts do, providing a boost to the firm.)

Most recently with the disclosure of a new security flaw, which appears to impact more than just Intel processors, Intel took most of the heat by not getting ahead of the news and because it quickly flipped to the CEO’s untimely divestiture of virtually every Intel option he had (over $25M worth). The implication was that even Intel’s CEO, Brian Krzanich, didn’t think the firm would weather this. Regardless, the optics are horrible, and now Intel’s CEO is yet another problem the firm must recover from.

I think the cause of this discrepancy goes to the difference in the two company’s CEOs. I follow both CEOs and have worked with both companies through several CEOs over the last two decades. Let’s contrast the differences.

AMD CEO: Dr. Lisa Su

Dr. Lisa Su, AMD CEO, was trained and developed in IBM, which has the strongest executive development program currently in the industry. The program forces diversity over time and Su was assigned to one of the most unusual IBM CEOs, Louis Gerstner. In fact, Gerstner is likely one of the very few technology CEOs that understood marketing. This was critical to IBM’s turnaround because his massive investment in marketing and controlling IBM’s image was critical to recovering what, at the time he took over, was a massive lack of confidence in the company. IBM also had a far more aggressive program to not only advance women but to protect them as well and it was early in the trend to create a more qualified diverse workforce.

Basic practices that IBM’s training teaches include team building, protecting employees and building loyalty, being very aware of and promoting a positive image of the firm, placing customers first, and making sure your behavior never reflects badly on the firm. The key thing about new IBM CEOs is that they are trained to promote the company, not themselves, once in place. This is one of the most difficult things for a new CEO who has come up inside a company to grasp because, while advancing, it is important to be able to promote yourself (particularly if you are an individual contributor), but as CEO the company’s success automatically reflects well on you and your individual visibility can detract from that. Steve Jobs, who was not IBM trained, seemed to get this best and was famous for forcing photographers and journalists to focus back on the firm and its products, not him.

Intel CEO: Brian Krzanich


Intel also has an executive development program but, like most companies, it appears to lack rigor. In addition, Intel’s culture is extremely focused on individual accomplishment and the firm implemented one of the most aggressive forced ranking programs in the industry. This tends to result in a very high level of abusive behavior in the firm. This behavior tends to place employee against employee and devalues collaboration and team building. Intel does attract top talent, but the firm’s ability to keep that talent has historically been problematic. As a result, most of those being groomed to be CEO at Intel left the company (Pat Gelsinger being one of the most visible), particularly if they didn’t fit within Intel’s often caustic culture. One of the big problems for Intel, and firms like it, is an inability to learn from mistakes because they excessively focus on blame and people use this blame to remove peers or superiors, increasing their own chances for advancement.

Krzanich is a product of that very different environment. When he was selected, he seemed to come out of left field, and the first time I saw him present as a CEO he criticized his replacement on stage for perceived failures. He was in sharp contrast to his predecessor, Paul Otellini, who often praised his subordinates in public. Krzanich has created a now failed TV show casting himself, which was focused on Intel’s strategic maker effort, but, when the show failed, he appeared to cancel the entire effort in retaliation. He put himself on prestigious councils, while cutting much of the external support for the firm. In marketing, he publicly criticized and replaced the well-regarded CMO he inherited with one out of retail. The most recent result was a campaign featuring a character out of the TV show “Big Bang Theory,” who is portrayed as clueless, providing advice as to PC purchases. It likely is one of the most expensive wrong-headed campaigns since Intel spent millions promoting the Blue Man Group years ago.

The result is a company that even Krzanich himself doesn’t seem to want to invest in.

Wrapping Up: The Importance of the Right CEO

I’m writing this at an AMD press/analyst event, the kind of event that Intel used to dominate but has apparently defunded under Krzanich. This is an event showcasing accomplishment and advancement, and is highly supportive of Moore’s Law (which came out of Intel). In contrast, Intel is mostly focused on trying to keep from having to recall parts affected by the new exploit “sideload-analysis.” AMD’s CEO is at the heart of the effort to keep customers safe, while Intel’s CEO has appeared to go dark once his massive stock sale was disclosed.

I think this again showcases the importance of grooming CEOs. This is not an easy job and the distractions that come with it, including a massive jump in income tied to stock performance, are impressively large and unique to the job. In addition, it requires a strong ability to build a formidable team, protect that team, and assure an environment that encourages employee development and diversity and doesn’t drive top employees to other firms.

In short, I think the reason that AMD is eclipsing Intel is because AMD’s board pulled a CEO from IBM which trains them well. Intel should train CEOs well and does not, creating a sharp contrast between the current execution at the two firms.

The industry really needs to stop throwing bodies at the CEO spot and realize there are a set of core skills necessary in a good CEO. We’ve now seen Microsoft struggle and recover, Yahoo fail, HP/HPE’s CEO mess (thankfully at least HP seems to have a qualified CEO now), and I figure we’ll see a number of other tech CEOs lose their jobs before year end. AMD showcases we can do better, and we need to.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+

 


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