Intel's Disruption is Now Complete
With a striking headline, the author of this Medium post argues that Intel's inability to keep pace with competitors now puts it at risk of ARM-based chips beginning to erode its "last refuge: the server business." While previous Beach Reads have highlighted Intel's struggles, this is the first post I've come across that looks at the involvement of Clayton Christensen, author of the 1997 book "The Innovator's Dilemma," with the company. The then-CEO of Intel, Andy Grove, worked with Christensen to better understand the famous innovator's dilemma: "The causal mechanism behind disruption that Grove so quickly understood was that even if a disruptive innovation started off as inferior, by virtue of it dramatically expanding the market, it would improve at a far greater rate than the incumbent," the article says. Grove's Intel disrupted itself by introducing less profitable products that compensated for the cannibalization of existing ones through much higher volume, which helped the company to fund additional R&D. However, the author says Intel lost sight of this after Grove retired as chairman in 2005 (he was CEO from 1987-1998), most notably when it missed out on providing chips for the first iPhone because it preferred to stick with its highly profitable design and manufacturing model rather than chase a high-volume, lower-margin business by fabricating Apple's designs: "He might not have realized it at the time, but when Grove was reading Christensen's work, he wasn't just reading about how Intel would go on to conquer the personal computer market. He was also reading about what would eventually befall the company he co-founded, 25 years before it happened." With companies in practically every industry vulnerable to the innovator's dilemma, understanding risks posed by a lack of flexibility is key in forecasting the future for businesses.