Teach Managers How to Think, Not What to Think

But instead of teaching him what to think, I taught him how to think, and he could reach his own conclusion.

An engineer in the middle of Intel read an early academic paper that we’d written on the subject of disruption. She said that after she read it, she looked down at the bottom of the microprocessor market and there was Syrex coming at Intel. Syrex had already picked off the entry-level computer business—the processors in those entry-level computers—and they were coming up. Intel was fleeing up-market.

I knew nothing about the microprocessor business, but she arranged, through a series of events, ultimately to give me a meeting with Andy Grove, the [Intel] chairman, and his executive staff. That was a once-in-a-lifetime opportunity for a no-name professor like me.

Grove is a very down-to-earth business sort of guy. He said, “Just give me ten minutes and tell me what this means for Intel, and we’ll be on to other stuff.” I said, “Andy, I can’t do it in ten minutes; I need thirty. Let me describe this mode of disruption that’s emerged from my research, and then let’s talk about what it means for Intel.” He sat back impatiently. I said, I’d like to describe how this process of disruption worked its way through a very different industry than microprocessors, and then we’ll talk about Intel. So he sat back impatiently again.

I decided to tell him the story about how in the steel industry, steel minimills had picked off rebar at the bottom of the market and then had moved up-market, and the integrated steel companies had retreated to higher and higher margin products. I picked steel because it was very different from microprocessors, so Andy wouldn’t get confused at all, but in many ways it was a perfect analogy to what I thought was going to happen in microprocessors.

When I finished telling the story about steel, Andy said, I get it. So what it means for Intel is…” And he got it. I’ve thought since, if I had been suckered into telling Andy Grove what I thought he ought to do in the microprocessor business, I would have just been crucified. There’s no way I would have the knowledge to overpower his wisdom about that business. But instead of teaching him what to think, I taught him how to think, and he could reach his own conclusion. Once he reached his own conclusion, I didn’t have to convince him.

Rarely do successful companies get crippled because a company comes into their market with a better product. Instead, competitors come in with a simple, inexpensive product that caters to the least-demanding customers, and then they move up-market.

ACTION POINT: Don’t underestimate the down market competitor.