Strategy at Nvidia; Guiding Policy

...the Nvidia team designed a set of cohesive policies and actions to turn their guiding policy into reality.

Progress in the semiconductor industry was based on reducing the size of a transistor.  Smaller transistors were faster and consumed less power.  The whole semiconductor industry coordinated around achieving a higher level of integration, based on smaller transistors, about every eighteen months.  This rate of progress was called Moore's law.  No one could jump much ahead of this pace because all the technologies, from photo lithography to optical design to metal deposition to testing, had to advance in lockstep.   The industry called this patter of collective advance the "road map."

Nvidia's top management and its technology board sketched out a different road map, one that would push 3-D graphics performance at a much faster rate than Moore's law predicted.  There were two factors crucial to making this happen.  First, they anticipated a large jump in performance from putting more and more of the graphics pipeline onto a single chip.  Second, most manufacturers, such as Intel, didn't keep cramming the maximum number of transistors possible onto a chip--they took advantage of increases in density to make more chis per wafer, thereby cutting the cost of chip.  Nvidia, by contrast, planned to use that extra density to add more parallel processors, boosting performance-a consequence of using the Utah-SGI "triangle bus" idea.

On the demand side, management judged that the market would buy virtually all the graphics processing power that could be provided.  There was not shape call for word processors or spreadsheets but ran one hundred times faster, but there was a very sharp demand for faster and more realistic graphics.  CEO Jen-Hsun Huang believed that Nvidia could construct an advantage by breaking the industry's eighteen month cycle.   He reasoned that since it looked possible to advance graphics power three times faster than CPU poet, Nvidia could deliver a substantial upgrade in graphics power every six months instead of every eighteen months.  

This is the point where a bad strategist would have wrapped the concept of a faster development cycle in slogans about sped, power, and growth, and then sought to cash in by taking the company public.  Instead, the Nvidia team designed a set of cohesive policies and actions to turn their guiding policy into reality.

ACTION POINT: Sometimes a guiding policy will go against the grain of the industry standard.