Learning activity # 1

Is the strategic decision below a case of behavioral control or clan control? . Please, explain why you respond to the question in one way or another.

Intel’s top management took a long time to finalize a decision that had been in the making since the early 80’s. Several managers pointed out that the decision could and should have been made sooner. The delay was, in part, caused by the fact that some managers sensed that the existing organizational strategy was no longer adequate and that there were competing views about what the new organizational strategy should be. There was still an important group of managers who believed that DRAM’s were critically important to Intel. Some of the top technologists saw DRAM’s as the technology driver of the corporation. Most managers mentioned emotional factors to explain why it had taken so long for Intel to get out of the DRAM business. It was kind of like Ford deciding to get out of cars. Moreover, as a result of adopting a resource allocation rule that shifted resources systematically to products that maximized margin-per-manufacturing activity, DRAM’s found it very difficult to continue to obtain capital investment. So even though most managers at Intel continued to believe the mythology of Intel as a memory company, the effect of these capital investment decisions was that Intel became a microprocessor company during the early 80’s. Grove realized that the PC market segment could be the new “big” market segment for Intel and was willing to bet on this opportunity. He observed the difficulty managers experience in dissociating themselves from the strategy that made Intel successful in the past. It reflected top management’s beliefs about the basis of the firm’s past and current success. Grove recalled going to see More and asking him what a new management would do if we were replaced. The answer was clear: Get out of DRAMs.

Learning Activity # 2

You are hired as a strategy consultant and given the strategic decision case below, for you to know the current strategic decision making process at your client company. The CEO wants to enhance behavioral control in the strategic decision making process at the senior management level. Your assignment is to identify two or three organizational strategic habits to be formed among senior managers making strategic decisions at the company. These strategic habits are expected to enhance the strategic decision making process in quality, speed, and flexibility. Which strategic habits will you recommend need to be formed among senior managers making strategic decisions? Please, describe your proposed strategic habits in detail.

Grove drove strategy-making when he was CEO of Intel Corporation. His intended strategy was to make videoconferencing an integral capability of the PC. Hence, he favored a frontal assault on the entire PC market segment and assigned Patrick Gelsinger to lead a project named ProShare, but continued to be deeply involved in the venture. A manager’s view is indicative: “There wasn’t a debate about it, there wasn’t even a discussion. Grove had already trained managers that periodically he gets all these flashes of an idea." Grove’s support to the ProShare meant authorization of funding of its development –– Intel spent about $750 million on the venture –– and shielding the venture from the strong selection pressures of the structural context, e.g., Intel’s rigorous financial reviews. Grove’s support to ProShare reduced the degrees of freedom of the executives in charge of the new business development effort. Technical and need-linking efforts were limited in their effectiveness, discipline-instilling product-championing efforts were not required to secure resources internally, and the effectiveness of strategic forcing efforts to secure a fast-growing beachhead in the market was limited. Finally, as a consequence of the early and sustained support from the CEO, the opportunity costs associated with ProShare were not considered until 1996, when the decision to scale the venture down was taken.