Winter 2007

Cover Story
The Quiet Revolutionary

CEO Paul Otellini, MBA 74, Sets a New Direction at Intel

By Diane Fraser

Think of Paul S. Otellini, MBA 74, as a quiet revolutionary. In the two years since he was named president and CEO of Intel Corporation, Otellini has overhauled the semiconductor manufacturer, betting on an entirely new strategy and reshaping its corporate identity. And Otellini has, true to form, orchestrated his revolution by speaking softly while trumpeting big ideas.


"Leaders must know when to take that leap of faith, to take a calculated risk to deliver higher returns," says Otellini. "A leader has to plot a direction and motivate people to move in that direction."


For his innovative new strategies at Intel, his ability to lead and to inspire a global workforce, and for his unwavering commitment to conducting business with integrity, Otellini was named the Haas School's Business Leader of 2006. He was given the mantle last November at the Haas Gala in San Francisco, an annual event celebrating the alumni community. Business Leaders are selected for their career accomplishments, their involvement with the school, and for their stature as role models for alumni and students.


"Paul Otellini brings to his work the kind of open thinking, unwavering ethics, and focused leadership that we try to instill in our students here at Haas," said Dean Tom Campbell. "We are honored to count him as part of our community and to share his insights with our students as they aspire to become truly great leaders."


Intel started in 1968 as a memory chip manufacturer. Three years later, it invented the microprocessor, eventually becoming the number one processor manufacturer for PCs by the 1990s.


Under Otellini's leadership, Intel is revolutionizing its business once again. Its new focus is on "platforms," which means Intel will move from selling individual chips to packages of chips that will work together as a complete product. Intel is targeting consumer electronics, wireless communications, and healthcare, as part of its platform strategy. It will also develop mobile products offering new security features and greater energy efficiency. Otellini has championed Intel's hiring of physicians, ethnographers, and sociologists to help develop these products. Ultimately, Otellini's platform strategy will allow manufacturers to rapidly build products based on predefined Intel platforms.


"Paul's 'platform strategy' reflects uncommon foresight and a keen awareness of the foundational changes sweeping computing, particularly the future prevalence of mobile devices," says Dr. Eric Schmidt, MS 79 and Ph.D. 82 (Computer Science), chairman and chief executive officer of Google, Inc. "He understands that a thriving Intel is one that fully appreciates and considers the context in which it operates. It's clear that Paul's vision and strategy will position the Intel brand to remain synonymous with innovation for the foreseeable future."


And in branding, too, Otellini has reinvented Intel. He had Intel's logo redesigned without a lowered "e" and introduced a new slogan, "Leap ahead." The new branding is emblematic of the sea change in Intel's strategy.


A San Francisco native, Otellini arrived at Haas after earning his bachelor's degree in economics from the University of San Francisco in 1972. Among his sharpest memories of Haas are the daily commute across the Bay Bridge to class from his full-time job and the Digital Equipment Corporation PDP-10 computer he described as "a beast."


While he was a student at Haas, Otellini learned a quantitative approach to problem solving that he says helped him build a career in the technology industry. "You learn a very thorough, analytical methodology at Haas," he said. "We did not have many cases in those days. Instead, we relied heavily on a highly quantitative, data-driven approach to problem-solving. That has worked extremely well for me in the high-tech industry."


After graduation, Otellini's Berkeley MBA helped him secure his first position at Intel. "I graduated in a recession and my MBA was my initial foot in the door," he said.


From a start in finance, Otellini's career touched many of Intel's technology and marketing breakthroughs. He managed the firm's pivotal partnership with IBM in the 1980s and was general manager of the Microprocessor Products Group, leading to the introduction of the Pentium microprocessor. In 1993, while he was executive vice president of the Sales and Marketing Group, Financial World named Intel the world's third most valuable brand, thanks in part to the innovative "Intel Inside" campaign, which is widely considered one of the most successful marketing campaigns ever. An innovative program for a chip manufacturer whose products constitute the building blocks of other products, the campaign is credited with making Intel one of the most recognizable brands in the world.


Otellini led the Intel Architecture Group from 1998 to 2002, when he was named chief operating officer and oversaw the launch of the Centrino mobile technology line. The Centrino processor featured integrated wireless capabilities, which saved consumers from buying separate wireless cards for their laptops. Its launch was a huge success for Intel and ultimately foreshadowed Otellini's revolution at Intel: In effect, he convinced the company to shift its focus from producing processors that were simply faster to manufacturing processors that had additional functionality such as wireless.


Three years later, in 2005, Otellini was made chief executive officer. He is the first chief executive at Intel without formal training as an engineer.


"I've stayed with Intel because I have never ceased to learn and to have new opportunities to grow," he told Haas students recently. "We went from being a start-up to being the largest semiconductor manufacturer in the world. It would be pretty hard to beat that in any other place."


According to members of Intel's senior leadership team, Otellini has keen strategic vision, a drive to execute, and the ability to inspire. "Paul believes in listening well. Whether he is in Intel's management committee with executives or in an open forum with employees, he can be seen taking seriously what he hears," explained Patty Murray, senior vice president and director, Human Resources. "A junior engineer will get as considered an opinion of the industry direction as a Wall Street analyst, and an unsolicited diagram from a junior employee describing how to approach a problem is just as likely to appear in Paul's presentation to senior management as an expert's."


In Otellini's management philosophy, community and collaboration are what makes business tick. He appreciates the interpersonal skill-building capability stressed at Haas, "the way you build the teams, the way you solve cases by picking each other's brains and coming up with the best solution amongst a group of people. That, in my mind, is a perfect model to solve real-time business problems."


"Paul is one of the reasons I came to Intel," said Eric Kim, senior vice president and general manager of Intel's Digital Home group. "I liked his open, direct approach. Paul is a genuinely likeable, engaging guy. Instead of putting his energy into his image, Paul focuses on relationships and substance."


By his own admission, Otellini has grown as a manager and a leader since he started at Intel. "In the 1970s, there was a sort of Wild West, anything-goes approach to the workforce in the high-tech sector. That doesn't work with today's global workforce, where you are dealing with multiple cultures," he said. "At the end of the day, it's a characteristic of leadership to get people to follow. If you lead and they don't follow, you're not a leader."


"During his more than three decades with Intel and nearly two years as chief executive officer, Paul has more than simply shaped Intel's corporate strategy – he has changed the way the semiconductor industry sees itself," says Eric Schmidt. "Paul epitomizes what it means to be a leader: he combines a bold and courageous vision for his company with a disciplined and results-oriented temperament that allows him to inspire effectively and lead by example."


Otellini writes his own blog and fields thousands of emails from employees around the world. A frequent participant in employee meetings, he doesn't shy away from open mike question-and-answer sessions. "When you encourage open communication, you have to be prepared to hear things from subordinates that you will not like, and that will make you uncomfortable," he said. "You hear a lot of things that make you swallow and think hard, but you also get a lot of good ideas."


Although Otellini is reinventing Intel, one aspect of his approach to life and business is unchanging: his integrity. "The ability to admit one is wrong and learn is critical," he said. A class Otellini took at Haas with Louis Lundberg, who had just retired as the chairman of the board of Bank of America, evoked vivid memories: "He demonstrated that ethics and integrity could be a part of a businessman's character."


Thirty-two years later, Otellini epitomizes integrity in his own character and career. "The measure of a man is not in what he says publicly but what he does privately. Paul lives by the maxim that there is never a wrong time to do the right thing," said Patty Murray. "Part of his ability to inspire is his candor; not only is it clear he is telling the truth, it is clear that truth matters."

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Paul Otellini

Paul Otellini

Paul Otellini conversing with John Thompson, chairman and CEO of Symantec Corp.

Otellini conversing with John Thompson, chairman and CEO of Symantec Corp., at "CEO Exchange." The show was taped at Zellerbach Auditorium and will be broadcast later this year.