Friedman and the Israeli team realized that the solution to the problem was something like a gear system in a car: if you could change gears, you could run the engine more slowly while still making the car go faster. In a chip, this was accomplished differently, by splitting the instructions fed into the chip. But the effect was similar: the transistors in Intel Israel’s low-power chips did not need to flip on and off as fast, yet, in a process analogous to shifting a car into high gear, they were able to run software faster.
When Intel’s Israel team euphorically introduced its innovation to headquarters in Santa Clara, the engineers thought their bosses would be thrilled. What could be better than a car that goes faster without overheating? Yet what the Israeli team saw as an asset—that the engine turned more slowly—headquarters saw as a big problem. After all, the entire industry measured the power of chips by how fast the engine turned: clock speed.
It did not matter that Israeli chips ran software faster. The computer’s engine—composed of its chip’s transistors—wasn’t turning on and off fast enough. Wall Street analysts would opine on the attractiveness (or unattractiveness) of Intel’s stock based on performance along a parameter that said, Faster clock speed: Buy; Slower clock speed: Sell. Trying to persuade the industry and the press that this metric was obsolete was a nonstarter. This was especially the case because Intel had itself created—through Moore’s law—the industry’s Pavlovian attachment to clock speed. It was tantamount to trying to convince Ford to abandon its quest for more horsepower or telling Tiffany’s that carat size does not matter.
“We weren’t in the mainstream—clock speed was king and we were on the outside,” Israel’s Rony Friedman recalls.[37]
The head of Intel’s chip division, Paul Otellini, tried to mothball the whole project. The clock-speed doctrine was enshrined among Intel’s brass, and they weren’t about to hold a seminar to decide whether or not to change it.
The “seminar” is part of a culture that Israelis know well, going back to the founding of the state. From the end of March to the end of May 1947, David Ben-Gurion—Israel’s George Washington—conducted an inquiry into the military readiness of Jewish Palestine, in anticipation of the war he knew would come when Israel declared independence. He spent days and nights meeting with, probing, and listening to military men up and down the ranks. More than six months before the United Nations passed its partition plan for dividing Palestine into a Jewish and an Arab state, Ben-Gurion was keenly aware that the next phase in the Arab-Israeli conflict would be very different from the war the pre-state Jewish militias had been fighting; they needed to step back, in the midst of ongoing fighting, and plan for the existential threats that were nearing.
At the end of the seminar, Ben-Gurion wrote of the men’s confidence in their readiness: “We have to undertake difficult work—to uproot from the hearts of men who are close to the matter the belief that they have something. In fact, they have nothing. They have good will, they have hidden capacities, but they have to know: to make a shoe one has to study cobbling.”[38]
Intel’s Otellini didn’t know it, but his Israeli team was giving him a similar message. They saw that Intel was headed for the “power wall.” Instead of waiting to ram into it, the Israelis wanted Otellini to avert it by taking a step back, discarding conventional thinking, and considering a fundamental change in the company’s technological approach.
The executives in Santa Clara were ready to strangle the Israeli team, according to some of those on the receiving end of Intel Israel’s “pestering.” The Israelis were making the twenty-hour trip between Tel Aviv and California so frequently that they seemed omnipresent, always ready to corner an executive in the hallway or even a restroom—anything to argue their case. David Perlmutter spent one week each month in the Santa Clara headquarters, and he used much of his time there to press the Israeli team’s case.
One point the Israelis tried to make was that while there was risk in abandoning the clock-speed doctrine, there was even greater risk in sticking with it. Dov Frohman, the founder of Intel Israel, later said that to create a true culture of innovation, “fear of loss often proves more powerful than the hope of gain.”[39]
Frohman had long tried to cultivate a culture of disagreement and debate at Intel Israel, and he had hoped this ethos would infect Santa Clara. “The goal of a leader,” he said, “should be to maximize resistance—in the sense of encouraging disagreement and dissent. When an organization is in crisis, lack of resistance can itself be a big problem. It can mean that the change you are trying to create isn’t radical enough . . . or that the opposition has gone underground. If you aren’t even aware that the people in the organization disagree with you, then you are in trouble.”
In time, the Israelis outlasted—and outargued—their U.S. supervisors. Each time the Israelis showed up, they had better research and better data, one Intel executive recalled. Soon they had a seemingly bulletproof case as to where the industry was heading. Intel could either lead in that direction, the Israelis told management, or become obsolete.
Finally, this time as CEO, Otellini changed his mind. It had become impossible to counter the Israelis’ overwhelming research—not to mention their persistence. In March 2003, the new chip—code-named Banias after a natural spring in Israel’s north—was released as the Centrino chip for laptops. Its clock speed was only a bit more than half of the reigning 2.8 gigahertz Pentium chips for desktops, and it sold for more than twice the price. But it gave laptop users the portability and speed they needed.
The switch to the Israeli-designed approach came to be known in Intel and the industry as the “right turn,” since it was a sharp change in approach from simply going for higher and higher clock speeds without regard to heat output or power needs. Intel began to apply the “right turn” paradigm not just to chips for laptops but to chips for desktops, as well. Looking back, the striking thing about Intel Israel’s campaign for the new architecture was that the engineers were really just doing their jobs. They cared about the future of the whole company; the fight wasn’t about winning a battle within Intel, it was about winning the war with the competition.
As a result, the new Israeli-designed architecture, once derided within the company, was a runaway hit. It became the anchor of Intel’s 13 percent sales growth from 2003 to 2005. But Intel was not clear of industry threats yet. Despite the initial success, by 2006, new competition caused Intel’s market share to plummet to its lowest point in eleven years. Profits soon plunged 42 percent as the company cut prices to retain its dominant position.[40]
The bright spot in 2006, however, came in late July when Otellini unveiled the Core 2 Duo chips, Intel’s successors to the Pentium. The Core Duo chips applied Israel’s “right turn” concept plus another Israeli development, called dual-core processing, that sped chips up even further. “These are the best microprocessors we’ve ever designed, the best we’ve ever built,’’ he told an audience of five hundred in a festive tent at Intel’s Santa Clara headquarters. “This is not just incremental change; it’s a revolutionary leap.” Screens lit up with images of the proud engineers behind the new chip; they were joining the celebration via satellite, from Haifa, Israel. Though Intel’s stock was down 19 percent over the whole year, it jumped 16 percent after the July announcement. Intel went on to release forty new processors over a one-hundred-day period, most of them based on the Israeli team’s design.
37
Ian King, “Intel’s Israelis Make Chip to Rescue Company from Profit Plunge,” Bloomberg.com, March 28, 2007.
38
Eliot A. Cohen,
39
Dov Frohman and Robert Howard,
40
This passage is based on Ian King, “Intel’s Israelis Make Chip to Rescue Company from Profit Plunge,” Bloomberg.com, March 28, 2007.