In the mid-1980s, Intel was losing the business that had made it famous. The company had practically invented the market for memory chips. Its 1103 dynamic memory chip, released in 1970, helped replace the old magnetic core memory in computers and made semiconductors the standard for storing data. Memory was what Intel did. It was how engineers there thought of themselves.
Then Japanese manufacturers arrived with chips that were very good and very cheap, and they kept getting better and cheaper. After a boom in 1983 and 1984 driven by the spread of personal computers, demand collapsed. Prices fell, supply piled up, and the memory market sank. Intel's profit dropped from about $198 million in 1984 to less than $2 million in 1985. The company was bleeding in the product line it considered its heart.
Andy Grove was Intel's president at the time, and Gordon Moore was its chairman and chief executive. Both were brilliant engineers. Both could read the numbers. And for about a year, Intel's leaders argued, studied, and circled the problem without making a call. Two beliefs held them in place. The first was that memory was Intel's technology driver, the product that pushed its manufacturing skill forward. The second was that customers expected a full product line, and that dropping memory would cost Intel business elsewhere. Neither belief was foolish. Together, they kept the company from acting while the losses grew.
In the middle of 1985, talking the problem over with Moore, Grove asked him a question that cut through all of it. "If we got kicked out and the board brought in a new CEO, what do you think he would do?" Moore answered without hesitating. A new chief executive would get Intel out of memories. Grove's reply was the turning point. If an outsider would do it, he said in effect, why not walk out the door, come back in, and do it themselves?
The power of the question was that it took away the history. A new leader would not care that Intel had pioneered memory chips. A new leader would not feel the sting of telling longtime engineers their life's work was finished. A new leader would simply look at where the money was going and where the future was. Grove and Moore had all the information they needed, and so did the managers who worked for them. What they lacked was the willingness to see it without the weight of who they had been.
Deciding was one thing. Doing it was harder, and Grove never pretended otherwise. He later admitted that he had a hard time even saying the words to his own people without equivocating. In October 1985 Intel announced that it was withdrawing from the dynamic memory business. The company would put its future on microprocessors, the chips that served as the brains of personal computers. That same year it introduced the 386, a 32-bit processor with about 275,000 transistors.
The cost was real, and it fell on people. Intel's 1986 annual report called that year the toughest in the company's history, with plant closings, layoffs, and deep losses. Eight older, smaller factories were shut down. Roughly 7,200 jobs were eliminated through layoffs and attrition. Grove later described the exit as a long process of shutting down factories, letting people go, and telling customers Intel was no longer in the business. It took about a year and a half to complete.
But the decision held, and it made Intel. Microprocessors became the engine of the personal computer era, and Intel's chips were inside a huge share of them. During Grove's later years as chief executive, the company's market value rose from about $4.3 billion to more than $114 billion. Looking back, Grove called getting out of memory when they did the best business decision Intel ever made, and also an emotional one.
There is a lesson here for every manager, not just the ones running chip companies. Most teams carry something that used to work. A product, a process, a report, a way of serving a customer. It has a history and loyal defenders, and the people who built it are still in the room. When the facts turn against it, the hard part is rarely understanding the problem. The hard part is admitting it while you are standing next to the thing you built.
Grove's question is one you can borrow on Monday. When you are stuck, ask yourself: if I were fired today and someone new took my job, what would they do first? Write the answer down. Then ask why you are not doing it already. Usually the answer is not a lack of information. It is pride, fear, or loyalty to the past dressed up as caution. Notice that Grove did not ask Moore for more data, another study, or one more quarter to see if prices recovered. He asked a question that made the answer impossible to keep avoiding. Good questions do that. They strip away the reasons you have been using to stay put, and they leave you looking at the choice itself.
And when you decide, be honest about the cost. Intel's turn was not painless, and pretending otherwise would have insulted the thousands of people who lost their jobs. Tell your team what is changing, why, and what it will cost them. Then carry it out cleanly, without dragging it on to spare yourself discomfort. A year of drift cost Intel more than the decision did. Your team can survive a hard call. What wears people down is a leader who already knows the answer and keeps walking around it.