South-Western - Management  
How Intel Grooms Its Leaders
Topic Leadership
Key Words Leadership, CEO
News Story

Paul Otellini is Intel's current president and COO, but he has known for two and a half years that he will be the next CEO when the current CEO gives up his job next May. He is the fifth "homegrown" CEO since the company's launch in 1968. By knowing its succession in advance, the company doesn't waste resources on wondering who will be next.

The long lead times are a hallmark of Intel's CEO transitions. In fact, the company's board of directors insists on them. They discuss executive changes 10 years out to identify gaps, making choosing the CEO the most important role of the board.

There is a gradual shift of duties from one CEO to the next, which means that the successor gets the job before he gets the title. This model is unique in an industry characterized by founders who tend to hold on too long, or frantic searches for replacements.

Intel's practice is known internally as "two in a box." By overlapping duties and responsibilities, Intel managers can better support one another in crisis. This is helpful in the case of CEO because the upcoming CEO gradually takes over the day to day operations, freeing the current CEO to focus on other things.

Intel chiefs don't overstay their welcome in part because they still wield authority after they are replaced, moving over to the boardroom. The chief drawback is that it turns current CEOs into lame ducks sooner than at other companies. Another drawback is that managers who don't see a path to the top aren't likely to stick around, causing the company to lose some key talent.

Questions
1.

What is unique about the way Intel chooses CEOs? How does its approach better prepare a new CEO for the position?

2.

Choose another company to compare to Intel's approach to choosing executive management. What are the pros and cons of each approach?

3.

What impact do you think Intel's succession planning practices have on middle management at the company?

Source "How Intel Grooms Its Leaders,"Business 2.0, July 2004, p. 43.
Instructor Discussion Notes Discussion Notes
These notes are restricted to qualified instructors only. Register for free!

 

Return to the Leadership Index

©2004  South-Western.  All Rights Reserved     |