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Comment by brookst | Hacker News Reader

As someone who worked at Intel for 5ish years a while ago, I partly agree. There was a fatalism to the culture; a sense that any initiative had to be simultaneously super low risk and guaranteed to generate $1B in revenue within a couple of years. It had to be 100% predictable and planned month by month years in advance, and also exactly what customers would want on day one.

The people who “succeeded” were those who could sell that story to the finance org (who essentially made all the product decisions), and who could move onward and upward before the fairy tale collapsed.

The disconnect between the aspirational culture (risk taking, tech-forward, customer-focused) and the real culture (risk averse, finance-forward, planning-focused) was extreme. The whole place was like a filter designed to retain only those who had no interest or capability to fix the systemic issues.

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> There was a fatalism to the culture; a sense that any initiative had to be simultaneously super low risk and guaranteed to generate $1B in revenue within a couple of years. It had to be 100% predictable and planned month by month years in advance

Ultimately, this is what MBA-style corporations do. They want unfettered predictability and massive revenues from every initiative. They even set up corporate structures to penalize failures.

As a result, layers and layers of managers, and managers and engineers are all risk averse. They will be penalized for being wrong, their jobs and livelihoods are put on stake.

What does one expect in such an environment? Innovation/risk-taking or politics of self-preservation/blaming/backstabbing?

The MBA-style is a failure for innovation and Intel should be a case study in every MBA school.

Have you ever taken an MBA course? It's so weird for you to refer to "MBA-style corporations" considering that "The Innovator's Dilemma" by Clayton M. Christensen has literally been a core text in most MBA programs for decades. If anything, Intel has become an anti MBA-style corporation.

https://hbsp.harvard.edu/product/10706-PDF-ENG

"MBA-style corporations" does not mean that they have read the innovators dilemma.

An MBA-style corporation is one that is lost in a vast trove of metrics. They focus too much on the birds-eye view dashboard style of work - ultimately forgetting that it is less important to meet metrics and more important to keep innovating.

The metric-driven production is well suited for warehouses and factories where every unit is the same as the other. Because every unit is the same your business can focus on eeking optimizations visible via metrics.

But technology is not like that at all. Every unit of production is so different from one another. You cannot have a top heavy company that is just focusing on metrics. You need the top to be intelligently engaged with market, customers, systems, and employees.

Put in another words, if your company's primary focus is margin management, shareholder return, and squeezing production (MBA-school style), your company will have a very very hard time innovating.

Case in point - Intel - which has haemorrhaged itself with years of focus on buybacks and dividends and unit production - but not studying the market, studying modern tech, and innovation.

I think the issue with MBA-led companies is that you have people with an MBA that have very little direct experience. The MBA itself is useful, but detached from the experience of the industry and organization leads to misguided thinking.

That is correct. MBA degree can be useful. But just hiring an MBA who doesn't have an appreciation and skill in the domain is just going to do what they can - counting metrics.

Eh, I have an MBA, and that is not at all my experience. At my program, there was a ton of focus on agility, avoiding sunk cost fallacies, the importance of a healthy corporate culture, what a tax elaborate structures can be, and so on.

And it was before Intel failed, but we had case studies on IBM, Enron, and General Motors and how misaligned incentives led to incompetence, corruption, and failure.

You may have had bad experiences with some individual MBAs (they run the gamut, just like everyone else), or you may have absorbed some stereotypes, but that's really not at all what is taught.

I was not aware that my last two companies have secretly been Intel because every one of these factors applied to them.

It’s really another aspect of the innovator’s dilemma - interesting $-wise and margin-wise is so limited that they end up never doing anything interesting.

It is a problem really specific to high margin companies.

You actually don’t see this behavior at low margin businesses because the spectrum of things that can be done which aren’t immediately labeled a margin drag is a lot wider.

The company I work for now put all the up front effort into a new product line which would lilekk pk y have easily gotten to a billion or two a year within 3y with the right customer wins, but out normal margin is very high and the new line of business would have been very profitable objectively but would have been a margin drag. Every dollar would have lowered the gross and net margin.

This describes almost every large enterprise I've ever done work for or worked at.

In most giant companies it is a reasonable strategy.

The critical difference is most large companies don’t need to innovate. United doesn’t design aircraft, airports, etc they compete with other huge companies in an extremely capital intensive industry and execution is what matters.

FedEx, Walmart, Bank of America, etc all need to keep up with their competitors but there’s no need to make risky bets when slow and steady brings in billions of revenue and nothing external is going to drive them out of business quickly.

Intel essentially forgot just how ruthless their industry was and got crushed.

I think all major airlines have pretty much gotten to the point of bankruptcy without bailouts

Again a logical choice.

Much like banks the boards of airlines are incentivized to have high levels of debt supported dividends / buybacks because it’s a highly volatile industry. Money isn’t clawed back from investors, but cash reserves disappear in a downturn.

Really any high risk industry where profits can be extracted in good times faces the same issues. The possibility for concessions from governments or people they owe money to like retires and bond holders etc, then repeat the cycle while maintaining control incentives high risk strategies because they are leveraging other people’s money.

Not even large companies. High margin companies tend to always think the same way. Don’t rock the boat. Change is the enemy. Eventually people lose track of what made the company profitable in the first place and simply follow the same process religiously. Suggestions to evolve or change the process are met with hostility.

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