Andy Grove, Innovation, STEM Education, and Jobs

Stephen DeAngelis

April 08, 2016

In March Andy Grove, the former CEO and Chairman of Intel, passed away. Eulogies praising his remarkable life called him “a giant in silicon valley” and “a brilliant technologist.” They also credited him with helping usher in a new age. The Economist noted, “Just as Andrew Carnegie helped to usher in the steel age and John D. Rockefeller the oil age, Mr Grove … helped to bring about the computer age.”[1] The comparisons didn’t stop there. The article continues, “And just as Carnegie and Rockefeller worked their magic by building organisations rather than inventing new products, Mr. Grove, though a brilliant technologist, worked his by building Intel from a startup into the world’s dominant semiconductor firm. Like Carnegie and Rockefeller, he built huge plants employing thousands.” That’s where the comparison ends and true character of the man begins. The article explains, “Whereas [Carnegie and Rockefeller] flaunted their wealth and power, Mr. Grove laboured in a cubicle no different from those of his employees.”

Amanda Eversole, President of the U.S. Chamber of Commerce’s Center for Advanced Technology & Innovation, notes Mr. Grove’s life’s story is as remarkable as the man himself. “Grove’s story began in Budapest, Hungary,” she writes, “where he survived Nazi occupation and escaped Soviet repression before immigrating to the United States.”[2] If you don’t think Andy Grove sounds Hungarian, you’re right. Mr. Grove was born Andras Grof and changed his name following his arrival in America and before enrolling in the City College of New York. Eversole reports, “After graduating from City College of New York and University of California at Berkeley, he started his career at Fairchild Semiconductor Research Laboratory in California, and five years later, he was the first hire when his mentor left to start a new venture called Intel.”[2] He spent the next 37 years of his life with Intel. Although Mr. Grove worked from a cubicle, his temperament could be fiery. The Economist article notes:

“Mr. Grove’s genius was as an organisation-builder and manager rather than as an innovator. His most obvious quality was his fierce intelligence. He could be difficult — hot-tempered when confronted with idiocy, prickly when challenged. He believed in the value of ‘creative confrontation’ (which sometimes meant screaming matches).”

He might not have been best-known for being an innovator, but he was a champion of innovation. Eversole explains:

“At a time when policymakers and technology leaders were mostly content to leave one another to their own devices, Grove understood the importance of government policy and recognized the need for more engagement between innovators and public officials. He spent more time than many realize in the nation’s capital, advocating for smart, forward-thinking legislative and regulatory policies that promote technology. He was relentless in sharing Silicon Valley’s story and helping government leaders understand the nuances of tech policy and what was possible through innovation. In particular, Grove fought for strategic, high-skilled immigration reforms, more funding for federal research, and stronger enforcement of software antipiracy laws. He called for comprehensive, long-term initiatives that would help address the tech sector’s labor shortage, and insisted that we commit more resources to science, technology, engineering and math (STEM) education.”

Although not a native-born American, Grove wanted to keep America competitive in the digital age and knew that better STEM education was one of the pieces of the puzzle that could make that happen. I agree with him; which is why I, along with a few colleagues, founded The Project for STEM Competitiveness to assist schools in our area to teach critical STEM skills. Mr. Grove also knew America would only remain strong if its workers remained employed. Half a dozen years ago — before laments about artificial intelligence, robots, and automation reached a fever pitch — Mr. Grove expressed his concern about jobs in America.[3] He wrote:

“Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter. The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs. … You could say, as many do, that shipping jobs overseas is no big deal because the high-value work — and much of the profits — remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed?”

The problem, Grove wrote, is that U.S. business and government leaders have forgotten that scaling is crucial to America’s economic future. He explained:

“How could the U.S. have forgotten? I believe the answer has to do with a general undervaluing of manufacturing — the idea that as long as ‘knowledge work’ stays in the U.S., it doesn’t matter what happens to factory jobs. It’s not just newspaper commentators who spread this idea. Consider this passage by Princeton University economist Alan S. Blinder: ‘The TV manufacturing industry really started here, and at one point employed many workers. But as TV sets became “just a commodity,” their production moved offshore to locations with much lower wages. And nowadays the number of television sets manufactured in the U.S. is zero. A failure? No, a success.’ I disagree. Not only did we lose an untold number of jobs, we broke the chain of experience that is so important in technological evolution.”

The solution to job loss and high unemployment, Grove believed, was to make job creation a central policy concern. He explained:

“Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better. Such evidence stares at us from the performance of several Asian countries in the past few decades. These countries seem to understand that job creation must be the No. 1 objective of state economic policy. The government plays a strategic role in setting the priorities and arraying the forces and organization necessary to achieve this goal.”

He went on to write, “The first task is to rebuild our industrial commons.” Grove’s clarion call to revive U.S. manufacturing has been joined by others. There is reason to worry. In KPMG’s 2014 Global Manufacturing Outlook report, Jeff Dobbs, KPMG’s Global Sector Chair for Industrial Manufacturing, indicates that changes in manufacturing have been (and will be) so significant that the future of manufacturing can be described as one that will be characterized by “Disruptive Complexity.” As volatile and uncertain as the past has been, Dobbs says the forces that changed manufacturing in the past “may seem tame compared to the new forces created by the proliferation of data, scientific discovery, robotics, technology and artificial intelligence … just to mention a few.” Since we are supposedly living in a post-industrial age, you might be asking yourself, “What’s the big deal? Why all the emphasis on manufacturing?” Brookings Institution analysts, Susan Helper, Timothy Krueger, and Howard Wial, answer those questions this way, “Manufacturing matters to the United States because it provides high-wage jobs, commercial innovation (the nation’s largest source), a key to trade deficit reduction, and a disproportionately large contribution to environmental sustainability.”[4]

The Economist concluded, “America was good to the young Andy Grove, providing him with a refuge from totalitarianism and then a first-class education. In return Andy Grove was good for America, by helping it to remain at the very heart of the semiconductor revolution. His career was a parable as well as a triumph.” In one of his books, Grove wrote, “We all need to expose ourselves to the winds of change.” Grove bravely stood braced atop the cliffs as the winds of change rushed ashore ushering in the computer age. If America is to remain strong, we need to keep alive the dream that brought Andras Grof to our shores.

Footnotes
[1] “The man who put Intel inside,” The Economist, 26 March 2016.
[2] Amanda Eversole, “Intel’s Andy Grove Blazed Trails From Silicon Valley to Washington,” Re/code, 29 March 2016.
[3] Andy Grove, “Andy Grove: How America Can Create Jobs,” Bloomberg, 1 July 2010.
[4] Susan Helper, Timothy Krueger, and Howard Wial, “Why Does Manufacturing Matter?” Brookings, 22 February 2012.