Intel plans to carve costs within 90 days
Sigh, another grand management pronoucement designed to dazzle Wall Street. From the article:
“Chipmaker Intel (INTC) plans to slash costs in hopes of pulling out of its recent slump, CEO Paul Otellini said Thursday.
Otellini, speaking to analysts in New York City, said executives will spend 90 days examining every part of the company for ways it can become more efficient. “No stone will remain unturned,” he said.
Otellini didn’t say if there would be layoffs, remarking only that specific actions would be announced during the third quarter. He said last week that he hopes to cut $1 billion in costs this year. (Intel earned about $9 billion last year on revenue of $39 billion.)”
This situation somehow reminds me of W. Edwards Deming and my intellectually lazy paraphrasing of his criticism of management by objectives, something to the effect of “If you could cut costs by just saying so, why didn’t you already do that??” (Curiouscat, please correct me if I’m significantly wrong on that).
So Intel wasn’t already working at becoming more efficient? It requires the CEO putting pressure on employees? Then, Wall St. and the media infer that the way to cut costs is to cut people, although the CEO didn’t say if there would be layoffs. We just have to assume that would be the case.
Announcements like this go against the idea of a continuous improvement mindset. You should ALWAYS be looking for ways to get better. The key is reducing waste, not eliminating people. The key is keeping your head down and doing it, the results will follow, rather than making announcements to the media about what you will do.
Back to Deming, the Intel CEO seems to be going against many of the famous 14 points (that’s not a surprise, most companies pay no attention to them):
1. Create constancy of purpose for the improvement of product and service. With the aim to become competitive, stay in business, and provided jobs.
2. Adopt the new philosophy of cooperation (win-win) in which everybody wins. Put it into practice and teach it to employees, customers. and suppliers.
5. Improve constantly and forever the system of production, service, planning, or any activity. This will improve quality and productivity and thus constantly decrease costs.
8. Drive out fear and build trust so that everyone can work effectively.
11. Eliminate slogans, exhortations, and targets asking for zero defects or new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
12. Eliminate numerical goals, numerical quotas and management by objectives. Substitute leadership.
I’ll give Wall St. some credit… Intel stock didn’t immediately spike upward on the promise of cost reductions.