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strategy and business
 / Summer 2009 / Issue 55(originally published by Booz & Company)


Dov Frohman Leads the Hard Way

Frohman’s persistence paid off, and in 1974, Intel’s leaders agreed to build their first outpost outside the U.S. in Israel. At the time, the country’s most famous export was Jaffa oranges. The year before, the Yom Kippur War had claimed more than 2,600 Israeli lives. Intel’s decision was a blazing vote of confidence in the future of the country’s technology sector — and, not coincidentally, in Dov Frohman.

A Global Outpost
In another surprise move, Frohman elected not to head the center himself, instead choosing to act as a consultant while he taught applied sciences at the Hebrew University of Jerusalem. The design and development center in Haifa would eventually design the microprocessor for IBM’s original personal computer, but to start it was staffed by only five engineers.

“I felt that I could serve my long-term vision better by building a cadre of trained scientists that would be future Intel employees,” Frohman has written. “I also thought the new center would have a better chance of being integrated into the company if its first manager were an American.”

And Frohman had a larger goal in mind. He knew that success in the semiconductor industry went beyond research and development. He wanted Intel Israel to have a semiconductor fab. Manufacturing semiconductors — which was intensely difficult and competitive in an industry that lived by the motto “smaller, faster, cheaper” — was the function most vital to Intel’s future. Frohman knew the fab was a long shot. Building one was a $150 million proposition in the early 1980s, representing a much greater bet on an unknown capability than the $300,000 Intel had spent to build the Haifa design center.

Knowing that the quality of a site’s labor force was critical to the decision to open a fab, Frohman decided to take advantage of an upcoming trip to Israel by Intel’s then CEO, Gordon Moore. Without saying a word about his goal, he impressed Moore with visits to Israel’s flourishing scientific and technical communities, including the Technion, a breeding ground for advanced engineering. It worked. Within days, Frohman had made his proposal and gotten the go-ahead from Intel to begin preliminary negotiations with the Israeli government for an investment incentive package.

However, these negotiations made the project controversial within Israel. Although the Israeli government offered foreign companies in some sectors a standard grant of up to 38 percent of their investment, the sheer size of Intel’s proposed project — the largest in the country’s history — generated a massive public outcry. For a young nation with enormous security needs and broad social obligations, the idea of granting almost $60 million to a foreign company made many an op-ed writer see red. At least, critics argued, the money should go toward subsidizing the country’s local talent.

“I was Public Enemy Number One,” Frohman recalls, chuckling. He stood his ground, repeating the same message whenever he was challenged: to be a player in the global economy, Israel needed to strategically leverage foreign investment. A key group of “anchor tenants” — established global corporations — would help develop the country’s high-tech infrastructure immeasurably.

Frohman then proposed what seemed like a strange idea. Instead of building the fab in Haifa or Tel Aviv, he suggested locating it in an industrial park in Jerusalem — a city known more for religious fervor than cutting-edge technology. Yet it was precisely that dynamic that appealed to Frohman, who realized that the city’s relative lack of industrial infrastructure would provide an additional rationale for government incentives.

In 1981, Jerusalem Mayor Teddy Kollek broke ground on the Jerusalem fab — at that point, the biggest construction project in Israel’s history. It took three and a half years to finish the project and train a new workforce, during which time Frohman stepped down from his position at Hebrew University and became general manager of Intel Israel.

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  1. Dov Frohman with Robert Howard: Leadership the Hard Way: Why Leadership Can’t be Taught, and How You Can Learn It Anyway (Jossey-Bass, 2008): The founder of Intel Israel articulates his brand of non- conforming risk taking in light of his own story.
  2. Amanda Ripley, The Unthinkable: Who Survives When Disaster Strikes — and Why (Crown, 2008): Based on interviews with survivors of disaster, portrays qualities of the risk-taking leader.
  3. Richard S. Tedlow, Andy Grove: The Life and Times of an American (Portfolio, 2006): Highly engaging, authoritative biography of the larger-than-life Intel CEO, champion of innovators and mentor to Frohman.
  4. For more business thought leadership, sign up for s+b’s RSS feed.
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