A Risky Venture
“When you’re working in a large global corporation,” Frohman later wrote, “it’s easy to become passive, to assume that the company will be around forever, even to start thinking that your own fate relies on decisions made at corporate headquarters far away.” He set out from the beginning to replace that kind of complacency with acceptance of uncertainty and a willingness to be creative, not just in principle but in day-to-day practice. “When I founded Intel Israel, I was determined to cultivate the atmosphere of a precarious startup, even though we were part of a successful and fast-growing company. I wanted people to feel that they — and they alone — were responsible for their own fate.”
Frohman was also highly aware that Intel Israel’s fate was far from guaranteed. Any startup is a gamble, but technology ventures are particularly risky. In such businesses, he notes in his book, “success at any one generation of technology is really only buying an option on the future. It wins you the right to compete at the next level of technology, but offers no guarantees of continual success. Quite the opposite, in fact: Often it is those companies that are most successful at one generation of technology that have the most difficulty in adapting to subsequent generations.”
The semiconductor industry, with its high rate of technological turnover, was particularly vulnerable to this sort of intergenerational risk. And that risk, in turn, was compounded by Israel’s geopolitical instability.
Smart risk taking, notes Frohman, “often involves doing the unexpected — and sometimes the seemingly impossible — even in the face of considerable opposition.” In general, effective leaders who take risks because of their commitment to a strong vision are more likely to succeed. And his own willingness to take risks as a technologist and leader is rooted in his commitment to a larger vision — the success of Israel’s high-tech sector.
“Dov always said that Intel didn’t owe us anything in Israel,” says Maxine Fassberg. “And therefore, if we wanted to ensure that Intel Israel survived, we needed to always do better than anybody else.” Frohman coined the organization’s rallying cry, “Survival through Success.” He also made a promise that was particularly bold in light of the region’s history of conflict: Intel Israel would be the last Intel operation to close in a crisis.
Survival through Success
Despite the ever-present possibility of crisis, Frohman’s view of leadership focused on times of prosperity. After all, he knew that getting an organization to concentrate on survival when facing a crisis was easy. It is during the heady days of success, when future survival seems assured, that organizations are most vulnerable to their own complacency. During such times, he says, effective leaders learn that “asking for the impossible creates a kind of ‘virtual’ survival situation. Almost by definition, it poses the likelihood of failure.... What often happens is that people become so engaged in doing what’s necessary to meet the impossible goals that they reach levels of performance they never thought possible — strengthening greatly the organization’s long-term prospects.”
Frohman decided to put this philosophy to the test by setting an “impossible” cost-cutting target for the Jerusalem fab’s first product when the plant opened in 1985 — coincidentally, EPROM. Until then, Intel had chosen to focus on innovation and performance over cost competitiveness, but Frohman realized that Intel Israel’s productivity was key to its global competitiveness and, in the long term, its value to Intel. In 1985, he announced that the new manufacturing cost target per unit of EPROM would be 66 cents, one-quarter of what was then Intel’s best price.