Dov Frohman Leads the Hard Way
The management author and former CEO of Intel Israel on the need to do the unexpected and attempt the impossible.(originally published by Booz & Company)
Dov Frohman doesn’t exactly look like a pillar of the high-tech business community as he arrives for an interview at a restaurant near his home in the verdant Ein Kerem neighborhood of Jerusalem. He’s riding a temperamental Suzuki dirt bike and dressed in a scuffed leather jacket, faded jeans, and black wristbands. And Frohman doesn’t sound very Fortune 500 as he talks about his newest book, Leadership the Hard Way: Why Leadership Can’t Be Taught, and How You Can Learn It Anyway (with Robert Howard; Jossey-Bass, 2008), which extols the virtues of taking risks, nonconformity, and survivalism. But the 70-year-old founder and now-retired CEO of Intel Israel Ltd. — an amateur pilot whose idea of a fun vacation involves being dropped by helicopter into the Alaskan wilderness with a backpack and a map — prides himself on his maverick persona. It has defined his long and varied career as a technologist, inventor, academic, and organizational leader. And it is responsible, in a significant way, for the fact that Israel is a world leader in the field of advanced technology.
“Dov’s risk taking brought Intel to Israel, and it made him able to achieve things that no one else could even dream of,” says Maxine Fassberg, Intel Israel’s general manager, who has known Frohman for decades.
Indeed, 25 miles down the road, in the southern town of Qiryat Gat, one of Intel’s massive semiconductor fabrication plants (or fabs, as they’re called) stands as a testament to Frohman’s ability to successfully take risks. Under his watch, Intel Israel grew from a small design center to a key outpost of the corporation’s global microprocessor production — one that has never missed a shipment, even in the face of war and continued geopolitical instability.
As the country’s largest private employer and its pioneering semiconductor producer, Intel is also an anchor of Israel’s booming high-tech sector. Today, Israel has the world’s highest levels of venture capital investment as a share of GDP, R&D spending per capita, and scientists and engineers per capita. Its high-tech sector is second only to Silicon Valley in terms of innovation, and more than 70 of its companies are listed on Nasdaq.
Although Frohman’s achievements have been recognized — in 1991, he was given the Israel Prize, the nation’s highest honor — he is hardly a household name, even within Israel. This may have something to do with the fact that for Frohman, being an effective leader is ultimately a private endeavor.
In Leadership the Hard Way, Frohman argues that leadership ability is fundamentally an intrinsic quality — the courage to obey a quiet instinct in the center of a storm and to act decisively on that instinct. He believes, therefore, that it is something that can never truly be taught, although it can be learned over time by acquiring personal wisdom and emulating a mentor.
For Frohman, that mentor was Intel CEO Andy Grove, whose catchphrase “only the paranoid survive” infused Intel’s culture. It is perhaps not surprising, then, that Frohman’s primary focus is survival at all costs. “The fundamental responsibility of the leader is to ensure the long-term survival of the organization,” Frohman wrote in Leadership the Hard Way. “I tried to create a culture at Intel Israel in which the imperative of survival became a powerful catalyst for improvisation and innovation.”
His strategy for achieving that survival, however, may seem counterintuitive: Welcome the unexpected while simultaneously holding fast to a long-term vision, fight against the mainstream, make room for dissent and daydreaming, think “differently,” and embrace risk precisely when you can’t afford to fail.
“As a maverick in the field of technology from the earliest days, Dov has been an innovator, a questioner, a radical, a champion, a sage, a survivor, and above all, a leader,” leadership scholar Warren Bennis wrote in the foreword to Leadership the Hard Way. “He’s never backed down from responsibility, and he’s faced some hair-raising crises with unconventional methods and achieved undeniable results.”
“Nothing Is Truly Secure”
Frohman’s focus on creativity and survival is grounded in his own life story. He was born in Amsterdam in 1939, the child of Polish Jews who had fled their country because of rising anti-Semitism. In 1942, as the Nazi shadow loomed, Frohman’s parents made the agonizing decision to give up their only child in order to save his life. They handed him over to the Dutch underground, which placed him with a devout Christian family, the Van Tilborghs, in the countryside. The family hid him for the duration of the war, caring for him along with their four children. When Nazis searched the village, Frohman hid under the bed or in the root cellar. One of his earliest memories is of watching a German soldier execute a fellow officer.
Years later, Frohman learned that his father, and most likely his mother, had been killed at Auschwitz. He spent several years in Jewish orphanages after the war and emigrated to Israel in 1949.
“My experience during the war inculcated in me a stubborn conviction that nothing is truly secure, that survival must never be taken for granted — but also that the actions of determined individuals can ‘achieve the impossible,’” he has written. “In agreeing to hide me, the Van Tilborghs took unimaginable risks. They endangered not only themselves, but their own children as well — to an extent that, seen from the outside, may appear almost irresponsible. In contemplating their example over the years, I learned something essential about leadership: Survival requires taking big risks, and sometimes the risks a leader takes, when viewed from a normal or conventional point of view, can appear crazy.”
Yet although Frohman’s focus on survival completely infused Intel Israel’s culture, he never once spoke publicly within the company about his personal history. “I never wanted to be seen as a victim,” Frohman explains. “I always just wanted to move forward.”
In 1959, after completing his mandatory army service, Frohman enrolled in the Technion–Israel Institute of Technology, where he studied electrical engineering. After graduating in 1963, he left Israel to pursue a master’s degree at the University of California at Berkeley, where he recalls “living a kind of double life.” During the day, he was hard at work in Berkeley’s labs, researching topics in engineering and computer science. In the evenings, though, he immersed himself in the area’s counterculture scene, attending rock concerts, experimenting with drugs, and protesting the Vietnam War. He was profoundly affected by these experiences, he says, and the hippie motto “do your own thing” quickly became his personal credo.
Frohman recalls watching a business executive emerge from his car and swap his suit and tie for a fringed vest and hippie beads. Instead of finding it amusing, Frohman was struck by “the power of being simultaneously an insider and an outsider,” as he later described it in Leadership the Hard Way. “Unless you are prepared to see things differently and go against the current, you are unlikely to accomplish anything truly important. And to go against the current, you have to be something of an outsider, living on the edge.”
A Breakthrough Chip
After earning his master’s degree in 1965, Frohman began working in the R&D labs of Fairchild Semiconductor Inc., a fertile breeding ground for Silicon Valley startups. That decision would prove extremely advantageous to his future career: Gordon Moore, Robert Noyce, and Andrew Grove — his managers at Fairchild — would soon ask him to join them at their own startup, a company they called Intel.
One of Frohman’s first assignments at Intel was to troubleshoot a nagging problem in an early semiconductor memory chip known as the 1101. The chip worked fine at room temperature, but it became unstable when exposed to heat and humidity, causing any embedded information to be lost. Without a solution, the chip couldn’t be released — a major hurdle for the young company.
For weeks, Frohman mulled over the problem. At the time, there were basically two kinds of semiconductor memory. Volatile random-access memory (RAM) chips were easily programmable, but had a major flaw: When their power source was turned off, they lost their charge, along with all the information encoded on them. The data encoded on nonvolatile read-only memory (ROM) chips, such as the 1101, was extremely stable. However, programming these chips was a long and arduous task. The data had to be physically embedded on the chip through a process that often took weeks. Once programmed, it was extremely difficult to change.
Frohman developed a hypothesis about why the 1101 chips were becoming unstable in heat and humidity, and devised a solution for it. In the process he made an additional discovery, which he realized could create a revolutionary new kind of semiconductor memory — one that would have the stability of ROM with the re-programmability of RAM. The result was erasable programmable read-only memory, or EPROM, as the technology came to be known. Intel paired EPROM with its new microprocessors in a combination that helped create the foundations for personal computing. Today’s flash memory technology, used in cell phones, digital cameras, and MP3 players, owes its existence to Frohman’s ability to turn disadvantage into opportunity.
A Long-term Vision
The EPROM innovation helped drive Intel’s sales from US$9 million in 1971 to $66 million just two years later. But instead of using his newfound status within the company to jockey for a corner office, Frohman made a surprising announcement: He was leaving the company and moving to Ghana to teach electrical engineering at the University of Kumasi.
Frohman’s announcement came as a shock to his colleagues. Not only was he jumping ship when he was most needed — Grove had expected him to oversee EPROM’s development and manufacturing — he was leaving just as Intel was about to go public, which meant abandoning stock options worth a considerable amount of money. The buzz around Intel’s water coolers was that Dov Frohman had lost his mind. What was he thinking?
What Frohman’s colleagues didn’t realize was that by leaving, he was pursuing a larger vision. Ever since his days at the Technion, he had nurtured a hazy but persistent idea: to bring a new field of innovation and industry back to his home country of Israel. His years in Silicon Valley had focused that vision on the semiconductor business.
“For me, the task of building Intel certainly was important — but only if, over time, it could be a vehicle for me to create something in Israel,” he wrote in Leadership the Hard Way. “I worried that if I devoted myself to the EPROM, I might go down the path of a U.S. management career and that would take me too far away from my vision.”
Frohman’s interlude in Africa gave him breathing space and time to reflect. He also found that Ghana’s rich cultural complexity provided valuable lessons about the type of organization he wanted to create in Israel — one that blended the best aspects of Intel with the unique strengths of Israeli culture. “Many of the Africans I met seemed to balance comfortably multiple identities,” he later wrote. “Kumasi is the capital of the Ashanti people, one of the key ethnic groups in Ghana, and it wasn’t unusual to meet people who took great pride in their Ashanti heritage without feeling any less Ghanaian.” By the time he left Africa 15 months later, Frohman was ready to pursue his vision. Knowing that there was a severe engineering shortage in the semiconductor industry, he returned to Silicon Valley and paid a visit to Intel’s senior management, to whom he aggressively pitched the idea of a small design center in Israel. The center, he suggested, should be located in the northern port city of Haifa, in order to capitalize on the impressive supply of engineers at the Technion. “Once Dov gets an idea, he’s like a bulldog,” says Grove. “He’s not limited by the proverbial box.”
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.
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.
Christening the campaign “Sixty-six Cents or Die,” Frohman galvanized Intel Israel’s workforce to hit the target. The team created a pirate flag with the campaign’s motto and hung it from the flagpole in front of the fab. They began tracking production statistics using new metrics, and disseminated them daily.
Although Frohman didn’t know whether the target could in fact be achieved, he wanted it to be dramatic enough to make people stretch themselves. And they did just that. The team focused mercilessly on costs, finding creative new ways to produce more chips for less money. They never did reach the target, but they came so close to 66 cents that Intel Israel was awarded a disproportionate share of the production of Intel’s 286 microprocessor production — the workhorse chip at the heart of the wildly popular IBM PC-XT and a host of subsequent leading computers.
Frohman had created a virtual threat to survival with his “Sixty-six Cents or Die” campaign, but he would be faced with a much more concrete threat just a few years later.
In January 1991, just before the first Gulf War began, Israel was in a state of high alert. Intelligence reports had suggested that chemical-tipped Scud missiles were being assembled in western Iraq — just seven minutes’ flight time from Tel Aviv — and that Saddam Hussein intended to deploy them against the Jewish state. The Israeli government distributed gas masks and ordered every household to prepare a sealed room for use in chemical attacks. Fearing that employees could be killed at work or on the road, the civil defense authority instructed all nonessential businesses to shut down. One by one, business leaders complied — except for Frohman.
Intel Israel would stay open, he decided. It had, after all, been continuously open since its founding in 1974. Frohman felt that, as the country’s largest high-tech enterprise, Intel Israel couldn’t afford to be perceived as cowering in fear. What kind of a precedent would that set for less established players? The very survival of Israel’s emerging high-tech sector was at stake.
The possibility of exposing his employees to danger weighed heavily upon him. But Frohman decided that if safety measures were put in place, the benefits of remaining operational would outweigh the risks.
“There was absolutely no element of Dov coercing anybody,” Fassberg says. “That was never part of his style.” She recalls that Frohman sat down with managers and asked, “What do we need to do to make it better for employees to come to work than to stay home?” They replied, “We need to let them bring their kids.” Intel’s huge bomb shelters — a requirement under Israel’s building code — were quickly converted into day-care centers. As a result, Fassberg says, “employees actually felt better about coming to work, because their children were safer than they might have been at home.”
In the end, nearly 80 percent of Intel Israel’s employees showed up for work, and the company did not miss a single shipment or delivery because of the war. What’s more, Frohman and his team developed a reputation for delivering “no matter what” — transforming a perception of instability into one of reliability.
Two years later, with that strong reputation still intact, the Jerusalem fab began to face technical obsolescence. Although it had successfully produced Intel’s 386 microprocessor, the successor to the 286, the fab was not equipped to produce future generations of technology. For example, without a complete overhaul of its laminar-flow air-conditioning system, the fab could not accommodate the purer air requirements of smaller microprocessors. (The shorter the channel length of a computer chip, the cleaner the air has to be.)
Intel, however, had decided to build its next plant in Arizona; the Jerusalem fab wasn’t being asked to modernize. If Intel Israel wanted to stay competitive, it would have to find a way to completely retool the fab without stopping production — a scenario that seemed utterly impossible.
Frohman urged the fab’s engineering team to brainstorm. “I don’t care how crazy the ideas are; just come up with something,” he told them. Three weeks later, they returned with an idea. By raising the fab’s roof and building a new air-conditioning system above its existing one, they suggested, they could retrofit the entire plant by slowly breaking through the ceiling — without ever stopping production. The $10 million projected cost was far less than the $1 billion a new fab would require, and Intel headquarters gave its blessing to the project. The Jerusalem fab would be able to compete with Intel’s other fabs — including the one in Arizona.
Ultimately, Frohman’s risk paid off. “The project had a galvanizing effect, not just on the facilities team but on the entire fab workforce,” Frohman wrote in Leadership the Hard Way. “Because everyone was so worried that production might suffer, they went out of their way to maintain and even improve on our performance. The paradoxical result: Our output was even better during and after the project than before.”
As a result, Intel Israel won a significant part of Intel’s global production for its 486 microprocessor. And in 1995, the company decided to build an additional fab in Israel, in the southern town of Qiryat Gat, followed by another at the same site in 2008. At $3.5 billion, the latter project was the single largest direct investment of foreign capital in Israel’s history.
A State of Innovation
Israel’s geopolitical situation remains shaky, but that also means that it continues to invest in technology to retain its economic and military advantages. In January, two rockets fired from the Hamas-controlled Gaza Strip — a mere 15 miles from Qiryat Gat — exploded near Intel’s facilities. As an Israeli innovator and management theorist, Frohman is aware that the future of Intel Israel may depend, in part, on events beyond its control. And although he says that innovation and creative teamwork are inherent strengths of Israeli society, he believes that Israel’s high-tech sector is not operating at its full potential.
“Who says we’re doing well compared to what we could be doing if there was peace?” he asks. But doesn’t economic stability lay a foundation for peace? “High tech may be Israel’s locomotive of progress, but it’s missing several wheels,” he insists, citing what he sees as the country’s outdated education system, failure to embrace its full manufacturing capabilities, and growing gap between its haves and have-nots. Underlying all this, he argues, is Israel’s lack of a long-term social vision, a result of its focus on security.
Ironically, the growing gap between Israel’s rich and poor has been spurred largely by the very thing that Frohman worked so hard to develop: the high-tech sector. In Qiryat Gat, where Intel Israel employs more than 2,000 workers, this dichotomy is keenly felt. Despite the activity in Intel’s industrial park, the town’s unemployment rate hovers around 10 percent. Its residents, many of whom are immigrants from Russia and Ethiopia, simply lack the skills necessary to work in high tech.
In the middle of the afternoon on an autumn day in Qiryat Gat, glum-looking men play cards on a sidewalk bench. The town center, just a few minutes from one of the world’s most advanced manufacturing facilities, is empty save for a stray dog.
As you drive away from Qiryat Gat, past a sign saying “Gaza — 2 km,” and continue south, the scenery turns brown and dry. This is the Negev, a desert expanse that makes up almost 60 percent of the country but houses a mere 8 percent of its residents. Frohman is planning his next venture here. In the next few years, he plans to open the Center for Different Thinking, a grassroots think tank aimed at incubating unconventional solutions to some of the world’s most intractable problems. Ultimately, Frohman wants the center to become part of a global web of brainstorming entities targeted toward the younger generation.
The idea for the center has been percolating for some time, he says, and was driven by the realization that young people in Israel are “too focused on their own circumference.”
Frohman says he is inspired by Bertrand Russell, who wrote: “The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd. Indeed, in view of the silliness of the majority of mankind, a widespread belief is more likely to be foolish than sensible.”
Frohman adds, “Since conformity is so deeply entrenched in society, the main focus should be on changing the culture to one that is tolerant of dissent, mavericks, oddballs, and ‛naysayers.’”
Although he doesn’t know what solutions will come out of this new venture, or exactly how to get it off the ground, Frohman isn’t worried. He believes, once again, that it is a risk worth taking.
Reprint No. 09208
- Paula Margulies is a writer specializing in the Middle East and international affairs. She is the New York correspondent for the Jerusalem Report and a consulting writer at the United Nations.