AMD’s Resurrection: the Bay Area sequel

With Jesus at the helm, it sure seems possible now. But when Hector de Jesus Ruiz stepped into the sandals of Bay Area icon and ex AMD CEO – Jerry Sanders, nobody would have suspected a turnaround, let alone a resurrection. But, come on, he’s Jesus – for Christ’s sake!

The facts speak for themselves. AMD now holds 26% of the lucrative U.S. server-chip business, and a stunning 48% of so-called multicore processors. Business Week writes:

Three years ago, the high-end server business was Intel’s alone. Most significantly, AMD’s gross margin passed Intel’s for the first time last quarter — 58.5%, vs. 55.1%.

Well, this seems like a topic ripe for my 3-point take on Business Strategy:

1. It’s the product, stupid: Nothing trumps great products. The premise of marketing evangelism, ergo the future of marketing is the assumption of a GRRREAT product/service. Great sales is through great marketing, which works only for a great product (D’uh!)

2. Hear and Learn: Although, I’ve no proof that Jerry Sanders was a friend of Jack Welch‘s, his ideas seem to mimic Jack’s 3 concepts on strategy, outlined in Jack Welch’s recent book “Winning“.

Here is how:
a. Jerry Sanders came up with a “big aha – a smart, realistic, relatively fast way to gain sustainable competitive advantage“, which in this case was out-performing his Goliath competitor with far-superior chips and servers that upped the ante in the chip-war.
b. Secondly, “put the right people in the right jobs to drive the big aha forward”. Hiring Hector Ruiz as his successor was key to moving forward with the strategy that Sanders had planned years in advance.

In my opinion, it was this combination of savvy leadership choices that has led to this revival of AMD’s fortunes. But mark my words, the game has just begun.

3. Be Paranoid: Andy Grove is right and so is Bill Gates (who is currently freakin out about Google). Grove whose recent book “Only the Paranoid Survive” states clearly that the thing he fears the most for any company is a “strategic inflection point”. In Grove’s own words, strategic inflection points are:

full-scale changes in the way business is conducted, so that simply adopting new technology or fighting the competition as you used to may be insufficient. Let’s not mince words: A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness.

The question is: Has Intel reached its strategic inflection point? We’ll find out soon.

And….one more thing….

Do NOT let your CEO wear a bunny suit in public. No Matter What!

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  1. Currency

    Nice blog, Very useful information here, Thanks for sharing.

  2. rachal

    i love that home!

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