History ofsiliconvalley


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History ofsiliconvalley

  2. 2. A SUCCESS STORY Story of Silicon Valley is a story of treachery, employees rebelled against bad leadership and decided to their way. These rebels are called as traitorous eight; the eight are Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce (Bob) and Sheldon Roberts. All the people of the world, we owe to them a lot. Silicon Valley is the center for entrepreneurship and high tech companies for the last sixty years. There are many success stories happened in this valley but one is different and more important than others, this is the story of great entrepreneurship and leadership which silicon based technologies moved the world into a new era. Transistor is invented by William Shockley, one of the most talented scientist (physicist) and inventor of the century. He was working at Bell Labs when he co-invented the transistor with his two colleagues. They were honored with Nobel physics prize. Shockley noticed the great opportunity in transistor and decided to build his own laboratory to continue on his own. He started to build his team; he searched for talented scientists and engineers and asked them to join his team. Robert Noyce, one of team members mentioned about his call, “It was like talking to god..!” Shockley was a great scientist but a bad leader. After winning the Nobel prize, Shockley’s ego outsized and now threatened to eclipse his genius. He became rigid, authoritarian, and impossible to please. He began to show lots of angers towards people who were doing things as he asked to do. He started to blame others for his own mistakes and bad decisions. He was threating his team as if they were children. Great ideas from team members are not welcomed, he did not encourage them for their ideas instead talked his colleagues at Bell laboratories about the idea and told to them you can’t be trusted with your own ideas. Team sent him a strong memo and it seemed not working. Seven members of the team members talked Shockley’s boss and requested that Shockley be removed as manager. But it is not easy to push a side a Nobel Prize winner, they were told “Shockley is the boss, take it or leave it”. At that point, they burned the bridge and it was not possible to return. But in those days, business culture was that you go to work for a company and stayed with it and retired there. This was a common America value and this team planned to stay and retire there but Shockley’s bad management skills forced to them step out. They started to contact with investment firms and asked for financing for their own company. Bob was not among them but they knew that they need him. He was given authority Bob tried to talk them into not leaving the company but failed to do so, than he felt he should be with them.
  3. 3. When they talked to Shockley that they would quit to build their own company, Shockley got shocked, “Shockley was crushed. He looked like a beaten puppy as he walked out the door that day”. Shockley laboratories never recovered from loss of talented engineers. They made a list of possible investors but none of them was willing to invest for their own reasons; they did not want to have problems with their own employees. Just before they gave up, Sherman Fairchild name was spoken. He was a rich inventor and entrepreneur, largest stock holder of IBM, his father had co-founded. Fairchild saw the potential in transistor. Fairchild semiconductor was founded and all the eight were in team. Sputnik changed everything, Americans felt they lost the technology race against the Russia, the ultimate enemy. President Eisenhower signed the National Aeronautics and Space Act, establishing NASA. NASA started a new program to win space race, target was moon. This new obsession with technology provided a life-time opportunity for the Fairchild semiconductor, federal government was looking for what they are producing exactly. They started a new company from the ground, they were given an empty down the road, close to Shockley Laboratories, no electric, no water, phones even toilets. Fairchild let them be free to do it as they think the right way was. Soon, with high amount of orders from the federal government, Fairchild semiconductor made huge profits. They all got stock options and became very rich. Bob encouraged a unique corporate culture, he had a very good idea of how a company should behave as a company. He had some pretty egalitarian ideas; he wanted to breakdown the distinctions between management and workforce (there is resemblance with Jack Stack case). He was sitting in a standard cubicle like others with no door, he was a smooth man and can communicate easily with everybody. Bob managed by camaraderie, he believed in team work and he did a great job of forming a successful team in Fairchild semiconductor. Employees encourage to contribute, what you contributed is that counted most. Employees are self-motivated and willing to work 10-12 hours a day. But there are problem at core, Fairchild semiconductor began to unravel. There were too much young talented engineer in one company, it would either blow up or settle to be another company. “ For Noyce,… He had the power to direct the semiconductor division -- and the responsibility for its performance -- but no ability to reward his staff.” This was frustrating for Noyce. Fairchild semiconductor not succeeded to grow rapidly mainly because main company was taking way the all revenue and new production factories, investments were not financed. It became impossible to keep employees anymore. They began to leave the company and start new ventures or became CEOs for other companies. In next two decades, Fairchild spin off more than 100 new firms. Employees of Fairchild distributed to whole other companies.
  4. 4. Bob saw a new expense opened in front of them as technology developed, devices were getting smaller, faster and cheaper. Noyce has the notion that electronics would change the world. What he noticed was that, if produce in small amounts, price would be high but if cut the price half then demand increases and production amount increases and this makes production less and you can still make profit.
  5. 5. CONCLUSION - LEADERSHIP In time, these talented engineers turned into young entrepreneurs and leader of big companies. But being talented in engineering or physics does not necessarily means you can be leader. William Shockley’s case is a good example to show how bad leadership can be destructive. He was a hell of a scientist and innovator but failed to be a leader. He tried to manage young talented engineers as children and never encourage them for their ideas, show anger towards them for his own mistakes. He was impossible to work with. Shockley’s authoritarian leadership failed and his laboratory never recovered from the loss of talented engineers. If he had chosen the path of laissez-faire leadership style, things would have happened different in his favor. Laissez-faire leadership style was perfect for his laboratory because employees are very capable to achieve a given task by themselves. After Fairchild semiconductor, Robert Noyce, Gordon Moore and Andy Grove (new team member) founded Intel cooperation. All these three men have different leadership styles of their own. Robert Noyce was legend in semiconductor industry and was an impressive man, he had incredible “presence” based on his intelligence. Bob has the thing which Psychologists called “halo effect”, such people seem what they are doing and make others want to admire to them for it. He was a visionary leader but not a day-to-day manager by any stretch. His nice guy style sometimes cause problems, he can’t say “no”. Whoever was there last got the right decision because he always said “yes”. He trusted people too much and when there is debate between two people and asked him for the decision, “May be you should work that out” or just changed the subject. Andy and Robert Noyce has common attitudes; they both like to sit in cubicals with no-door at all and encourage employees to share ideas. According to Grove's successor at Intel, Craig Barrett, "It's give and take, and anyone in the company can yell at him. He's not above it." Grove insisted that people be demanding on one another, which fostered an atmosphere of "ruthless intelligence." Andy Grove was known for directness (truth teller) in finding fault, had a fiercely competitive and highly demanding leadership style. According to Richard S. Tedlow in “The History and Influence of Andy Grove”, this created a “pressure cooker” environment within Intel. Andy and Robert Noyce were friends but he never regard Noyce as a role model. Andy mentioned that he found Noyce’s nice guy attitude irritating and ineffective and classified Noyce as the “front man1”. 1 Peter Drucker’s 1954 book, The Practice of Management, CEO’s three face;
  6. 6. Gordon Moore on the hand was “thought man” with his encyclopedic mind. Andy mentioned about him as “…Moore was not activist, that was his thing to do… Moore has encyclopedic knowledge of the technologies that are relevant to our business…” Andy was the “man of action” who got things done. There is problem to solve, Andy talks to Moore and gets all the necessary information and takes notes. Based on his notes, Andy takes necessary actions to solve the problem. Another side of its “Moore was once asked what Intel would have been like without Grove. Moore’s response, says Grove, was, “It would have been a much more pleasant place and a whole lot smaller.” The corollary question might be what Intel would have been like without Moore. Says Grove, “The answer is: It would have been an Intel without Andy Grove.” Without any particular leadership experience, these men founded Fairchild semiconductor and Intel cooperation, both were successful. They made many mistakes but with their great vision and technical skills, these talented engineers became successful leaders.