Brian Krzanich’s resignation from the CEO job at Intel is a reminder of how powerful the zero tolerance environment has become in the wake of the #metoo movement. But it also brings to light some incongruities around Intel’s leadership of the past and other problems that emerged during Krzanich’s reign as CEO from 2013 to this week.
Krzanich resigned because of a violation of Intel’s non-fraternization policy, which forbids managers from dating employees. In Krzanich’s case, the board said it was a “consensual relationship,” but a violation nevertheless. In the wake of the news, Intel’s stock lost about 2.4 percent in value, or about $5.9 billion. That was a pretty momentous event, even for the stock market. But it’s small, considering the gains Intel saw under its CEO.
The news was strange in part because Krzanich has been the leader of the tech industry when it comes to doing the right thing for diversity and sexual harassment. He had pledged to invest $300 million to improve diversity at Intel, said he would invest $125 million in startups run by women, and made gains in changing Intel’s workforce to make it more diverse. He did more publicly on this front than any tech CEO in Silicon Valley.
And a quick look at Intel history shows that this type of fraternization has happened at high levels in the past.
The non-fraternization policy went into effect during 2011, in the midst of the reign of Paul Otellini, the former Intel CEO who passed away in 2017. Otellini met his second wife, Sandra, at Intel. She worked as a lawyer in legal and management, and she retired in 1995.
Going back even further, Robert Noyce, cofounder of Intel, also married an Intel employee. Ann Bowers began working in human resources at Intel in 1970, and Bowers and Noyce got married in 1974. The company declined to comment on why fraternization became a no-no after some high-profile relationships were tolerated in the past.
“[The situation is] a bit ironic, given that fraternization was fairly endemic in the early days, both at Fairchild, and then at Intel,” said Michael Malone, author of the book The Intel Trinity, in an email. “For example, it was well known at the time  that cofounder and Valley legend Robert Noyce embarked on an affair while married with a woman employee [a pioneering female mask designer]. There was also considerable resentment of this fact by other women working at Intel.”
He noted the Bowers-Noyce relationship, and that fact that many other leaders in Silicon Valley have also “fraternized.”
Malone added, “That wasn’t unusual for the time. People, especially busy entrepreneurs in a then small town like Silicon Valley, didn’t have much time to socialize outside the job. But, obviously, it is still going on. I suspect a lot of execs protect themselves by conducting relationships with people connected with, but not working for, their companies. [Former HP CEO] Mark Hurd lost his job over it.”
There are so many other issues swirling around Krzanich. For instance, Intel paid $1.2 million for unspecified “personal security arrangements” for Krzanich, based on specific Intel-related incidents and threats. Krzanich himself said during a CES panel on Intel’s anti-harassment hackathons that he had to deal with a stalker.
“What makes this very unusual is that at least two of BK’s predecessors, also had in-company affairs,” said Rob Enderle, analyst at the Enderle Group and who expected that Krzanich would be fired. “I expect the board had other reasons and chose one that reflected the least poorly on Intel. Most large companies have had zero tolerance policies on affairs in chain of command since the 1980s because they represent such a high risk of abuse, hostile workplace, and discrimination complaints.”
Krzanich was at the company for three decades, starting as an engineer. During his tenure as CEO, he made many changes in the executive team. When he was named CEO in 2013, Renee James, another longtime executive, was named alongside him as president. But James announced she would resign in mid-2015 and now runs Ampere, an Intel rival.
Danielle Brown was once a technical assistant for Krzanich. She rose to become his chief of staff when he was CEO, and she became chief diversity officer as Krzanich announced his diversity initiatives. But she left Intel in 2017 to join Google. Diane Bryant also ran Intel’s high-profile datacenter group, which generates most of Intel’s profits. But she took a leave of absence in May 2017.
During Krzanich’s reign, archrival Advanced Micro Devices became more competitive, recapturing lost market share for the first time in years with its Zen processor architecture — an advance Intel still hasn’t answered. Intel could have used its advantage in processor manufacturing to trump AMD’s progress in Zen designs; instead Intel reported a rare miss on that front when it delayed 10-nanometer manufacturing from 2018 to 2019.
“While Intel’s financials currently look good they largely got that way through massive cuts which damaged the firm’s future,” Enderle said. “They gutted the PC and server units while staffing up things like graphics development (they are decades behind NVIDIA and AMD), autonomous driving (investing in the same sensors Tesla found inadequate), and things like Drone Swarms (which appear targeted at the tiny fireworks segment). During this time both Apple and Microsoft indicated a pivot away from x86 to ARM and AMD began to make significant inroads suggesting Intel’s strategic future had been crippled.”
Krzanich also took a lot of big actions, like buying Altera for $16.7 billion and Mobileye for $15.3 billion. Those deals will take years to fully play out. I bring these things up to show the diversity of Intel’s experience under Krzanich’s leadership, from the good to the bad. He had an effect on many lives, and this change is a momentous one that will impact many people. Uncertainty lies ahead, spurred on by what may have been the smallest of things once upon a time and is now one of the most momentous.
“Intel has 10-nanometer execution issues, but if you look at how Brian Krzanich diversified the company in 5G, storage, self-driving cars, and accelerated computing while driving the datacenter, overall things went well under his tenure,” said Patrick Moorhead, analyst at Moor Insights & Strategy. “And, of course, the stock soared. His tenure wasn’t perfect, but whose is?”