Want to change a dysfunctional culture? Intel’s Israel Development Center shows how

Disclosure: Intel is a client of the author.

Many tech firms have a reputation for paying well, but treating employees — particularly women and minorities — poorly. Some of this follows from decades of bad behavior, as highlighted in books such as “Brotopia: Breaking Up the Boys’ Club of Silicon Valley“ and “Technically Wrong: Sexist Apps, Biased Algorithms, and Other Threats of Toxic Tech.”

These firms tend to be engineer driven — and engineers are not only predominantly white and male, but they’re not known for the best social skills. The issue harkens back to a concept created by Jack Welch at GE: Forced Ranking. It was meant to address the problem where employees were not reviewed based on their performance but on tenure, status, and connections. But forced ranking basically pit employees against each other in cutthroat competition, destroying a firm’s ability to collaborate and create sustainable work groups. If an employee helped someone else, they were effectively undercutting themselves. This promoted backstabbing and scapegoating and drove supportive high producers out while favoring employees who were  good at destroying peers and manipulating superiors.

Intel’s difficult problem

Before Pat Gelsinger took over as CEO in 2021, Intel had been seen as a firm that treated some employees poorly. Former CEO Brian Krzanich was blamed for doing considerable damage to the company (and was the kind of executive who tends to rise in a technology company). I watched him speak of his people poorly (in public) and effectively manipulate Intel’s board into making him CEO. (He resigned in 2018 under less-than-deal circumstances.)

Gelsinger was, and is, a sharp contrast to Krzanich. He was one of the most effective executives in Intel before being forced out, so when he came back, his mission was to turn Intel back into a company he could be proud of, one that reflected his vision of firms that support their workers. Rather than employees focused on making peers look bad, they would focus on building better products. 

But how do you fix a bad culture once it sets in? I worked at IBM when it worked to fix similar issues decades ago. I recall one meeting where executives were told IBM had implemented a zero-tolerance policy for misogyny — and a senior sales exec immediately told an off-color joke, figuring he was untouchable. Two security guards showed up a few minutes later and walked the guy out of the room. Within the hour, he was no longer employed by the company. Incidents like that should have stopped the behavior but really only drove it underground. It took IBM decades — and a female CEO — to truly make IBM a better place to work for women. 

Intel does not have decades.

Gelsinger’s solution

Intel’s secret weapon, one that until recently it did not talk about much, is its Israel Development Center. It is the largest employer in Israel, a nation surrounded by hostile countries, and women and men are treated more equally than in most other countries I’ve studied. They are highly supportive of each other, making it an incredibly supportive country for women in a wide variety of industries. (The executive staff is refreshingly diverse compared to most US companies.)

The facility itself is impressively large and well-built and eclipses Intel’s corporate office in both size and security. The work done there really defines Intel’s historic success in both product performance and quality, making it an example of how a company should be run. Surprisingly, the collaborative and supportive country culture overrode the hostile and self-destructive corporate culture that has defined the US tech industry.

What Gelsinger has done is showcase the development center as a template for the rest of Intel, as a firm more tolerant of failure, more supportive of women and focused like a laser on product quality, performance and caring for Intel’s customers. (Interesting side note:  one of Intel’s employees I most admire, Mooly Eden, started out at the Israeli facility.)

In talking with people that work at Intel today, it’s clear this Gelsinger-driven strategy has had a positive impact. Women are better supported, employees are working collaboratively again, and the company has become a far better place to work. And, as they shared talked about upcoming products, it was clear that the products themselves have significantly benefited from this change.

Clearly, Intel is as competitive as it’s been since the Andy Grove days and, should this trend continue, it has a decent chance of eclipsing that early success.

A best practice that works

As I saw at IBM, changing a company’s culture is hard and can take decades. But executives are not given decades to fix a company in trouble. Investors often unreasonably expect a new CEO to turn things around in months, not years.

Tech firms must fix their cultural issues, make themselves more attractive and supportive of employees in general, and to women and minorities, in particular. The concept of using one part of a company (be it a division like such as the Israel Development Center or with an acquisition) to immediately change the status of the rest of the company is a smart one. 

Intel’s use of its development center looks to be an innovative, impressive, and surprisingly effective way to change a culture in months instead of decades. It will allow Gelsinger to show far more progress than otherwise would have been possible. For this to work elsewhere, a company needs a progressive employee-focused CEO like Gelsinger and a large unit of the company that is behaving well. Getting one of those things is difficult. Getting both is almost impossible. But Intel seems to have both. Impressively done.