Welcome to the Resilient Business Series. In this series, we examine businesses and organisations that have gone through events like recessions, pandemics and world wars who not only survived, but thrived. We find out how they did it and the lessons you can apply to your business.
This week we examine Intel, the world’s largest manufacturer of semiconductor chips by size and revenue…
In 2008, Intel was heading into their 87th quarter of profit. They had exclusive contracts with some of the world’s biggest computer brands and were the leading semiconductor chip manufacturer.
The future looked bright, but there were storm clouds on the horizon.
That storm was the GFC, which led to Intel stock losing 50% of its value in a month, 6000 redundancies being made and the closing of four manufacturing plants.
As other businesses began to feel the pinch, orders dropped, and Intel faced an uncertain future. It was time to circle the wagons or fight the storm.
While cost-cutting was certainly part of Intel’s recovery plan, they decided to pour their remaining money into research and development. In 2008, their R&D percentage spend actually increased.
They knew the GFC couldn’t last forever and wanted to be in a position of strength when markets lifted.
To find out where to spend their R&D budget, Intel increased their customer focus.
Pre-GFC, Intel’s marketing team met monthly to discuss demand data and how customers were responding to their products. During the GFC, the marketing team met twice a week and adjusted spend accordingly.
Intel also put aside their ego, they had plans for a new range of super chips that would be market leading. Rather than continue their development, Intel focused instead on smaller and more efficient models that they knew would be in-demand post-GFC.
Alongside R&D spend and better marketing, they focused heavily on current customers. Intel knew that it’s 80% easier to keep a current customer than acquire a new one.
The result? Intel’s profits went to a ten-year high only one-year post-GFC. In the words of Intel’s spokesperson, Chuck Mulloy, “You never save your way out of recession. You invest your way.”
What you can take-away for your business:
- Listen to the market, it might have the solution to your problems
- Invest in improving your products and don’t chase vanity projects
- Love your current customers, it’s hard to find new ones in challenging times