How Bureaucracy Strangled Innovation at Intel

Intel been in the news lately, grappling with a possible foundry split, a valuation stuck in a two-decade rut, and rivals like NVIDIA, AMD, and TSMC leaving it in the dust. Raja Koduri, Intel's former chief architect, recently shared his candid assessment of Intel's struggles in a long post on X. The article gets technical at times (discussing metrics like "pico-joules-flop" and architecture specifications), but it’s well worth a read since Koduri provides an excellent diagnosis of how bureaucracy crippled a once-dominant company. Here are my takeaways:

1️⃣ The growth of "spreadsheet & powerpoint snakes" - Koduri's name for bureaucratic processes that"multiply and coil around engineers, constraining their ability to execute on the product roadmap with the boldness it requires." These processes optimized for "minimizing quarterly losses while missing the bigger picture.”

2️⃣ A climate of fear for initiatives outside established standards and priorities - "one misstep, and the bureaucratic snakes strike." This punished the kind of skunkworks initiatives that historically drove innovation at Intel and other tech giants. Engineers learned that coloring outside the lines, even when technically justified, led to career consequences.

3️⃣ "Learned helplessness" throughout engineering ranks - technical talent gradually accepted powerlessness to drive change, "stifling the very innovation culture that built Intel's empire." Engineers stopped proposing bold solutions or challenging flawed decisions because experience had taught them it was futile.

4️⃣ Too many managers, too few makers. As organizations grow and bureaucracy expands, the number of people overseeing, checking, and coordinating the work often increases faster than the people actually doing it. Which is why Koduri calls for increasing "the coder-to-coordinator ratio by 10x” at the company. He even suggests offering "re-learning opportunity to folks stuck in co-ordination tasks to get back to coding or exit the company.”

5️⃣ The "cancel culture" of projects - As Intel's culture became increasingly myopic, risk-averse, and finance-centric, the company lost patience for projects requiring sustained investment to bear fruit. Koduri notes that "Going back to Larrabee days (2009), Intel had at least 8 start/stops" in computing architecture. (Larrabee was Intel's ambitious attempt to create a GPU architecture that could compete with NVIDIA and AMD.) Intel repeatedly "switched to a different architecture and not benefitting from the earlier loop" with each cancellation, preventing the cumulative learning that competitors like AMD achieved by persisting with their architectural approaches. Koduri puts it well: "You only learn by shipping."

6️⃣ Rigid silos -Intel was organized around product markets with no effective mechanisms to harness capabilities and resources to capture opportunities across units. Koduri notes that Intel's technologies could power everything from small personal devices to massive data centers using common components, but parochialism prevailed.

7️⃣ Organizational entropy - Koduri has a great description of how bureaucratic complexity creates a self-reinforcing cycle of inefficiency: "When entropy crosses a certain threshold, the leadership loses control of the company. No amount of executive thrash can fix this situation, until you reduce this entropy." He sees it as a creeping dysfunction that steadily saps a company’s efficiency, slowing decisions and stalling progress. The only solution he sees is to "let chaos reign and then rein in chaos" – invoking Andy Grove's famous dictum. Koduri argues that Intel and other companies in the same predicament must first dismantle accumulated bureaucratic constraints before they can redirect energy toward innovation. A traditional reorg that takes a layer or two here and gets rid of a few silly rules there isn’t going to solve the problem.

How many of these conditions exist in your organization—Has your ratio of talkers to doers ballooned? Does your organization reward process adherence more than breakthrough thinking? When was the last time you championed a project without guaranteed returns? Bureaucracy rarely arrives dramatically—it creeps in through seemingly logical procedures and prudent controls until suddenly, innovation suffocates.

Diagnosing these symptoms is just the beginning. The necessary treatment, as Koduri suggests, requires the courage to dramatically simplify structures and processes to restore the conditions for bold innovation.