corporate crisis

The Intel Crisis I have decided to focus on occurred in 1994. The crisis was named the Pentium FDIV bug, and despite the fact that it happened over 15 years ago, it is still relevant today. The crisis began in October of 1994 when a professor at Lynchburg College discovered a glitch in his Intel Pentium processor. Dr. Nicely discovered that when performing certain operations, incorrect results were being given. And while I do not consider myself a mathematician, I do understand the significance of arriving at correct results during complex mathematical algorithms.

Dr. Nicely informed Intel of the bug in the system. And the manner in which Intel responded is where the crisis ultimately took off. Intel replied that the flaw would only affect a very small percentage of users -- which is why they stated that they will not be replacing the products. On top of their inconsiderate and somewhat inexperienced response, Intel admitted that they have been aware of the bug in the system for months -- way before it was reported by Dr. Nicely.

The response and action from the Intel PR team was awful. Dr. Nicely sent a mass email to his colleagues describing the bug. The glitch was then verified over the internet by many other Intel users. Still, Intel did nothing. In November of 1994, the story of the Intel glitch was picked up by Electronic Engineering Times and soon after by CNN. The issue grew rapidly and Intel became the target of widespread uproar. Intel ultimately agreed to replace the processors of people who could prove that they were affected. However, they continually denied the significance of the problem and repeatedly downplayed the issue, despite the fact that the error was a serious issue for mathematicians. And while it can be admitted that the bug did not affect most users, it did cause major problems for some.

Public pressure mounted against Intel, who later made a public announcement to replace processors on the basis of request. However, the damage was done. In the beginning of 1995, Intel reported a cost of $475 million, all associated with the replacement of flawed processors.
The way that the Intel Pentium FDIV bug was handled was obviously far from professional. The error cost the company millions of dollars, not to mention made a huge blow to their upstanding reputation. Their lack of admittance of the issue as serious portrayed negligence, disregard and the company came across as uncaring. One of the most shocking aspects of the entire issue comes from Intel's lack of planning. While admitting that they knew about the problem months before it occurred, they were unprepared for the crisis.

If I was in charge of Intel's PR team, I would have handled this crisis differently. For starters, when I learned of the issue that was brewing (the bug in the processor), I would immediately prepare a report and anticipate the crisis. I would have on hand press releases, Q and A's, key messages, fact sheets and other important information for when the crisis actually occurred. If Intel had been proactive in handling the issue, it would have been in and out of the news briefly. As soon as Dr. Nicely reported the issue, Intel should have replaced his processor - no questions asked. Once the story hit CNN, Intel should have made a public apology and announcement about the issue and immediately replaced all broken processors. Instead of showing disregard for the issue, Intel should have tackled it head on. In doing so, they would have avoided public outcry and saved the reputation of the company.

Signing off... Literally,
KDC123