Time's Man of the Year announces he'll be stepping down as CEO of the most powerful chip company on the planet, and the market doesn't even blink. In fact, investors send the company's stock higher. What's wrong with this picture?

Actually, the picture is just fine. In fact, in a curious way, the market's reaction to Intel CEO Andy Grove's announcement is the best testimony to Grove's managerial genius one can imagine. For what Grove succeeded in doing at Intel was this: He made the company stronger than just him. His superfluity, in that sense, becomes the measure of his mastery.

To be sure, "superfluity" overstates the case, since Grove will remain at Intel as chairman of the board, while Craig Barrett, who will become CEO May 20, has already been running much of the company's day-to-day business as president and chief operating officer. As chairman, Grove plans to continue playing a role in shaping Intel's long-term strategy, presumably including its heavy investment in companies that are pushing the technological edge. Grove's abdication of his throne also loses some drama from the fact that in recent years his public image has become that of a long-range thinker rather than a hands-on manager. Especially since there's no Mrs. Simpson in the picture.

Since Barrett was christened the heir apparent years ago, the succession should go smoothly, and all indications are that he's a more than capable executive. Still, Grove's announcement was certainly a surprise. There was no hint of it in the press, and he's only a couple of years older than Barrett (though Grove has had a much publicized bout with cancer). But there was nary a ripple of bad news out of Intel when the announcement was made, and the sense of seamlessness that Grove and Barrett have projected has transformed the whole thing into an elegant passing of the torch ceremony.

In fact, there's something invigorating about Grove's decision, precisely because he's going out at the top of his game. For most of his career at Intel, Grove was, if not anonymous, then certainly overshadowed by Gordon Moore and Bob Noyce, technological whiz kids who co-founded the company in 1968. They were the visionaries, he was the nuts-and-bolts guy. In the last three or four years, though, after Moore's retirement (Noyce died in the 1980s), Grove was able to take on the visionary role, even as he seems to have made a conscious choice to become a more public figure. Magazines now wanted to know his thoughts about the future of computing and the Internet. They became oddly fond of taking pictures in which his body was occluded by shadow while his face would be softly spotlit, pictures that made Grove appear to be a mysterious man thinking very deep thoughts. Which he probably was.

This transformation was also reflected in Grove's writing. In the late 1960s, he published an acclaimed engineering text, Physics and Technology of Semiconductor Devices. (That one just missed getting on the best-seller list.) In the early 1980s, he published an exceptional book on management theory, High Output Management, which combined a sophisticated discussion of the way companies should be organized, with a surprisingly convincing analysis of how to evaluate and motivate workers. Then, two years ago, Grove published Only the Paranoid Survive, which lays out a kind of Schumpeterian theory of major transformations in the business climate and tries to explain how to deal with them.

Grove's basic idea is that there are "strategic inflection points," moments where the entire framework in which business has been conducted is transformed and companies must adapt or die. The arrival of superstores in suburbia, the introduction of the stand-alone PC, the advent of talkies in Hollywood: All these were strategic inflection points. In each case, those companies that recognized the changes and adjusted to them flourished, while those that didn't floundered and eventually went under.

As might be expected, Grove's description of past strategic inflection points is more convincing than his recipe for recognizing such moments in the future. But what's especially striking is the way in which the evolution of his books--from engineering to management to theories of change--tracks his evolution as a public figure. The Andy Grove of HighOutputManagement couldn't have been Time's Man of the Year. The Andy Grove of Only the Paranoid Survive could.

In that sense, it's hard to see what more Grove had to accomplish as CEO of Intel. The company's stock price isn't at its all-time high but, in every other way, it's among the most productive, profitable, and acclaimed companies in the world. (It's fourth on Fortune's most-admired-companies list.) And without giving too much weight to Time, it's not likely that a corporate leader--other than Bill Gates, of course--is going to garner more mainstream attention than a "Man of the Year" cover. Ted Williams retired after hitting a home run in his last at-bat. Grove's doing something similar, except that, thanks to the chairmanship, he has the advantage of stepping aside gracefully without really disappearing.

Still, there's a certain irony in Grove's ascent to elder statesman, because the idea of him as shaper of the future makes it easy to miss how much Grove and Intel were products of what's now described as the corporate past. Intel is not, after all, a virtual company. It doesn't outsource all its production. It doesn't have a brand name as its only real asset. It doesn't have 10 people in its corporate headquarters running the whole operation. It's not what management theorist Tom Peters sees as the company of the future, a "floating network/crap game." Instead, Intel makes real things. It builds enormously expensive plants that employ blue-collar workers, even if they are wearing bunny suits. It invests heavily in research and development. And it is hugely productive, which is to say that it makes goods that are more valuable--in a real sense--than the sum of the various things that go into making them.

To say that Grove is a product of the past, then, is to say only that what Grove has done at Intel is more like what Alfred Sloan did at General Motors than what CEOs of Internet companies or Silicon Valley startups think they're doing today. Intel's success under Grove, though, should give pause to advocates of this free-floating, no-manager, no-employee, just-free-agents new economy we're supposedly living in. For what Grove has done exceptionally well is manage. What has allowed Intel to dominate its many competitors, who are perennially nipping at its heels with computer chips that are supposedly faster or cheaper, is that Intel does a much better job of making chips reliably and efficiently. And what has made Intel such a stable company over the past decade has been Grove's ability to plan for change and adapt to it while holding the overall framework steady. The ease of Barrett's succession to CEO is the ultimate expression of this, of course. As Noyce and Moore did before him, Grove led Intel brilliantly without making it dependent upon him. He helped fashion an institution bigger than himself. And that's why there's nothing at all wrong with this picture.