Thursday, May 24, 2012
The title of Andy Grove's book Only the paranoid survive aptly reflects the philosophy of the man. The former leader of the world's biggest microprocessor manufacturing company comes across as surprisingly wary of what he calls a 'strategic inflection point' or a '10x force', an unknown and unforeseen force that brings about radical changes in the fortunes of a company, and which, if it catches you unawares, can destroy you before you can learn to cope with it. Having survived the onslaught of the Japanese memory makers in the mid 1980s and transitioned Intel from a memory company to a microprocessor company, but barely by the skin of his teeth as the company saw plunging profits before moving with the new winds, the man comes across as battle worn. In consequence, he advocates a management approach in which the manager is eternally on the lookout for the next strategic inflection point. He advocates looking for changes in one's competitors, complementors (a term he coins for allies), suppliers, or possible changes or advances in technology that could alter the market one is playing. He cites the successful transition of Next from a computer company to a software company and the continuous adjustments of HP to changing market conditions as examples of companies that survive strategic inflection points by altering their company strategies and priorities to the new market, even at the expense of shelving their sentimentality for their former strongholds. To contrast, he gives the examples of the now extinct but once massive Digital Equipment Corporation and IBM, a diminutive of its former self, which failed to survive the strategic inflection from vertically organized computer makers to horizontally organized ones, with each company specializing in one layer of the vertical integration, viz microprocessor manufacturing,computer assembly, operating systems, software etc: As much of the book is drawn heavily from personal experience, Andy recommends keeping an open ear to employees, especially middle managers, whom he calls 'Cassandras' after the lady who foresaw the destruction of Troy, as he thinks they are the first ones to sense a strategic inflection point due to changing market conditions. He derives this piece of advice from the fact that his middle managers were committing an increasing fraction of Intel's wafers to microprocessors since about 3 years prior to Intel's senior management actually making the strategic change from SRAMs to microprocessors. From today's vantage point, Andy proves to have honed his managerial instincts reasonably well because in the last chapter of the book he predicts the internet would be a strategic inflection point in the media communications and advertising industries, but not necessarily for Intel's own future and he has been proven largely correct. Overall, I think this book is a quick, light read for anyone who wishes to emulate the paranoia that Andy possessed, and which he claims, solely on the authority of his position, is the only way to survive.
Posted by skar at 10:41 PM