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a strategic inflection point is a time in the life of a business when its fundamentals are about to change.
A strategic inflection point can be deadly when unattended to.
You need to plan the way a fire department plans: It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event.
The sad news is, nobody owes you a career. Your career is literally your business. You own it as a sole proprietor. You have one employee: yourself. You are in competition with millions of similar businesses: millions of other employees all over the world. You need to accept ownership of your career, your skills and the timing of your moves. It is your responsibility to protect this personal business of yours from harm and to position it to benefit from the changes in the environment. Nobody else can do that for you.
“Bug in the Pentium FPU.” (FPU stands for floating point unit, the part of the chip that does the heavy-duty math.)
It was due to a minor design error on the chip, which caused a rounding error in division once every nine billion times.
Businesses are about creating change for other businesses.
The lesson is, we all need to expose ourselves to the winds of change. We need to expose ourselves to our customers, both the ones who are staying with us as well as those that we may lose by sticking to the past. We need to expose ourselves to lower-level employees, who, when encouraged, will tell us a lot that we need to know. We must invite comments even from people whose job it is to constantly evaluate and critique us, such as journalists and members of the financial community. Turn the tables and ask them some questions: about competitors, trends in the industry and what they think we
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These six forces are sketched out in the diagram below.
In the early eighties, Michael Dell started supplying his friends with computers he assembled out of parts in his dorm room at the University of Texas.
One, don’t differentiate without a difference. Don’t introduce improvements whose only purpose is to give you an advantage over your competitor without giving your customer a substantial advantage.
Two, in this hypercompetitive horizontal world, opportunity knocks when a technology break or other fundamental change comes your way. Grab it. The first mover and only the first mover, the company that acts while the others dither, has a true opportunity to gain time over its competitors—and time advantage, in this business, is the surest way to gain market share.
Three, price for what the market will bear, price for volume, then work like the devil on your costs so that you can make money at that price.
A fundamental rule in technology says that whatever can be done will be done.
Some history: Intel started in 1968. Every start-up has some kind of a core idea. Ours was simple. Semiconductor technology had grown capable of being able to put an ever larger number of transistors on a single silicon chip. We saw this as having some promising implications. An increasing transistor count readily translates into two enormous benefits for the customer: lower cost and higher performance.
We started modestly. Our first product was a 64-bit memory. No, this is not a typo. It could store 64 digits—numbers. Today people are working on chips that can store 64 million digits but this is today and that was then.
Through our struggle with the first two technological curiosities that didn’t sell and with the third one that sold but that we had such a hard time producing, Intel became a business and memory chips became an industry.
Then we were hit by the quality issue. Managers from Hewlett-Packard reported that quality levels of Japanese memories were consistently and substantially better than those produced by the American companies. In fact, the quality levels attributed to Japanese memories were beyond what we thought were possible.
Most importantly, we continued to spend heavily on R&D. After all, we were a company based on technology and we thought that every problem should have a technological solution.
People who have no emotional stake in a decision can see what needs to be done sooner.
People in the trenches are usually in touch with impending changes early. Salespeople understand shifting customer demands before management does; financial analysts are the earliest to know when the fundamentals of a business change.
The debate over their merits divided the computing industry and almost tore it apart. CISC was the older approach; RISC was a newer technique. CISC designs require a lot more transistors to achieve the same result that RISC chips can accomplish with fewer transistors.
Cassandras are usually in middle management;
Peter Drucker quotes a definition of an entrepreneur as someone who moves resources from areas of lower productivity and yield to areas of higher productivity and yield.
Altogether too often, people substitute opinions for facts and emotions for analysis.
If you are a senior manager, keep in mind that the key role of Cassandras is to call your attention to strategic inflection points, so under no circumstances should you ever “shoot the messenger,” nor should you allow any manager who works for you to do so.
From our inception on, we at Intel have worked very hard to break down the walls between those who possess knowledge power and those who possess organization power.
Calendar of the CEO of a Major U.S. Corporation During a Strategic Inflection Point
I call this phenomenon the inertia of success.
Netscape went public as I was working on this book.
By some estimates, worldwide spending on advertising is some $345 billion dollars. Right now, all of this money is spent on advertising in newspapers, magazines, radio and television. The money flows from advertisers like GM, Coca-Cola and Nike through the conventional media industry without any of it ending up in the pockets of the personal computing or telecommunications industries. That may be about to change.
Processing the large number of bits that make these up requires higher and higher power microprocessors. This has wonderful promise for our business.
A simple and cheap microprocessor would not do a wonderful job of creating content that is appealing enough to steal eyeballs.
I think it is that big a deal. I think anything that can affect industries whose total revenue base is many hundreds of billions of dollars is a big deal.
In 1998, I relinquished my position as Intel’s CEO after eleven years in the job. I did this as part of a normal succession process. I have always regarded preparing for succession to be part of a manager’s job and have often stated that belief. Now I could do no less than what I expected others to do.
According to some statistics, 1998 will have seen a trillion dollars’ worth of merger and acquisition activities. That trillion-dollar figure signifies changes in corporate structure employing perhaps a million people.
Your career is literally your business, and you are its CEO.
Put yourself in the picture. Ask yourself a series of questions:
Often you’ll be tempted to believe that because of your particular individual excellence, you’ll be exempt from the change. You’ll think, “It may happen to others but not to me.” This is a dangerous conceit.
Furthermore, if you are among the first to take advantage of a career inflection point, you are likely to find the best pick of the opportunities in your new activity.
Ask yourself another set of questions:
As a single individual, you have just one career. Your best chance to succeed in a career inflection point is to take control of it with full focus and energy, and with no wavering.
It’s a bit like emigrating to a new country. You pack up and leave an environment you’re familiar with, where you know the language, the culture, the people, and where you’ve been able to predict how things, both good and bad, happen.
