Only the Paranoid Survive

by Andrew S. Grove

Let’s not mince words: A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness.

The possibility that all entertainment content can be created, stored, transmitted and displayed in digital form may change the entire media industry.

The first involved our attempting to change how our products were perceived. A few years back, we had introduced a major marketing campaign, the “Intel Inside” program. It was the biggest campaign the industry had ever seen—in fact, it ranks up there with big-time consumer merchandising campaigns. Its aim was to suggest to the computer user that the microprocessor that’s inside his or her computer is the computer.

Like all good merchandising campaigns, this had the advantage of reinforcing the truth. Even before the campaign, when you asked someone what kind of a computer he had, the first thing he tended to say was, “I have a 386”—which was the microprocessor chip inside the computer—and then he would go on to identify the computer manufacturer, what kind of software it had and so on.

The difference between vertical and horizontal

Even something as simple as the choice of the name “OS/2” showed how IBM missed the significance of the horizontal industry. The idea of OS/2, a new personal computer operating system, was introduced in 1987 at the same time as a new line of IBM personal computers called the “PS/2.” Even though it wasn’t necessarily the case, the inference was that OS/2 worked only on PS/2 computers. That perception alone might have been enough to limit the success of OS/2, since the majority of personal computers were made by IBM’s competitors, not by IBM itself.

Some managers inside the company had advocated throwing in the towel in hardware and porting their crown jewel to mass-produced PCs. Jobs resisted this for a long time. He didn’t like PCs. He thought they were inelegant and poorly engineered, and the many players in the industry made any kind of uniformity hard to achieve. In short, Jobs thought PCs were a mess. The thing is, he was right. But what Jobs missed at the time was that the very messiness of the PC industry that he despised was the result of its power: many companies competing to offer better value to ever larger numbers of customers.

A fundamental rule in technology says that whatever can be done will be done.

Inflection point

Is your key competitor about to change? First, figure out who your key competitor is by asking a hypothetical question that I call the “silver bullet” test. It works like this: if you had just one bullet in a figurative pistol, whom among your many competitors would you save it for?

Escape, or diversion, refers to the personal actions of the senior manager. When companies are facing major changes in their core business, they seem to plunge into what seem to be totally unrelated acquisitions and mergers. In my view, a lot of these activities are motivated by the need of senior management to occupy themselves respectably with something that clearly and legitimately requires their attention day in and day out, something that they can justify spending their time on and make progress in instead of figuring out how to cope with an impending strategically destructive force.

When you have to reach large numbers of people, you can’t possibly overcommunicate and overclarify. Give a lot of speeches to your employees, go to their workplaces, get them together and explain over and over what you’re trying to achieve. (Take particular care to answer questions of the “Does it mean that…” variety. Those are the ones that offer the best chance of bringing your message home.) Your new thoughts and new arguments will take awhile to sink in. But you will find that repetition sharpens your articulation of the new direction and makes it increasingly clear to your employees. So speak and answer questions as often as possible;