Only the Paranoid Survive

by Andrew S. Grove

when it comes to business, I believe in the value of paranoia.

a strategic inflection point is a time in the life of a business when its fundamentals are about to change.

strategic inflection points are about fundamental change in any business, technological or not.

If you run a business, you must recognize that no amount of formal planning can anticipate such changes.

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.

This project was called “Job 1” so all our employees knew where our priorities lay.

Ultimately, we took a huge write-off—to the tune of $475 million.

And we embarked on a whole new way of doing business.

It’s like sailing a boat when the wind shifts on you but for some reason, maybe because you are down below, you don’t even sense that the wind has changed until the boat suddenly heels over.

Middle managers—especially those who deal with the outside world, like people in sales—are often the first to realize that what worked before doesn’t quite work anymore; that the rules are changing.

The lesson is, we all need to expose ourselves to the winds of change.

nobody will ring a bell to call your attention to the fact that you are entering into such a transition.

An inflection point occurs where the old strategic picture dissolves and gives way to the new, allowing the business to ascend to new heights.

a strategic inflection point is when the balance of forces shifts from the old structure, from the old ways of doing business and the old ways of competing, to the new.

When you’re caught in the turbulence of a strategic inflection point, the sad fact is that instinct and judgment are all you’ve got to guide you through.

Even in retrospect, I can’t put my finger on exactly where the inflection point took place in the computer industry.

So when the industry changed, they attempted to use the same type of thinking regarding product development and competitiveness that had worked so well in the past.

When an industry goes through a strategic inflection point, the practitioners of the old art may have trouble.

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.

Yet while Jobs was focusing on an ambitious and complex development task, he ignored a key development that was to render most of his efforts futile. While he and his employees were spending days and nights developing the superb sleek computer, a mass-produced, broadly available graphical user interface, Microsoft Windows, had come on the market. Windows wasn’t even as good as the Mac, let alone the Next interface, and it wasn’t seamlessly integrated with computers or applications. But it was cheap, it worked and, most importantly, it worked on the inexpensive and increasingly powerful personal computers that by the late eighties were available from hundreds of PC manufacturers.

Steve Jobs is arguably the founding genius of the personal computer industry, the person who at age twenty saw what in the next decade would become a $100 billion worldwide industry. Yet ten years later, at thirty, Jobs was stuck in his own past.

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

Customers drifting away from their former buying habits may provide the most subtle and insidious cause of a strategic inflection point—subtle and insidious because it takes place slowly.