July 06

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What you could learn from ‘Only the paranoid survive’ by Andrew Gove (1997, 184 pages)

What happens when the fundamentals that underpin your industry change?  How do you see change coming?  How do you separate the signal from the noise? How do you lead your organisation through the transition?

In his book ‘Only the paranoid survive’ Andrew Grove, former CEO of Intel, discusses how the memory chip (which store data) industry was turned on its head by the rise of cheaper and better quality Japanese memory chips.  Andrew explains how he pivoted a large company from being the world leader in memory chips to be the world leader in processing chips (which make calculations).

The key points from the book are:

  • When you are successful, more people want to copy you, so you need to focus on using your first mover advantages (brand and economy of scale) but also work on your next product and look out for disruption
  • Inflexion points (10X changes) are more common than people think, examples include: Wallmart’s creation of the superstore, use of containers in shipping, privatisation in utility companies (see p77 for more)
  • Disrupt yourself.  Think about bringing a 10X improvement to fundamentally change the industry before others
  • Horizon scan to look at trends and threats (importantly changes could be to do with people and process – a lot of companies are yet to break out of the ‘command and control’ mindset, which significantly hampers agility)
  • Middle managers are close to the customer (especially in sales) and are most likely to be the first to spot potential changes, speak to these people often.  Most importantly don’t blame them for speaking truth to power, if they are speaking up it is because they care
  • Good questions to ask are:
    • Is your crucial competitor changing, about to change?
    • Which competitor would you like to remove? Why?
    • Are your customers changing? Have you lost a significant customer recently? Why?
    • Are people in your organisation ‘losing it’? Is what you did in the past no longer working?
  • Managing transition through inflexion points is about:
    • You have to be chaotic at the start to find the new direction.   The new direction will need experiments, be uncertainty and involve failure.  You need to allow this to happen, but be able to spot the few largest opportunities
    • Rein in chaos once you have found the new direction.  Value Proposition Design is a great book which outlines the three stages of company growth:
      • Product solution fit – is there a customer problem you can solve does you solution theoretically solve it
      • Product market fit – do customers want to use your solution.  Are your customers growing in size and volume
      • Business model fit – can your product add value to the customer and can you as a company extract value as well
    • Set very clear direction and get on with it
    • Over-communicating, clearly and consistently from the whole top team
    • Managing both top-down (setting and encouraging change, taking strategic actions) and bottom-up (identifying there is a problem, changing things locally and highlight what needs to improve across the organisation)

 

How could this book change how you work?

  • Identify the structure of your industry and drivers of value
  • See how these levers are changing over time (trends)
  • Create possible future scenarios based on these trends and potential impact of new technology (e.g., the rise in voice interaction over graphical)
  • Set up a system to see which scenario is becoming true
  • Ensure that your team has understood all of this context and ensure we are nimble enough to adapt

You can buy ‘Only the paranoid survive’ here on Amazon UK (all proceeds go to maintaining this site, and any extra is donated to veterans charities).