As Andrew S. Grove said: The business responds differently to managerial actions than it did before. We have lost control and don’t know how to regain it. Eventually, a new equilibrium in the industry will be reached. Some businesses will be stronger, others will be weaker. Managing, especially managing through a crisis, is an extremely personal affair.
Andy Grove was one of the greatest CEOs in the technology sector of all times. He was the man who made Intel one of the greatest companies of the last 50 years – a company that revolutionized the computer industry with its invention of the microprocessor.
Only the Paranoid Survive is Grove’s tour de force. It’s more of a peep into his business philosophy that led to Intel’s great success than a business narrative as such. As an avid business book reader and a student of business, this book has been to me what reading Plato would mean to a student of philosophy, or what a book by Germaine Greer would mean to a young feminist.
This is essentially a book about crisis in business and dealing with it. Grove explains the philosophy of his book as – How to Exploit the Crisis Points That Challenge Every Company. Every business faces a crisis at some point, it could even be an existential crisis that threatens the continuity of the business.
The term used to describe this phase in a business’ life is called the Strategic Inflection Point. Grove explains there are 6 factors that determine a business’ success: customers, competitors, suppliers, substitutes, barriers to entry, and complementors (businesses that offer complementary products, like what an operating system is to a laptop).
A company is said to have a strategic inflection point when any one of these six forces become untenable and threaten its strategic plan, first this starts as a ripple and then transforms into a tsunami. And when this strategic inflection point is reached, the management has to take stock and act – act urgently at that.
A Strategic Inflection Point has to be attended to urgently, with haste and action has to be taken. Not attending to it can be disastrous for a business and cause its imminent downfall. It is about realizing, “Things are different. Something has changed. ” According to Grove, this awareness is the main weapon against being defeated by a Strategic Inflection Point.
Grove talks about how transforming Intel from a company that made memory chips into one that introduced microprocessors to the world was how he reacted to his own Strategic Inflection Point as a CEO – the entry of Japanese companies in the memory business.
The Japanese manufacturers made memory chips that were cheaper and of the same quality. Grove could compete with them and fail, or change Intel’s primary product and business model completely – which he did. He was soon to get rid of Intel’s memory chip business and get into the manufacturing of processing chips – which he did, to outstanding results.
Grove’s analysis of how the computer industry transformed itself from a vertical market – where one company such as IBM made everything, hardware, software and so on, to a horizontal one, in which Microsoft made the software, Novell did the networking and HP and Dell made the hardware is spot on as well. Grove argues that it is easier to be the best in a small area of business than try to do everything under the sun.
Truly, a remarkable book by one of the greatest business leaders of our times.