Only the Paranoid Survive

Six Forces Diagram (Location 452)

Note: Adds complementors to Porters five forces Prefer the layout of Porters

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. (Location 698)

They’re Everywhere “Strategic inflection points are not a phenomenon of the high-tech industry, nor are they something that happens to the other guy.”   When a Wal-Mart moves into a small town, the environment changes for every retailer in that town. A “10X” factor has arrived. When the technology for sound in movies became popular, every silent actor and actress personally experienced the “10X” factor of technological change. When container shipping revolutionized sea transportation, a “10X” factor reordered the major ports around the world. (Location 721)

“10X” Change: Competition (Location 742)

“10X” Change: Technology (Location 804)

“10X” Change: Customers (Location 874)

“10X” Change: Suppliers (Location 921)

“10X” Change: Complementors (Location 959)

“10X” Change: Regulation (Location 965)

Then, in 1968, the Federal Communications Commission ruled that the phone company could not require the use of its own equipment at the customer’s location. (Location 984)

Strategic Inflection Points: Changes and Results (Location 1046)

I was in my office with Intel’s chairman and CEO, Gordon Moore, and we were discussing our quandary. Our mood was downbeat. I looked out the window at the Ferris wheel of the Great America amusement park revolving in the distance, then I turned back to Gordon and I asked, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Gordon answered without hesitation, “He would get us out of memories.” I stared at him, numb, then said, “Why shouldn’t you and I walk out the door, come back and do it ourselves?” (Location 1177)

Intel’s performance started to slump when the entire industry weakened in mid-1984. The conversation with Gordon Moore that I described occurred in mid-1985. It took until mid-1986 to implement our exit from memories. Then it took another year before we returned to profitability. (Location 1263)

The second thing is that, when you explore these developments first hand, you’ll discover that mostly they aren’t what they’re cracked up to be. In the early days, getting from one place to another on the Internet took forever and when you got there, more often than not, you found a stale marketing brochure. Electronic banking is still a clumsy way to replace a stamp. And interactive television seems to have vanished even before the ink dried on the mega-announcements. On the other hand, don’t shut off your radar screens and go on about your business, discounting everything even if at first it seems quite crummy. A danger in assessing the significance of changes lies in what I call the trap of the first version. In 1984, when Apple introduced the Macintosh, I thought it was a ridiculous toy. Among other weaknesses I saw in it, it didn’t have a hard disk (at the time, all PCs already had one) and it was excruciatingly slow. Because of these two factors, the Mac’s graphical interface struck me as more of a nuisance than a significant advantage. The first implementation of the Mac blinded me to the far more important features that came with graphical interfaces, like the fact that they brought with them a uniformity for all the application programs that were based on them: You learned one and you learned them all. But I didn’t see through the problems of the first version to perceive the beauty of the technology that lay beneath them. (Location 1481)

However, unlike the accepted model of the sequence of emotions associated with grief (i.e., denial, anger, bargaining, depression and, ultimately, acceptance), in the case of a strategic inflection point, the sequence goes more as follows: denial, escape or diversion and, finally, acceptance and pertinent action. (Location 1635)

The operating phrase should be: “Let chaos reign!” Not that chaos is good in general. It’s awfully inefficient and wearing on all participants. But the old order won’t give way to the new without a phase of experimentation and chaos in between. (Location 1762)

Looking back over my own career, I have never made a tough change, whether it involved resource shifts or personnel moves, that I haven’t wished I had made a year or so earlier. (Location 1800)

To make it through the valley of death successfully, your first task is to form a mental image of what the company should look like when you get to the other side. This image not only needs to be clear enough for you to visualize but it also has to be crisp enough so you can communicate it simply to your tired, demoralized and confused staff. (Location 1870)

Basically, I went back to school. (I was aided by the fact that Intel is a schoolish company, where it’s perfectly respectable for a senior person with twenty years of experience to take some time, buckle down and learn a whole new set of skills.) (Location 1949)

Assigning or reassigning resources in order to pursue a strategic goal is an example of what I call strategic action. I’m convinced that corporate strategy is formulated by a series of such actions, far more so than through conventional top-down strategic planning. (Location 1968)

What’s the difference? Strategic plans are statements of what we intend to do. Strategic actions are steps we have already taken or are taking which suggest our longer-term intent. Strategic plans sound like a political speech. Strategic actions are concrete steps. (Location 1972)

Second, while you’re going through the valley of death, you may think you see the other side, but you can’t be sure whether it’s truly the other side or just a mirage. Yet you have to commit yourself to a certain course and a certain pace, otherwise you will run out of water and energy before long. If you’re wrong, you will die. But most companies don’t die because they are wrong; most die because they don’t commit themselves. They fritter away their momentum and their valuable resources while attempting to make a decision. The greatest danger is in standing still. (Location 2054)

The point is this: how can you hope to mobilize a large team of employees to pull together, accept new and different job assignments, work in an uncertain environment and work hard despite the uncertainty of their future, if the leader of the company can’t or won’t articulate the shape of the other side of the valley? (Location 2074)

It seems that companies that successfully navigate through strategic inflection points have a good dialectic between bottom-up and top-down actions. Bottom-up actions come from the ranks of middle (Location 2177)