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Stay Paranoid – Top Survival Insights from Intel’s Andrew Grove, Part 2
 

Stay Paranoid – Top Survival Insights from Intel’s Andrew Grove, Part 2

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Intel’s former CEO Andrew Grove sits among business’s most eminent leaders. Grove’s highly celebrated business book, Only the Paranoid Survive, offers an intimate account of Intel’s darkest ...

Intel’s former CEO Andrew Grove sits among business’s most eminent leaders. Grove’s highly celebrated business book, Only the Paranoid Survive, offers an intimate account of Intel’s darkest hour. It was the mid-‘90s when Intel was forced to innovate or perish. The once rapidly successful semiconductor startup faced unexpected, overwhelming competition, a severely disrupted market and a team of bewildered, disheartened employees in desperate need of clear direction.

Grove sat at the fore of Intel during its passage through the “valley of death” and, remarkably, managed to transform Intel into the famed microprocessor manufacturer it is known as today. In this two-part guide, key quotes from Only the Paranoid Survive are arranged to deliver Grove’s most crucial lessons for dealing with disruption, innovation and change management.

In Part 1, Grove’s insights for detecting strategic inflection points where highlighted. Part 2 goes beyond identifying impending changes, sharing Grove’s lessons on implementing transformations necessary for survival.

1. Planning to Pivot
2. Change Management
3. Horizontal Industry: Three Rules for Success

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    Stay Paranoid – Top Survival Insights from Intel’s Andrew Grove, Part 2 Stay Paranoid – Top Survival Insights from Intel’s Andrew Grove, Part 2 Document Transcript

    • WITH MALCOLM NETBURNStay Paranoid:Top Survival Insights from Intel’s Andrew Grove, Part 2 Malcolm Netburn Chairman and CEO of CDS Global
    • FORWARD: with Malcolm Netburn February 2013Stay Paranoid:Top Survival Insights from Intel’s Andrew Grove, Part 2Intel’s former CEO Andrew Grove is one of business’s most eminent leaders. Grove’s highlycelebrated business book, Only the Paranoid Survive, offers an intimate account of Intel’s darkesthour. It was the mid-‘90s when Intel was forced to innovate or perish. The once rapidly successfulsemiconductor startup faced unexpected, overwhelming competition, a severely disrupted marketand a team of bewildered, disheartened employees in desperate need of clear direction.Grove sat at the fore of Intel during its passage through the “valley of death” and, remarkably,managed to transform Intel into the famed microprocessor manufacturer it is known as today. Inthis two-part guide, key quotes from Only the Paranoid Survive are arranged to deliver Grove’s mostcrucial lessons for dealing with disruption, innovation and change management.In Part 1, Grove’s insights for detecting strategic inflection points where highlighted. Part 2goes beyond identifying impending changes, sharing Grove’s lessons on implementing thetransformations necessary for survival. 1. Planning to Pivot 2. Change Management 3. Horizontal Industry: Three Rules for Success© 2013 CDS Global. All rights reserved. 2
    • FORWARD: with Malcolm Netburn February 20131. Planning to PivotYou’ve identified a 10X change placing your organization at a major inflection point (Part 1).You know it’s time to take action. But where do you begin? Grove’s insights below will help youplan your organizational pivot. You need to plan the way a fire department plans: It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event. We must invite comments even from people whose job it is to constantly evaluate and critique us, such as journalists and members of the financial community. Turn the tables and ask them some questions: about competitors, trends in the industry and what they think we should be most concerned with. As we throw ourselves into raw action, our senses and instincts will rapidly be honed again. The more complex the issues are, the more levels of management should be involved because people from different levels of management bring completely different points of view and expertise to the table, as well as different genetic makeups. The debate should involve people outside the company, customers and partners who not only have different areas of expertise but also have different interests. When dealing with emerging trends, you may very well have to go against rational extrapolation of data and rely instead on anecdotal observations and your instincts. The old order won’t give way to the new without a phase of experimentation and chaos in between. The dilemma is that you can’t suddenly start experimenting when you realize you’re in trouble unless you’ve been experimenting all along. It’s too late to do it once things have changed in your core business. Ideally, you should have experimented with new products, technologies, channels, promotions and new customers all along. 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. Seeing, imagining and sensing the new shape of things is the first step. Be clear in this but be realistic also. Don’t compromise and don’t kid yourself. If you are describing a purpose that deep down you know you can’t achieve, you are dooming your chances of climbing out of the valley of death. For us senior managers, it took the crisis of an economic cycle and the sight of unrelenting red ink before we could summon up the gumption needed to execute a dramatic departure from our past.© 2013 CDS Global. All rights reserved. 3
    • FORWARD: with Malcolm Netburn February 20132. Change ManagementIt has been said time and again that it’s not the adoption of new technology that creates thegreatest friction within a company looking to shift its strategic direction – it’s in leading the peopleof your organization to accept and adjust to new changes. It is a delicate and difficult process, andone worth making a, if not the, top priority, as people will always be your most precious resource.Below, Grove offers insights into what to expect and how to manage human change. Ideas about the right direction will split people on the same team. After a while, everyone will understand that the stakes are enormously high. There will be a growing ferocity, determination and seriousness surrounding the views the various participants hold. People will dig in. These divergent views will be held equally strongly, almost like religious tenets. In a workplace that used to function collegially and constructively, holy wars will erupt, pitting coworkers against coworkers, long-term friends against long-term friends. The arguments in the midst of an inflection point can be ferocious. When an industry goes through a strategic inflection point, the practitioners of the old art may have trouble. On the other hand, the new landscape provides an opportunity for people, some of whom may not even be participants in the industry in question, to join and become part of the action. It is truly difficult for a successful industry participant to adapt to a completely different industry structure. When a strategic inflection point sweeps through an industry, the more successful a participant was in the old industry structure, the more threatened it is by change and the more reluctant it is to adapt to it. If you’re in a leadership position, how you spend your time has enormous symbolic value. It will communicate what’s important or what isn’t far more powerfully than all the speeches you can give. I can’t stress this issue strongly enough. It takes many years of consistent conduct to eliminate fear of punishment as an inhibitor of strategic discussion.© 2013 CDS Global. All rights reserved. 4
    • FORWARD: with Malcolm Netburn February 20133. Horizontal Industry: Three Rules for SuccessOften times, strategic inflection points present the opportunity to rapidly tap into markets that wouldhave never been considered, or that were non-existent, previously. The competition in a horizontalindustry will be fierce and will require an entirely new approach, but the potential for growth will behigh. Grove offers three rules for entering a horizontal market. I. 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. II. 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. III. 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. This will lead you to achieve economies of scale in which the large investments that are necessary can be effective and productive and will make sense because, by being a large-volume supplier, you can spread and recoup those costs. By contrast, cost-based pricing will often lead you into a niche position, which in a mass-production-based industry is not very lucrative.© 2013 CDS Global. All rights reserved. 5