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1-Page Summary of Only The Paranoid Survive
Overview
Andrew Grove, former CEO of Intel, has a model that can help companies not only to deal with critical moments in their existence but also use them to thrive.
Intel’s CEO, Andy Grove, calls these moments “strategic inflection points” or SIPs. He presents advice for surviving and thriving in these critical times.
Here are some key points:
• It’s not always a good idea to keep secrets.
• Open communication with outsiders is important.
• A company shouldn’t trust the opinion of someone who feels emotionally attached to it.
Big Idea #1: “Strategic inflection points”: Whenever there’s a change in the market, companies have to reevaluate their strategies.
There are times when a company’s entire strategy is questioned. These moments of crisis are known as strategic inflection points (SIPs). However, there are six forces that shape the competitive well-being of a company and can compel it to consider its strategic options. These forces include the strength of competitors, suppliers, existing customers, potential customers and complementors, and finally whether or not business can be done in a different way. Any disturbance in this balance will transform the company’s business environment. For example IBM was greatly affected by how their computers were built because they used to sell pre-built computers but then people could combine components like microchips, hard drive software etc., so now consumers preferred designing their own PCs instead of buying pre-made ones from IBM
Although IBM tried to develop PCs for the masses, they were too late and failed. The market had already gone to other companies who sold computers with better technology. Although a company can sometimes succeed with their own strategy (e.g., Apple), it is often difficult for them to change course when there are major changes in the environment or industry trends (e.g., how Nokia was overtaken by Samsung).
Some of these forces are easier to spot than others. Companies should be aware of any changes that might affect them.
Big Idea #2: Employees must react to strategic inflection points – not only in their company, but also in the wider market.
SIPs are not just relevant to CEOs. Rather, they affect all employees at every level of a company. That’s why everyone should be prepared for such situations because jobs can be lost when SIPs occur. In extreme cases, an SIP could even result in the entire business shutting down and thus causing every employee to lose their job. However, if the company survives and restructures, it might have to lay off some workers or force others to acquire new skills and adapt quickly to different work environments.
A significant innovation project (SIP) often forces employees to change the way they operate in the market. For example, when sound was first introduced into movies, actors were forced to choose whether they wanted to stick with silent films or adapt to a new kind of acting that sound required. Some actors succeeded by adapting and becoming successful movie stars; others failed because they didn’t adapt well enough. Charlie Chaplin, for instance, was bitter about having to make “talkie” movies but eventually he had no choice but to do it anyway.
Furthermore, SIPs have caused some jobs to become obsolete. This is especially true when technological changes occur. For example, when industrialization began, craftsmen were in danger of becoming obsolete because factories could produce the same products much faster and cheaper. As a result, almost all craftsmen had to quit their businesses and work at the factories. The few who survived by specializing in higher-quality production were able to keep their business going.
