1.24.2006

TIP: Only the paranoid survive

Business success contains the seeds of its own destruction, former Intel CEO Andrew S. Grove wrote. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left. I believe that the prime responsibility of a manager is to guard constantly against other people's attacks and to inculcate this guardian attitude in the people under his or her management.

The things I tend to be paranoid about vary. I worry about products getting screwed up, and I worry about products getting introduced prematurely. I worry about factories not performing well, and I worry about having too many factories. I worry about hiring the right people, and I worry about morale slacking off.

And, of course, I worry about competitors. I worry about other people figuring out how to do what we do better or cheaper, and displacing us with our customers.

But these worries pale in comparison to how I feel about what I call strategic inflection points... a strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.

Strategic inflection points can be caused by technological change but they are more than technological change. They can be caused by competitors but they are more than just competition. They are full-scale changes in the way business is conducted, so that simply adopting new technology or fighting the competition as you used to may be insufficient. They build up force so insidiously that you may have a hard time even putting a finger on what has changed, yet you know that something has. Let's not mince words: A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness...

We live in an age in which the pace of technological change is pulsating ever faster, causing waves that spread outward toward all industries. This increased rate of change will have an impact on you, no matter what you do for a living. It will bring new competition from new ways of doing things, from corners that you don't expect.

It doesn't matter where you live. Long distances used to be a moat that both insulated and isolated people from workers on the other side of the world. But every day, technology narrows that moat inch by inch. Every person in the world is on the verge of becoming both a coworker and a competitor to every one of us, much the same as our colleagues down the hall of the same office building are. Technological change is going to reach out and sooner or later change something fundamental in your business world.

Are such developments a constructive or a destructive force? In my view, they are both. And they are inevitable. In technology, whatever can be done will be done. We can't stop these changes. We can't hide from them. Instead, we must focus on getting ready for them. The lessons of dealing with strategic inflection points are similar whether you're dealing with a company or your own career. If you run a business, you must recognize that no amount of formal planning can anticipate such changes. Does that mean you shouldn't plan? Not at all. 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. Understanding the nature of strategic inflection points and what to do about them will help you safeguard your company's well-being. It is your responsibility to guide your company out of harm's way and to place it in a position where it can prosper in the new order. Nobody else can do this but you. If you are an employee, sooner or later you will be affected by a strategic inflection point. Who knows what your job will look like after cataclysmic change sweeps through your industry and engulfs the company you work for? Who knows if your job will even exist and, frankly, who will care besides you?...

Category: C++ Quant > Fix the Job You Got

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