Only The Paranoid Survive

Most of this change is gradual: However, every once in a while, technology a changes in a dramatic way. Something can be done that could not be done before, or something can be done "10X" better, faster or cheaper than it would have been done before.

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 a make a decision. The greatest danger is in standing still.

At times like this, looking back may be tempting, but it's terribly counterproductive. Don't bemoan the way things were. They will never be that way again. Pour your energy, every bit of it, into adapting to your new world, into learning the skills you need to prosper in it and into shaping it around you. Whereas the old land presented limited opportunity or none at all, the new land enables you to have a future whose rewards are worth all the risks.

INTRODUCTION

KEY TAKEAWAYS

• when it comes to business, believe in the value of paranoia. Business success contains the seeds of its own destruction.
• […] .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 as you adopting new technology or fighting the competition used to may be insufficient. They build up force so insidiously that you may have hard time even putting a finger on what has changed, yet you know that something has. When the way business is being conducted changes, it creates opportunities for players who are adept at operating in the new way. This can apply to newcomers or to incumbents, for whom a strategic inflection point may mean an opportunity for a new period of growth.
• 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.
• You are in competition with millions of similar businesses: millions of other employees all over the world. You need to accept ownership of your career, your skills and the timing of your moves. It is your responsibility to protect this personal business of yours from harm and to position it to benefit from the changes in the environment. Nobody else can do that for you. p
• the old rules of business no longer worked. New rules prevailed now […] The trouble was, not only didn’t we realize that the rules had changed - what was worse, we didn’t know what rules we now had to abide by.
• Recent modifications of competitive theory call attention to a sixth force: the force of complementors. Complementors are other businesses from whom customers buy complementary products. Each company's product works better or sometimes only works with the other company's product. p
• I'll call such a very large change in one of these six forces a "10X" change, suggesting that the force has become ten times what it was just recently.
• a strategic inflection point is when the balance of forces shifts from the old structure, from the old ways of doing business and the old ways of competing, to the new.
• Most of the time, recognition takes place in stages. First, there is a troubling sense that something is different. Things don't work the way they used to. Customers' attitudes toward you are different. Then there is a growing dissonance between what your company thinks it is doing and what is actually happening inside the bowels of the organization. Such misalignment between corporate statements and operational actions hints at more than the normal chaos that you have learned to live with. Eventually, a new framework, a new set of understandings, a new set of actions emerges. Last of all, a new set of corporate statements is generated, often by a new set of senior managers.
• Given the amorphous nature of an inflection point, how do you know the right moment to take appropriate action, to make the changes that will save your company or your career? Unfortunately, you don't. But you can't wait until you do know: Timing is everything. If you undertake these changes while your company is still healthy, while your ongoing business forms a protective bubble in which you can experiment with the new ways of doing business, you can save much more of your company's strength, your employees and your strategic position.
• There were others who, being born into the new order, were unfettered by old concepts or old rules.
• Reading the daily newspapers through a "10X" lens constantly exposes potential strategic inflection points. By learning from the painful experience of others, we can improve our ability to recognize a strategic inflection point that's about to affect us. And that's half the battle.
• There's competition and there's megacompetition, and when there's megacompetition- a "10X" force -the business landscape changes. It doesn't do business the way you are used to having business done, but it will lure your customers away just the same.
• It took facing a business survival situation for reality to win over longheld dogmas.
• Most of this change is gradual: However, every once in a while, technology a changes in a dramatic way. Something can be done that could not be done before, or something can be done "10X" better, faster or cheaper than it would have been done before.
• to a large extent, whether a company became a a winner or a loser was related to its degree of adaptability. Strategic inflection points offer promises as well as threats. It is at such times of fundamental change that the cliché "adapt or die" takes on its true meaning.
• 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?"
• People who have no emotional stake in a decision can see what needs to be done sooner.
• the people coming in are probably no better managers or leaders than the people they are replacing. They have only one advantage, but it may be crucial: unlike the person who has devoted his entire life to the company and therefore has a history of deep involvement in the sequence of events that led to the present mess, the new managers come unencumbered by such emotional involvement and therefore are capable of applying an impersonal logic to the situation. They can see things much more objectively than their predecessors did. If existing management want to keep their jobs when the basics of the business are undergoing profound change, they must adopt an outsider's intellectual objectivity. They must do what they need to do to get through the strategic inflection point unfettered by any emotional attachment to the past.
• While the realization of what we were facing was a flash of insight that took place in a single conversation, the work of implementing the consequences of that conversation went on for years. also learned that strategic inflection points, painful as they are for all participants, provide an opportunity to break out of a plateau and catapult to a higher level of achievement.
• People in the trenches are usually in touch with impending changes early.
• Changes take place in business all the time. Some are minor, some are major. Some are transitory, some represent the beginning of a new era.
• There simply is no surefire formula by which you can decide if something is signal or noise. But because there is no surefire formula, every decision you make should be carefully scrutinized and reexamined as time passes.
• you have to pay eternal attention to developments that could become a "10X" factor in your business.
• Ask these questions to attempt to distinguish signal from noise:
• Is your key competitor about to change? the "silver bullet" test. It works like this: if you had just one bullet in a figurative pistol, whom among your many competitors would you save it for?
• When the answer to this question stops being as crystal clear as it used to be and some of your people direct the silver bullet to competitors who didn't merit this kind of attention previously, it's time to sit up and pay special attention.
• In an analogous fashion, you should ask, is your key complementor about to change? Does the company that in past years mattered the most to you and your business seem less important today?
• Do people seem to be "losing it" around you? Does it seem that people who for years had been very competent have suddenly gotten decoupled from what really matters? p. 107
• Think of it this way: when spring comes, snow melts first at the periphery, because that's where it's most exposed.
• quotes definition of an entrepreneur a as someone who moves resources from areas of lower productivity and yield to areas of higher productivity and yield. That's what a properly motivated and intelligent middle manager will do with resources under his or her command.
• A danger in assessing the significance of changes lies in what call the trap of the first version. You can't judge the significance of strategic inflection points by the quality of the first version.
• But if your instincts suggest that "10X" improvement could […] make this capability exciting or threatening, you may very well be looking at the beginning of what is going to a be a strategic inflection point.
• all sides cannot prevail in the debate but all opinions have value in shaping the right answer.
• But data are about the past, and strategic inflection points are about the future.
• Simply put, fear can be the opposite of complacency. Complacency often afflicts precisely those who have been the most successful. It is often found in companies that have honed the sort of skills that are perfect for their environment. But when their environment changes, these companies may be the slowest to respond properly. A good dose of fear of losing may help sharpen their survival instincts.
• Senior managers got to where they are by having been good at what they do. And over time they have learned to lead with their strengths. So it's not surprising that they will keep implementing the same strategic and tactical moves that worked for them during the course of their careers--especially during their "championship season.'
• I call this phenomenon the inertia of success. It is extremely dangerous and it can reinforce denial. When the environment changes in such a way as to render the old skills and strengths less relevant, we almost instinctively cling past. We refuse to acknowledge changes around us, almost to our like a child who doesn't like what he's seeing so he closes his eyes and counts to 100 and figures that what bothered him will go away.
• But 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. Then, when you sense that "something has changed,' you will have a number of experiments that can be relied on to expand your bag of tricks and your organization will be in a much better position to expand the scope of experimentation and to tolerate the increased level of chaos that is the precursor for repositioning the company in a new business direction.
• As in many sports, timing is everything. The same action taken in business early on may do the job; taken later on, it may well fall short because it won't be enough. By "early" I mean acting while the momentum of your existing business is strong, while the cash flow is there and while the organization is intact.
• 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.
• This tendency is easy to see in others although we are prone to blindness when we do it ourselves.
• Implicit in doing business every day is a mental map of the structure of the industry. This map is composed of an unstated set of rules and relationships, ways and means of doing business, what's "done" and how it is done and what's 'not done,' who matters and who doesn't, whose opinion you can count on and whose opinion is usually wrong, and so on. But when the structure of the industry changes, all of these elements change too. The mental map that you have been carrying with you all these years and relied upon in charting your company's course of action suddenly loses its validity.
• Sharing a common picture of the map of the industry and its dynamics is a key tool in making your organization an adaptive one.
• 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. Management writers use the word "vision" for this. That's too lofty for my taste. What you're trying to do is capture the essence of the company and the focus of its business. You are trying to define what the company will be, yet that can only be done if you also undertake to define what the company will not be.
• 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.
• As Peter Druker suggests, the key activity that's required in the course of transforming an organization is a wholesale shifting of resources from what was appropriate for the old idea of the business to what is appropriate for the new.
• 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. Strategic change doesn't just start at the top. It starts with your calendar.
• But management's tendency is to hang on to the old, so their strategic actions are more likely to happen later rather than earlier. The risk is that if you are late you may already be in an irreversible decline. Simply put, in times of change, managers almost always know which direction they should go in, but usually act too late and do too little.
• The biggest danger facing an early-mover company is that it may have a hard time distinguishing a signal from noise and start to respond to an a inflection point that isn't one. Moreover, even if it is right in its response, it is likely to be ahead of its market and will run a greater risk of getting caught up in the dangers of the "first instantiation,". But offsetting these dangers is the possibility of greater rewards: The early movers are the only companies that have the potential to affect the structure of the industry and to define how the game is played by others.
• A question that often comes up at times of strategic transformation is, should everything on you pursue a highly focused approach, betting on one strategic goal, or should you hedge? I tend to believe Mark Twain hit it on the head when he said, "Put all of your eggs in one basket and WATCH THAT BASKET."
• If competition is chasing you (and they always are this is why "only the paranoid survive"), you only get out of the valley of death by outrunning the people who are after you. And you can only outrun them if you commit yourself to particular direction and go as fast as you can.
• Hedging is expensive and dilutes commitment. Without exquisite focus, the resources and energy of the organization will be spread a mile wide and they will be an inch deep.
• 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 a make a decision. The greatest danger is in standing still.
• Clarity of direction, which includes describing what we are going after as well as describing what we will not be going after, is exceedingly important at the late stage of a strategic transformation.
• How do you role-model a strategy? By showing your interest in the elements that lead to the strategic direction, by getting involved in the details that are appropriate to the new direction and by withdrawing attention, energy and involvement from those things that don't fit. Overcorrect your actions, recognizing that the symbolic nature of your actions will amplify their impact within the organization. Most executives' schedules are shaped by the inertia of prior actions. You are likely to accept appointments, attend meetings and schedule activities that are similar to what you had been doing in the past. Break the mold now.
• When you have to reach large numbers of people, you can't possibly overcommunicate and overclarify. But you will find that repetition sharpens your articulation of the new direction and makes it increasingly clear to your employees.
• An organization that has a culture that can deal with these two phases - debate (chaos reigns) and a determined march (chaos reined in) - is a powerful, adaptive organization.
• The other side of the valley of death represents a new industry order that was hard to visualize before the transition. Management did not have a mental map of the new landscape before they encountered it. Getting through the strategic inflection point required enduring a period of confusion, experimentation and chaos, followed by a period of single-minded determination to pursue a new direction toward an initially nebulous goal.
• At times like this, looking back may be tempting, but it's terribly counterproductive. Don't bemoan the way things were. They will never be that way again. Pour your energy, every bit of it, into adapting to your new world, into learning the skills you need to prosper in it and into shaping it around you. Whereas the old land presented limited opportunity or none at all, the new land enables you to have a future whose rewards are worth all the risks.

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