Only the Paranoid Survive

by Andrew S. Grove

  I think it is that big a deal. I think anything that can affect industries whose total revenue base is many hundreds of billions of dollars is a big deal.

  Pros and Cons of the Internet for Intel

  Positives Negatives

  More applications Microprocessors could be commoditized

  Cheaper connectivity More intelligence resides on centralized computer

  Cheaper software distribution Internet appliance might make do with a cheap microprocessor

  Media business opens up; needs powerful microprocessors

  Does it represent a strategic inflection point for Intel? Does it change any of the forces affecting our business, including our complementors, by a “10X” factor?

  As I look at the above balance sheet, I don’t see that either our customers or our suppliers would be affected in a major way. What about our competition? Let’s apply the silver bullet test. Does the Internet bring on the scene players that would be more attractive targets for our silver bullet than the targets we have now? My gut says no. There will be new players on the scene to be sure, but they are just as likely to play the role of complementors as competitors. I certainly wouldn’t want to use a silver bullet to take out a complementor that might bring new capabilities to us.

  Does my list of fellow travelers change? It does, because companies that used to be complementors to our competitors are now generating software that works as well on computers based on our microchips as on computers based on others. That makes them our complementors too. Also new companies are being created almost daily to take advantage of the opportunity provided by the Internet. Creative energy and funds are pouring in, much of which is going to bring new applications for our chips. So my fellow travelers are likely to grow in number, whereas I don’t see that we are about to lose any.

  What about our people? Will they be out of it and not “get it?” I don’t think that’s very likely. A lot of our people have followed the evolution of the Internet from research to mass market both in their capacities as researchers and in their capacities as users of the mass-market version. Their presence ensures that we have the genetic mixture that represents this technology in our midst.

  Let’s test for dissonance. Are we doing things that are different from what we are saying? We are busily involved in communicating Intel messages on the World Wide Web ourselves. We have ongoing contact with most of the key players in this emerging branch of our business. We even talk with the people who are advocating the development of the inexpensive Internet appliance without an Intel chip in it. I don’t see signs of strategic dissonance. But then again, as the CEO, I could very well be the last one to notice.

  All this suggests that the Internet is not a strategic inflection point for Intel. But while the classic signs suggest it isn’t, the totality of all the changes is so overwhelming that deep down I think it is.

  What Do We Do?

  On balance, I think the promises of the Internet outweigh the threats. Still, we won’t harness the opportunity by simply letting things happen to us. Because this “we” specifically includes me, I have to ask, What do I do differently?

  I decide to devote more than half of my environmental assessment to the Internet. While that’s an easy thing to decide, to fill my presentation with things I’m not embarrassed to say to my colleagues is harder. In other words, I have to study.

  I read everything I can lay my hands on. I spend many hours searching out computers located on the World Wide Web and looking at their contents, reading the content of both competitors and oddball presences. I visit other companies, including those that at first blush might be regarded as the enemy because they are devoted to diminishing our business by putting an Internet appliance on the market as a substitute for PCs. I ask our own people to show me things we can do with PCs attached to the Internet.

  Gradually, my picture gets clearer. I put my presentation together and finally give it to forty or so of our senior management team, some of whom know a whole lot more about my subject than I do and some of whom haven’t given any of it much thought. Comments on my presentation range from “This was the best strategic analysis you’ve ever done” to “Why the hell did you waste so much time on the Internet?” But I succeed with one thing: the center of gravity of our management discussion shifts measurably.

  There seems to be a measure of embarrassment surrounding things to do with the Internet. People know a lot less than they let on. Being familiar with the Internet has become a cultural mandate that causes people to be embarrassed to ask basic questions, so my sense is that a lot of the familiarity that exists is extremely superficial. We set up a hands-on course for our senior managers and for our sales force, where they get to experience the current status of the World Wide Web first-hand. The hope is that this course will fill in the background bit by bit without confronting people with their ignorance point-blank.

  I have to admit that my own knowledge is too superficial for my taste as well. But as my knowledge deepens, my conviction is growing that the triad of software coming from personal sources, from telephone and network sources and from the Internet will together be what will drive our industry in the years ahead. My conviction is also growing that the media and the advertising industries represent a growing opportunity for us.

  We have a few problems in exploiting all this. We need to update our own genetic makeup, to be more in tune with the new environment. We have a whole slew of new fellow travelers that we need to get to know, to cultivate and learn to work with: software companies that we never had anything to do with in the past, telecommunications providers that are in the process of upgrading their networks, advertising and media companies that want to learn about our technology and advertisers who have paid no attention to the computing world until now but suddenly realize that they had better start.

  Do we have the time, the attention and the discipline to play this more complex role? We may need to rethink our entire corporate organization structure and modify it to let us play this role with fewer internal complexities. Such a change would touch the lives of thousands of our employees. They would need to understand why we would tinker with what has worked well for us in the past.

  Intel operates by following the direction set by three high-level corporate strategic objectives: the first has to do with our microprocessor business; the second with our communications business; the third with our operations and the execution of our plans. We add a fourth objective, encapsulating all the things that are necessary to mobilize our efforts in connection with the Internet. This is preceded by a lot of argument; some think we might just as well fold all the Internet-related things we need to do under the other three objectives. I feel otherwise. Packaging Internet activities separately and elevating them on a par with our other three objectives is a way to communicate their significance to the entire company.

  So that’s where we are.

  Except for one last thing. What if the people who believe in the cheap Internet appliance turn out to be right?

  It is likely that the Internet appliance is a case of turning the clock backward, given that the trend over the last twenty to thirty years has consisted of pulling down intelligence from big computers to little ones. I don’t believe that the Internet is about to reverse this trend. But then again, my genes were formed by those same twenty or thirty years. And I’m likely to be the last one to know.

  So I think there is one more step for Intel to take to prepare ourselves for the future. And I think we should take it now while our market momentum is stronger than ever. I think we should put together a group to build the best inexpensive Internet appliance that can be built, around an Intel microchip. Let this group try to derail our strategies themselves. Let them be our own Cassandras. Let them be the first to tell us whether this can be done and whether what I now think is noise is, in fact, a strong signal that, once again, something has changed.

  Career Inflection Points

  “Career inflection

>   points caused by a

  change in the

  environment do not

  distinguish between

  the qualities of the

  people that they

  dislodge by their

  force.”

  In 1998, I relinquished my position as Intel’s CEO after eleven years in the job. I did this as part of a normal succession process. I have always regarded preparing for succession to be part of a manager’s job and have often stated that belief. Now I could do no less than what I expected others to do.

  For a number of years, there had been a growing consensus among members of Intel’s board of directors about my probable successor. We had often discussed this choice and consequently, over the years, moved the person whom we were considering into positions of increasing responsibility. My change of status was widely expected, both inside and outside the company. I continue to hold the job of chairman, go to work every day and participate in many of the same activities as before. Still, I knew that there would be a difference, and that the difference would grow in time.

  As career changes go, this was a mild one, as mild as they come. But it still made me think about the millions of career changes that occur each year around us. Some of them are as natural as mine, but many more occur in adverse circumstances. Consider this: According to some statistics, 1998 will have seen a trillion dollars’ worth of merger and acquisition activities. That trillion-dollar figure signifies changes in corporate structure employing perhaps a million people.

  There are other forces at work today that further alter the work environment. The Internet tidal wave that I described in Chapter 9 has grown and accelerated, increasingly affecting the way a large number of companies do business. It destroys existing business methods and creates new ones. Many jobs get shaken up in the process.

  The year 1998 saw the momentum of the Asian economies go from fast-forward to reverse. Those countries fueled economic growth all over the world with their appetite for new products and services. The repercussion of the changes brought about by the Asian economies’ sudden stalling-out has affected an untold number of careers in Asia and the rest of the world.

  Clearly, if environmental changes beget strategic inflection points for companies, they do so even more for the careers of the employees of those companies.

  Nor are environmental changes the only ones that precipitate upheavals in individual careers. The desire for a different lifestyle, or the fatigue that sets in after many years of doing a stressful job, can cause people to re-evaluate their needs and wants, and can build to a force as powerful as any that comes from the external environment. Put another way, your internal thinking and feeling machinery is as much a part of your environment as an employee as your external situation. Major changes in either can affect your work life.

  Are there any lessons from how corporations handle cataclysmic change that can be applied to individual careers?

  Your Career Is Your Business

  I have long held that each person, whether he is an employee or self-employed, is like an individual business. Your career is literally your business, and you are its CEO. Just like the CEO of a large corporation, you must respond to market forces, head off competitors, take advantage of complementors and be alert to the possibility that what you are doing can be done in a different way. It is your responsibility to protect your career from harm and to position yourself to benefit from changes in the operating environment.

  As environmental conditions change, as they inevitably will, the trajectory of this business of one undergoes a familiar curve, reaching a defining point where the action of the CEO, i.e., you, determines whether your career path bounces upward or accelerates into a decline. In other words, you face a career inflection point.

  Just as a strategic inflection point marks a crisis point for a business, a career inflection point results from a subtle but profound shift in the operating environment, where the future of your career will be determined by the actions you take in response. While those actions will not necessarily introduce an immediate discontinuity into your career, their impact will unleash forces that, in time, will have a lasting and significant effect. As we have seen, a strategic inflection point reflects a wrenching moment in the life of a company, but the effort of navigating through it is spread around among members of a community. Career inflection points are even more intense for an individual because everything rests on his or her shoulders.

  Career inflection points are commonplace. A story comes to mind. It so happens that it was related to me by a business journalist who had interviewed me when this book was first published. This man used to be a banker. He was happily and productively employed until one day he went to work and learned that his employer had been acquired by another, larger bank. In short order he was out of a job. He decided to change careers and become a stockbroker. He knew that he would have to pay his dues. While he was comfortable with financial matters, he knew that a banker’s skills are not the same as those required of a stockbroker. So he went to stockbroker school and eventually started working as a full-fledged broker.

  For a while, things went well and the future looked promising. However, a short time before we met, on-line brokerage firms started to appear. Several of this man’s clients left him, preferring to do their business with low-cost on-line firms. The handwriting was on the wall.

  This time, our man decided to make his move early. He had always had an interest in, and aptitude for, writing. Building on the financial knowledge that he had first acquired as a banker, and that was reinforced during his stint as a stockbroker, he found himself a job as a business journalist, a less lucrative position but one less likely to be replaced by technology. At the time we met, his career was in ascendancy. The transition this time was not as traumatic, mainly because he initiated it in his own time, unlike the previous time, when the change was initiated for him by outside circumstances.

  A lot of the elements involved in dealing with strategic inflection points are at play here, too. The most important—and the most difficult—is to be alert to changes in your environment. When you work inside an organization, you’re often sheltered from a lot of things going on in the world at large that are relevant to the health of the business you work for. When you got this job, even though deep down you knew it was unlikely to be what you would do for the rest of your work life, you may very well have tacitly relinquished responsibility for your welfare to your employer. But by taking your eyes off the environment in which your company operates, like the CEO of a large organization, you too may be the last to know of potential changes that could have an impact on your career.

  How do you get around that?

  The Mental Fire Drill

  Tune your alarm system to be more alert to potential strategic inflection points in businesses like yours. Go through a mental fire drill in anticipation of the time when you may have a real fire on your hands. Simply put, be a little paranoid about your career.

  Put yourself in the shoes of the CEO of a large company. You must open up your mind to outside views and stimuli. Read the newspapers. Attend industry conferences. Network with your colleagues in other companies. You may hear anecdotal descriptions of changes that may be relevant to you before they add up to a cogent trend. Listen to chatter from colleagues and friends.

  In a corporation, the helpful Cassandras would be the frontline employees who sense potential changes first and bring early tidings of strategic inflection points to the CEO. In the case of a career inflection point, the Cassandras are likely to be concerned friends or family members who work in a different industry or competitive environment and deduce winds of change that you don’t sense yet. Perhaps they have already been bounced around by a wave of change that’s coming your way. Or perhaps they’ve experienced a career inflection point in their own industry and have a lesson to impart, even if they’re not in your line of work.

  When different sources—newspaper stories, industry scuttle
butt and company gossip—and your Cassandras all reinforce each other, it is really time to sit up and take notice.

  Put yourself in the picture. Ask yourself a series of questions:

  Do these anecdotes indicate changes that might somehow apply to you?

  How would an important change manifest itself in your situation?

  Would you know about such changes from the kind of business information that you routinely get from your company?

  Would you be able to predict that changes like this are coming your way from your company’s financial performance?

  Can you bring up your concerns with your boss?

  What would you do if you were affected by such a change?

  How likely is your company to be affected by changes in your industry?

  Would those industry changes be a temporary setback for your company or a harbinger of a longer-term industry restructuring? The distinction is important because your company can bounce back from the former with no effect on your career; the latter, however, will likely have a lasting impact on it.

  Consider how developments originating in other industries might have a ripple effect on your job. When a new machine or a new computer system comes in, can it change the way your department does its work? Are your skills as good in doing things with this new technique as they were before? Are you confident of learning the new ways? If not, what should you do?

  Maybe your company is losing ground to a competitor. What does that imply? Could you be in the right line of work but working for the wrong employer? Or is the entire industry shifting ground? Asking and answering such questions are important because the measures you take to fix things vary with the circumstances. If your employer is losing out to another outfit, you could continue to utilize your skills and just look for a way to jump from the sinking ship to one more likely to navigate the competitive seas successfully. On the other hand, when there’s a fundamental change in the industry and you don’t change your skills, you will lose at both winning companies and losing companies. That is a situation that can truly be classified as a career inflection point.