Only the Paranoid Survive

by Andrew S. Grove

  The existence of career inflection points is best analyzed by conducting a vigorous debate with sympathetic associates. You need to cultivate the habit of constantly questioning your work situation. By examining the tacit assumptions underlying your daily work, you will hone your ability to recognize and analyze change. In other words, get into the habit of conducting an internal debate about your work environment with yourself.

  Timing Is Everything

  As with strategic inflection points of the business kind, success in navigating a career inflection point depends on a sense of timing. Are you picking up on the portents that something may be changing? Have you already anticipated a change and prepared for it? Or are you waiting until the signs are incontrovertibly clear before you make your move?

  The stages of dealing with a career inflection point, if anything, are even more emotion-laden than with inflection points affecting a company. Little wonder; after all, you are likely to have invested a lot in getting your career to where it is. More important, you’ve invested your hopes in the further upward trajectory of your career. As signs appear that the curvature is shifting downward, your whole being will work at trying to deny that this is so.

  Often you’ll be tempted to believe that because of your particular individual excellence, you’ll be exempt from the change. You’ll think, “It may happen to others but not to me.” This is a dangerous conceit. It’s the equivalent of the “inertia of success” that dogs companies which have done well. 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.

  History offers plenty of examples. In early nineteenth-century England, the increasing use of mechanized looms made woven cloth sp much more cheaply than by traditional manual means that an entire class of craftsmen, both expert and mediocre weavers, lost their independent livelihoods and were forced to work as unskilled laborers in the mills. The rise of the automobile threw harnessmakers, both good and bad, out of work. Today, small farmers are struggling to retain their economic viability against competition from agricultural conglomerates. No one is immune to these environmental changes, no matter how skilled and how invulnerable he or she may feel.

  Denial can come from two wholly different sources. If you’ve been very successful in your career, the inertia of success may keep you from recognizing danger. If you’ve just been hanging on, fear of change and fear of giving up whatever you have achieved may contribute to your reluctance to recognize the situation. Either way, denial will cost you time and cause you to miss the optimal moment for action at or near the inflection point.

  As in managing businesses, it is rare that people make career calls early. Most of the time, as you look back, you will wish you had made the change earlier. In reality, a change made under the benign bubble of an existing job, when things are still going well, will be far less wrenching than the same change made once your career has started its decline.

  Furthermore, if you are among the first to take advantage of a career inflection point, you are likely to find the best pick of the opportunities in your new activity. Simply put, the early bird gets the worm; latecomers will get only the leftovers.

  Get in Shape for Change

  The time period from an early sense of foreboding to a career inflection point is valuable. Just as athletes get in shape for competition, this is your time to get in shape for change. Picture yourself in different roles. Read about these roles. Talk to people who are in them. Ask yourself questions about them. Conduct a dialogue with yourself about how you suit those roles. Train your brain in preparation for the big change.

  Experimentation is a key way to prepare for change. The banker/stockbroker started on his transition to business journalism while he was still employed as a stockbroker. This served several purposes. He dusted off his writing skills, tested the feasibility and practicality of his future change and established contact with potential sources of business before giving up on his main source of income. In doing so, he verified that he could plausibly make a living by writing if he devoted himself to it full-time.

  Experimentation can take different forms. It can be moonlighting on a second job, as in this case. It can be going back to school part-time. Or it can be by asking your current employer for a new and entirely different assignment. All are ways to explore new directions for your career and get you ready for a career inflection point.

  As you experiment, avoid random motion. Don’t just take blind steps in directions whose only common characteristic is that they are different from what you are presently doing. Guide yourself by your knowledge and understanding of the nature of the changes that are upon you; in this way, the experimentation propels you forward in a direction that gets you out of the way of those changes. Look for something that allows you to use your knowledge or skills in a position that’s more immune to the wave of changes you have spotted. (Better yet, look for a job that takes advantage of the changes in the first place. Go with the flow rather than fight it.)

  It is very important to visualize what you want to achieve before you start to traverse the career equivalent of the valley of death. Ask yourself another set of questions:

  What do you think the nature of your industry is going to be in two or three years?

  Is this an industry you want to be a part of?

  Is your employer in a good position to succeed in this industry?

  What skills do you need to progress in your career in this new landscape?

  Do you have a role model of the person who has the career today that you want to achieve?

  Remember the incident I described in Chapter 8, when our then-chairman, Gordon Moore, made a comment to the effect that if we were to change from a semiconductor company to a microprocessor company, half of our management would have to become software types. That observation captured the essence of a strategic change in the workings of the company that, in turn, precipitated career inflection points for quite a few people, including myself. But it also gave us an idea of, if not a role model for, what we would have to learn and how we would have to change.

  Much as conducting a dialogue with yourself will help clarify the existence of a career inflection point, an ongoing dialogue about the nature of the future you are headed into will help focus your efforts and allow you to move forward in a number of small, consistent steps rather than in a cataclysmic leap forced on you by the external world.

  There are two things that will help you get through the career valley: clarity and conviction. Clarity refers to a tangible and precise view of where you’re heading with your career: knowing what you’d like your career to be as well as knowing what you’d like your career not to be. Conviction refers to your determination to get across this career valley and emerge on the other side in a position that meets the criteria you have determined.

  When a corporation crosses the valley of death involved in navigating a strategic inflection point, the CEO is called upon to describe a clear vision of the new industry map and provide the leadership to get the organization across this valley. As CEO of your own career, you will have to supply both the vision and commitment yourself. Both are daunting. Arriving at the clarity of direction through a dialogue with yourself and maintaining your conviction when you wake up in the middle of the night filled with doubts are both tough. Yet you have no choice. Inaction will leave you in a position where the action will be forced upon you.

  As a single individual, you have just one career. Your best chance to succeed in a career inflection point is to take control of it with full focus and energy, and with no wavering.

  You have to steel yourself to recognize that it will take a while before you rebuild your career support system, experience and confidence to the same level that you had before. Part of the support system you will miss is the identity—a brand—your employer gave you. Whether you join another company or go out on your own, you have to let go of one identity and build a new one.
This takes effort and time, and most certainly will test your courage. But it will also give you a sense of independence and self-confidence, which will help you in dealing with the inevitable next career inflection point.

  A New World

  Going through a career inflection point is not an easy process. It is not without many dangers. It calls upon all your best resources. It calls upon your understanding of the new world that you wish to become part of, your determination to take control of your career, your ability to adapt your skills to that new world and your resolve as you deal with the fear and anxiety of change.

  It’s a bit like emigrating to a new country. You pack up and leave an environment you’re familiar with, where you know the language, the culture, the people, and where you’ve been able to predict how things, both good and bad, happen. You move to a new land with new habits, a new language and a new set of dangers and uncertainties.

  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.

  Notes

  Chapter 1: Something Changed

  “growing at around 30 percent per year …”: From 1986 to 1994, Intel grew at a 31.3 percent CAGR. Intel Annual Report, 1994.

  “headlines …”: New York Times, November 24, 1994; p. D1; Wall Street Journal, December 14, 1994; p. B1.

  “long-standing bugs …”: “Attempting to address the complaints of Macintosh users, Microsoft Corp. last week shipped a maintenance release of its best-selling word processing software. The company says the release improves speed and resolves conflicts with a handful of system extensions.” “Microsoft Fixes Word for Mac,” Computer World, March 27, 1995, p. 40. “Apple Computer Inc. joined rival Microsoft: Corp. last week by delaying the release of the next major revision of its operating system. Apple’s Copland is now expected to ship in mid-1996, not in the middle of 1995 as previously announced.” “Microsoft Not Alone: Apple Delays Copland OS Release,” PC Week, December 26, 1994/January 2, 1995, p. 106. “‘We regret that customers have had incompatibility problems and we are 100% committed to customer satisfaction,’ says Steve McBeth, president of Disney Interactive, the company’s software arm. ‘We won’t be satisfied until all compatibility problems are removed.’ … As company officials now concede, the program was marketed with known errors, wrongly believed to affect only a minute percentage of computers.” “A Jungle Out There: The Movie Was a Hit, the CD-ROM a Dud,” Wall Street Journal, January 23, 1995, p. A1. “Hoping to avert a major revolt, Intuit Inc. last week made available on-line free revised versions of tax preparation software, designed to fix three bugs.… Intuit will pay IRS penalties and interest for any errors caused by the bugs, which the company claims affect fewer than 1 percent of MacIn Tax and Turbo Tax users.” “Intuit Issues Patches for Turbo Tax and MacIn Tax,” PC Week, March 6, 1995, p. 3.

  Chapter 2: A “10X” Change

  “competitive strategy analysis …”: Michael Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: The Free Press, 1980), pp. 3–4.

  “the force of complementors …”: Adam M. Brandenburger and Barry J. Nalebuff, “The Right Game: Use Game Theory to Shape Strategy,” Harvard Business Review, July/August 1995, p. 60.

  Chapter 3: The Morphing of the Computer Industry

  “a cost-effectiveness that was easily ten times greater …”: “In a little over five years, the cost adjusted by performance decreased by 90%. This unprecedented rate of decline in cost to the consumer came about, basically, as a result of standardization. In the future, the price/ performance characteristics will continue to drop further and further at this hair-raising rate.” Andrew S. Grove, “The Future of the Computer Industry,” California Management Review, Vol. 33, No. 1, Fall 1990, p. 149.

  “the way computing was done changed …”: “Right now the computer business is in a painful transition between two worlds: from the old world of slow-moving, highly integrated systems to the new world of quickly developed, extremely cost-efficient, but not-very-well-integrated technology.… The very structure of the industry is being dramatically reshaped by the standardization of the PC.” “PCs Trudge Out of the Valley of Death,” Wall Street Journal, January 18, 1993, p. A10.

  “big-time computing increasingly started to be done this way …”: “Within a few years, every computer in the NCR line from PCs on up will be based on one or more Intel microchips. Gone will be NCR’s mainframe proprietary designs and any other machine that cannot run standard software.…” “Rethinking the Computer: With Superchips, the Network Is the Computer,” Business Week, November 26, 1990, p. 117.

  “IBM … a $100 billion company …”: “When Opel retired as CEO in 1985, the corporation’s outlook called for revenue of $100 billion in 1990 and $185 billion by 1994.” “The Transformation of IBM,” Harvard Business School Case, 9-391-073, rev. September 9, 1991, p. 6.

  Compaq: “Compaq made corporate history by becoming the first company to surpass the billion dollar milestone in sales after only five years of operations.” Compaq 1988 Annual Report, p. 3.

  “those that win inevitably get stronger …”: W. Brian Arthur paraphrases Alfred Marshall’s 1890 observation, “If firms’ production costs fall as their market shares increase, a firm that simply by good fortune gained a high proportion of the market early on would be able to best its rivals.…” The more contemporary version of this theory is summed up by Professor Arthur: “Technologies typically improve as more people adopt them and firms gain experience that guides further development. This link is a positive-feedback loop; the more people adopt a technology, the more it improves and the more attractive it is for further adoption.” W. Brian Arthur, Increasing Returns and Path Dependence in the Economy (Ann Arbor: University of Michigan Press, 1994), pp. 2, 10.

  “IBM’s growth slowed down …”: “But [IBM’s] PC revenues haven’t compensated for a slowdown in mainframes and minis—a slowdown caused in large part by the success of the PC. As a result, IBM’s revenue growth has averaged 6.5% since 1984.” “Is the Computer Business Maturing? New Technology May Not Halt an Erosion in Growth and Margins,” Business Week, March 6, 1989, p. 69.

  “OS/2 worked only on PS/2 computers …”: “[The new software] will use the IBM Personal System/2 PC as the window into information.… [It] requires a new IBM proprietary version of OS/2, the PC operating system, or basic software, introduced two years ago.…” “A Bold Move in Mainframes: IBM Plans to Make Them Key to Networking—And So Restore Its Growth: The Software That Ties It All Together,” Business Week, May 29, 1989, pp. 74–75.

  “marketing their operating systems to … their competitors …”: “IBM stresses that it will ‘open up’ OS/2 version 2.0 to companies that don’t sell IBM-manufactured PCs.… By selling beyond its own confines, IBM—which is responsible for OS/2 version 2.0 development and sales—will help spur interest in the operating system.” “IBM Announces OS/2—Again,” Systems Integration, June 1991, p. 38.

  “eventually they even passed IBM …”: In 1994, Compaq shipped 4.8 million units worldwide, compared to IBM’s 4.0 million. “Personal Computers Worldwide,” Dataquest, June 26, 1995, p. 90.

  “Michael Dell started supplying his friends …”: “Dell’s roots can be traced to a small dorm room at the University of Texas. In 1984, during his freshman year, Michael Dell began buying excess computers from a local retailer, enhancing their features and selling the PCs directly to end users at a discount. In less than a year, Michael was grossing $50,000 a month with his direct relationship marketing approach. He left the University to devote his full attention to his rapidly expanding company, PCs Limited.…” “The Story of Dell�
��s Success” from Dell’s Home Page on the World Wide Web, June 9, 1995.

  “Dell … is doing about $5 billion worth of business a year …”: Expected FY96 sales are $4.8 billion. Bear Stearns Analyst Report, May 26, 1995.

  “In adapting, Unisys …”: “The economic model and the business model of the business we had been in totally changed. So we had to step back and say, well, that means, first of all, we shouldn’t be doing things that aren’t really of added value to the client.… So it’s a very different strategy and our success will come from building successful partnerships with our clients, to assist them with information management to get that competitive advantage.… If you look at it from revenue streams, [five years from now] you’re going to see well over half of the revenue coming from software services and much less coming from hardware.” From an interview with Unisys chairman and CEO James Unruh, “Smooth Sailing on an Ink-Black Sea: Unisys Eyes Information Services,” Computer Reseller News, June 13, 1994, p. 226.