An enduringly compelling corporate philosophy!
Abstract
This book, ONLY THE PARANOID SURVIVE, is written by Andrew Grove, who served as the CEO of Intel Corporation from 1987 to 1998, and was also its third employee; the first two being its co-founders Robert Noyce and Gordon Moore. A Hungarian Jew, he and his family had earlier narrowly escaped the Nazis and certain death, by taking on false identities during the WW II and he was barely 8 years old then.
As a twenty year old lad growing up in Soviet Era Hungary, he fled his home and family, again to escape political persecution, this time to the USA, where he learnt to speak English from scratch. His hunger for knowledge led him to obtain 3 University degrees, culminating in a PhD from the prestigious University of California at Berkeley, all within 6 years of landing in the USA, as a hungry, penniless émigré.
Starting off at Fairchild Semiconductors, he went on to play a leading role in Intel, helming it and navigating the tech behemoth, through some of the most tumultuous years that the industry itself had witnessed. Eulogized and honoured for his ruthless pursuit of excellence, TIME Magazine named him its Person of the Year in 1997. Wharton School of Business called him the “Most Influential Business Person of the last 25 years”, in 2004.
ONLY THE PARANOID SURVIVE is an intimate story of how even the most successful and pioneering organizations of the world are routinely tested, often shaken rudely from their positions of eminence and apparent infallibility, and forced to acknowledge that the only remedy against ignominy and extinction is a periodically administered, healthy dose of paranoia.
Narration
In this review, we consciously eschew the conventional pattern that typifies most boring book reviews. What we do away is the linear narrative that takes up a book being reviewed, chapter by ensuing chapter, and discuss its salient points just as it would happen in a class, perhaps. This book deserves better, definitely! For a book that preaches and embraces change, disruption and rupture as wholeheartedly as it does, a continuous and predictable narration is simply unflattering and plain unjust. So, we move nonlinearly back and forth between topics, while all the time staying coherent, and faithfully riveted to the core focus of this book. So, sit back and relax. No, better still, straighten up and concentrate. !!
Principal Characters, & the Era of Chaos
The Times They Are A-Changin'…
Cut to mid-1985, and to the pleasant surroundings of Intel’s Corporate HQs at Santa Clara, California. Grove, the President of Intel is in his office and talking to the then CEO, and co-founder Gordon Moore. The mood is grave and downbeat. Grove turns to Moore and asks: “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Moore answers without batting an eyelid, “He would get us out of the memories business.” Grove, numb and dumbstruck for a moment says, “Why shouldn’t you and I walk out the door, come back and do it ourselves?”
The importance of this moment, when Intel decided to get out of the very business that it was known for around the world, can only be termed historic. Historic not only for this path-breaking and legendary company, but also in some sense, for the entire tech industry itself.
The particular quandary that Intel had founded itself in, in the mid-80s was due, of course, to the rampaging Japanese. Japan, wounded severely in WWII, had vowed to win back its place in the world order. Automobiles, Manufacturing and Electronics were areas where the Japs were beginning to not only take America head on, but also to beat them at their own game. Worse, on home ground. Intel, synonymous with Memory Chips till then, was feeling the heat and losing market share at an alarming rate. Grove and Moore saw the end coming, definite and bloody. They had to act quickly and decisively. All their lives, assiduously and with dogged determination, Intel’s founders and engineers had painstakingly researched and innovated to earn for themselves a global reputation for quality and reliability. They had slowly built their enviable customer base over nearly two decades, and nurtured their business with passion and pride. The Samurai threat though seemed to be a losing battle. Lose, they did. Badly. But only until that crucial inflection point, when the two men in that room and at the helm of affairs, decided to completely exit what they had been so good at for their entire lives, and pursue wholly new and unexplored avenues and opportunities. Where even survival was not guaranteed, let alone success.
The Inflection Point(s) – What is that?
Inflection points are actually quite ubiquitous. In layman terms, they are situations where an individual or an organization is compelled to make a radical decision that fundamentally alters the course of one’s individual or collective future evolution. In our own country’s evolution as a great nation, July 1991 is one such time when we decided to shed 40 + odd years of failed Socialism, and embrace a market / competition / merit based approach to Economic growth. The ensuing beneficial changes that have unfolded in the economy are there for all of us to see. The breakup of the former USSR and the ramifications on the global political scene is another example for an inflection point, although with far greater ramifications. Inflection points are not just limited to nation states, or large economies, but can be seen in other places too, and in our own case, in abundance in the brutal world of high technology. The economic meltdown of 2008, where financial heavyweights such as Lehman Brothers suddenly disappeared as though they never even existed, is an example of the change and the consequences brought about by Inflection Points.
In the mid-80s, Intel, the pre-eminent global market leader in High Tech Computer Hardware, came face to face with such a situation. And the challengers were the Japs.
Grove and Moore, had to decide either to continue to transact as though it was business as usual, or, change course and get out of their comfort zones, and navigate Intel into unknown and uncharted territory, with no guarantee of success.
In a historic decision they decided to dump the past, and get into hot and deep water.
They were faced though with the immediate challenge of communicating this decision to the other Senior Managers, who actually ran the company on a daily basis. The plan to get out of the Memory business, and get into the nascent Micro-Processors business, was deliberated over two and a half years, and what shocked the top management in Intel, although pleasantly, was that the lower rungs of the organization were much more willing to change course than the Seniors had anticipated. When they mulled on how that could possibly have been, they encountered a truth that was very plain to state – The guys at the top are usually the last to know the truth about the ground realities. The first to sense changes as they unfold are the foot soldiers – The Sales Team. Sadly, for most organizations, the raw intelligence of the street gets filtered and sometimes even erased by the time it reaches the top rungs.
Summary – The Generals were not listening to the Cassandras.
Listen to the Cassandras – 10X Change is everywhere
The Cassandras are mythical Greek characters, usually associated with prophecies. Prophecies can be uplifting too, like the arrival of a long awaited God or his Apostol, except that Cassandras are most often associated with doom and destruction.
In Intel’s case, the fact that the Japs were going to wipe the Americans out of business was a fact as plain as daylight to the lower rungs of Intel. Every time they were outbid, or undercut out of large deals by the Japs, starting from the early 80s, they knew that it was a losing battle. Wisely, they consulted their bosses and conveyed their learnings to the mid-level management, who in turn passed it on to the layer that worked just below the CEO, COO, and CXO suite. This layer just below the so-called C suite, were in charge of making those crucial decisions that eventually much later would bail Intel out of a potentially life threatening corporate situation.
To Grove and Moore’s huge advantage, the Cassandras were in fact being heard, quite diligently and carefully. Not by the Generals in the HQs themselves, but by the Brigadiers, the Colonels and the Majors. And that message was loud and clear. Huge and never seen before change was imminent and near. The old order was going to be not only challenged, but replaced. Success in the new and imminent scheme of things was far from everyone’s minds. What was important was to first survive, which itself by the way, was not guaranteed. Listening to the Cassandras though was imperative even for sheer survival. What the Cassandras were whispering was the dawn of a new era of Computing, where the combined technological advances of the previous 30 years were converging, so as to enable the design of hardware and software that could achieve huge increases in performance, efficiency and operation. The mid-80s was a hotbed of innovation, with consumer electronics, entertainment and computing bringing in a lot of products and services never before seen on that scale. And also in terms of performance, cost and sheer variety. Quietly powering this revolution from behind were a new generation of logical devices, highly optimised to serve the demands of a new generation of consumers. They were a far cry away from their early ancestors of the 50s. Grove was no stranger to these advances, having started off his professional life working with no less than William Shockley himself, the Nobel Prize winning inventor of the Transistor. The Microprocessors of the 80s though were vastly souped up versions of ensembles of millions of such transistors, all bundled together in an unimaginably small volume of Silicon, and tuned to perform like racehorses. And the race was to get to pack as many of them in as small a volume, and achieve higher performance and speed. And even more dramatically, at a reduced cost compared to their slower and less able predecessors. This famed law, where Computing Power doubled every few years, while inconceivably though, the price of all that enhanced power halved, is Computing folklore. And credited to the man with whom Grove took that momentous decision to exit Intel from the Memory Chips business, Gordon Moore, co-founder of Intel.
But to set all this in perspective, Intel’s sales teams saw this coming first; ahead of the big boys in the HQs.
Summary - The Cassandras were indeed being heard.
Prediction is difficult, especially of the future
…where it takes all the running, just so as to be able to even stay in the same place.
Be it Niels Bohr or Mark Twain; be it arcane quantum phenomena, or mundane human interactions, prediction is difficult. Especially in times of rapid changes, with no precedence to fall back on. What do you rely on then?
Grove has a simple yet pragmatic answer. “Since no one, including you has even a vague clue, just jump right in. Let the chaos reign, and if you jump in with sufficient wisdom, grit and strategy, you may actually end up reigning in the chaos. Embrace the change, don’t deny it, or worse still, shy away or run further away from it. The longer you take to acknowledge its undeniable presence, the more vicious its effect on your future.”
In that crucial meeting in Grove’s office in mid-85, Grove and Moore decided to embrace Chaos. And let themselves be tossed and turned around in the giant tsunami of change that was to descend on them all in the months and years to come. All they had with them was grit, and an instinct to outlive the storm. Except that this was a 10X storm, and it would take Grove all the survival instincts he had accumulated in his life, from the life threatening Nazi invasion of WW II, to the Communist takeover of Hungary while he was in his teens, and to his own eventual escape to the USA. It also helped that he had earned his battle scars from the experience of working with a quixotic and eccentric genius, William Shockley - the Nobel Prize winning physicist under whom all of Intel’s co-founders and early employees had initially worked.
More was to come, as though they did not already have enough on their plates. In the late 60s, a group of scientists had come out with a vague plan to connect distant computers and build what was to be the very first computer network. The government of the day had funded it as a purely academic project, little anticipating the earth shaking impact of this seemingly simple exercise of connecting distant computers. Over many decades of steady progress and many iterations, it had evolved to a point where the power of interconnectedness, and the benefits of sharing, had begun to dawn on the world at large. Suddenly, it had grown from being a PhD dissertation that only a handful read and even fewer understood, to being a potentially big idea. Among the first few who saw the big picture was Grove. He saw it coming, and he realised that this network of computers that only a few academicians were interested in, was indeed going to be a game changer for the industry. He saw that it would quickly scale up, and the demand for hardware and software that could work in tandem with this big network of interconnected devices, and even more importantly, power all of that big network from within, could be a new business opportunity for Intel. It was the sign that he wanted to see. It was the Cassandra prophecy that he wanted to bet his and his company’s future on. And he took the plunge. Intel was now in the race, for envisioning, designing, and manufacturing the devices that would work not just as engines that could power a single stand-alone computer, but would also be able to work in all those computers that could be hooked up to be part of a much larger interconnected network. That was a lot of computers, and which meant a lot of individual micro-processors.
This was also a huge challenge, in terms of technological advances to be made in terms of Memory, Power Consumption, Materials Science, and most importantly, in newer and ever more costlier Fabs. The need to pack more and more transistors into ICs [Integrated Circuits] meant that Fabs themselves had to keep pace, with the very devices that they eventually turned out. And every new generation of ICs that the industry developed, came out of Fabs that themselves had to be put in place even before. Mostly with billions of dollars of Capital Expenditure, all of which had to be recovered before the competition let loose another round of innovation. And to think that his own colleague, and Intel’s co-founder Gordon Moore had predicted this maddening race towards seeming nowhere, did little to soothe his nerves. All they did was to let the chaos reign: fight hard to initially just about barely survive the first brutal wave of change that took everyone to unpredictable lows; and then when the competition seemed to get weary and tired, push hard to get ahead of the rest. It worked sometimes. But sometimes they were not so lucky.
That unfortunate incident was the Pentium Bug episode. In the punishing race towards performance enhancement, relentless miniaturisation and cost efficiencies, organizations such as Intel were pushed to the limit to innovate, design, manufacture and test – and all of these, before and ahead of the rest of the competition. In such a race, mistakes were bound to happen. Intel had always had a razor sharp focus on quality, and was by the mid-90s, almost synonymous with quality that one could trust eyes closed. And since microprocessors had by then infiltrated everything from refrigerators to satellites, they were a key component of scientific research too. Key projects in Space, Energy, Defence and Health were being already designed solely on computers, and the numbers that they churned out had to be true to a phenomenal level of accuracy. A seemingly simple inability to perform a very simple mathematical calculation, and that too to the tenth decimal place cost Intel dearly. It also taught Grove a valuable lesson. Nobody was too big or too invincible to fail. And in a world where one’s competitors are only a few decimal points behind, a seemingly small mistake was all that was needed to fall from grace.
What is in it for me, for us, and for our company?
No man ever steps in the same river twice…
The moral of this exposition is that all of us, be it individuals, teams or organizations, always stand at the cusp of multiple opportunities. And also on the cusp of multiple ways to fail and perish. Those of us who see far, and who see deep, and who are wise enough to listen to the Cassandras are the ones who are most likely to ride the inevitable waves of change that are going to impact all of us. As long as human minds continue to tick, innovation is inevitable. As long as there are the likes of a Brin / Page, a Grove, a Hassabis, a Musk, change is inevitable. And in the light of such rapid and unforgiving change, there are only a few hard options. Rest and surely perish, or innovate to survive; and if done well, flourish. And even then, not for ever.
Changes are like the waves in the sea that roll in towards our tiny kayaks. If you are too elated that you have successfully navigated a tough one, watch out, for there are more. In fact, there always will be a wave headed your way. For ever…
STAY PARANOID, ALWAYS.
‘COS, "ONLY THE PARANOID SURVIVE" !!