The business world is constantly changing. New technologies create opportunities for some companies while leaving others behind. New competitors, new markets, and unexpected regulations can all change the rules of the game you thought you were playing. Usually these changes are minor, but sometimes a company faces an unexpected change so dramatic that they must reinvent core parts of their business.
While this might sound like every business leader's worst nightmare, Andrew Grove’s Only the Paranoid Survive suggests that with the right preparation, your company can survive—and grow from—such a change. As the President, CEO, and Chairman of Intel, Grove led one of Silicon Valley’s most successful hardware companies through the turbulent tech markets of the 80s and 90s. In this section, we’ll explore the market upheaval that shaped Grove’s approach to leading a company through crisis. The rest of our guide will then cover the lessons he learned and their practical applications.
Grove's advice draws heavily on his experience leading Intel through one of its greatest crises to date. Before selling microprocessors, Intel specialized in memory chips. An “early mover” on this technology, they enjoyed close to 100% of the market share in the late 1960s. However, by the early 1980s, Japanese firms like Hitachi, Fujitsu, and Nippon Electric Company began selling higher-quality memory chips at lower prices. Able to produce and export these chips at high volume, they quickly grabbed 70% to 80% of the market share.
Intel stood at a crossroads. They could either double down on memory chips to catch up with their competitors or abandon the memory market entirely, instead pivoting toward their latest side project: microprocessors. This second choice would provide them with a new niche, but it was a gamble: Still relatively new, microprocessors were not yet fully integrated into the supply chains of computer makers.
After three years of scrambling, confusion, and vigorous debate, Intel decided to pivot. Ultimately, their bet paid off. Not only did Intel survive an upheaval that shut down other American memory companies, but they also became a global leader in microprocessors.
Volatility Is on the Rise
Intel's dramatic market disruption may seem like a once-in-a-career event. However, there's strong evidence that the business world is growing more volatile, and these kinds of crises may become much more frequent over the course of your career.
A study by McKinsey & Company found that the average life expectancy of businesses on the S&P 500 list has fallen dramatically during the past century—from an average of 90 years in 1935 to just 14 years in 2010.
This means companies are facing market disruptions at a faster rate than ever before—and this trend will likely continue. Because the business world is moving at such a fast pace, your business’s ability to stay agile and keep up with the latest market trends is more important than ever.
After reflecting on his experience, Grove distilled his hard-won lessons into clear advice for other companies facing a similar upheaval. He encourages you to adopt a stance of vigilance, flexibility, and forward-thinking as you work to keep your organization stable and competitive in an ever-changing business environment.
In this guide, we’ll explain how you can adopt this stance, exploring the specific challenges in preparing for, recognizing, and responding to a sudden upheaval. Our guide will walk you through Grove’s advice in five parts:
To prepare for a crisis like Intel’s, you first need to understand what kind of change to look out for. Throughout the 1990s, Grove defined and popularized the concept of the "strategic inflection point." This is the point in a company’s trajectory where they face a crisis unlike any they’ve ever seen before. Strategic inflection points may look different across industries and companies, but Grove notes they all share three defining characteristics:
Strategic inflection points happen constantly throughout the commercial world. For example, the shopping mall was once the future of retail, but online shopping has now forced malls across America to close. Or, consider how free-trade agreements have forced international competition on companies used to operating in smaller domestic markets.
“Strategic Inflection Point”: What’s in a Name?
It’s worth reflecting on what Grove means by a “strategic inflection point.” In geometry, the point at which a line’s curve changes is known as the inflection point. Similarly, once your company reaches a strategic inflection point, its fundamental direction has changed—the forces that determine your business trajectory are pushing in a new direction and the conditions and strategies that used to lift up your company are now dragging it down. This signals that it’s time to rethink your business’s old models and change quickly if it’s going to survive.
Today, “strategic inflection point” has become a standard part of the business lexicon. The term appears in the Cambridge Dictionary and remains in use in business education and media. Since the 1990s, the term has grown beyond the business context. Experts in military and international relationships discuss strategic inflection points in relationships between the US and rivals like China and Russia.
Now that we're clear on the definition of a strategic inflection point, let's talk about how to prepare your business for facing one. This is challenging, considering that a key feature of these upheavals is that they’re never been seen before—you must be ready for an unknown change. Grove insists that preparation can make or break your company. He has two suggestions for building a prepared organization.
Let’s explore each of these suggestions in detail.
Grove’s first suggestion is to stay alert to potential market disruptions before they hit with full force. Drawing on the work of Harvard business professor Michael Porter, Grove identifies six forces that shape your business environment: existing competitors, potential competitors, regulations, customers, suppliers, and complementors.
Your company likely interacts with most, if not all, of these forces already and deals with their normal fluctuations. However, a drastic change in any of these forces could push your business into a strategic inflection point. Below, we’ll clarify how for each term.
1. Current competitors: Competitors can force a strategic inflection point if they’ve developed a product, technology, or marketing strategy that could dominate the market and start cutting into your share. Pay attention to your rivals: If a competitor starts hitting a growth spurt, you need to understand why.
2. Future competitors: Most businesses have a firm grasp on their current competition, but don’t consider future competitors. Startups or smaller companies might find a winning strategy, or international firms may start exporting products across borders—cutting into your market share with their product or strategy. Keep an eye on your industry’s promising newcomers, as you would for your established rivals.
3. Government policies: New laws and regulations can upend your business model. Taxes can weigh down your budget if you haven’t planned for the extra expense. Tariffs and embargoes could leave you scrambling for a new supplier if your supply chain relied on international imports. In short, government policies can play an enormous role in the markets and resources your company can access. That’s why it’s crucial to keep tabs on the laws and regulatory agencies relevant to your industry. To do this, you’ll need a legal team that understands how policies could impact your business before they take effect.
4. Consumers: Consumers have a lot of power over your company. Changes in consumer preferences could expand your revenue or cause it to dry up completely. Pay close attention to what your customers want so you can keep them coming back to your product. Also pay attention to new consumer trends as they develop so that you can anticipate and meet their needs by successfully bringing the right product to market at the right time.
5. Suppliers: Most businesses depend on a wide range of suppliers for raw materials, labor, finished parts, and so on. Your suppliers face the same market disruptions you do and may try to hike up their prices. Small fluctuations in prices are normal, but a giant, unexpected price hike might torpedo your budget.
6. Adjacent businesses: Adjacent businesses are those selling goods that complement yours. For example, a flashlight company and a battery company are adjacent businesses: The battery company coordinates its designs so the batteries will work in the flashlight. But if adjacent businesses suddenly stop selling compatible products, your products could quickly become obsolete. Keep an open channel of communication with firms in your adjacent businesses. You’ll need to anticipate changes in their products to stay compatible and competitive.
Auditing Your Business Environment
Grove identifies where to look for potential disruptions on the horizon. However, his advice of simply "keeping tabs" on these forces may not always be feasible. After all, this is a lot to pay attention to at once.
This is why some companies have opted to undertake a formal audit of their business environment. By standardizing the process of examining the state of each of these forces in detail, you lower the chance that there's something you missed.
This often takes the form of a list of targeted research questions to make sure you leave no stone unturned. Below are some examples of research questions for each of the six forces. These are all things that are good for your company to be aware of anyway. But you should really sit up and pay attention if you conduct multiple audits over a period of years and notice a dramatic change in the answer to any of these questions.
1. Current competitors: For each competitor, ask yourself: What is their strategy? What are they doing better or worse than anyone else in the field? What are their strengths and weaknesses? Who are their primary customers? What kinds of financial resources are they able to leverage? Who are their major partners? Are they doing anything interesting or new?
2. Future competitors; Write out a list of potential competitors. Consider both promising newcomers and established international firms that may start moving in on your market. For each one, ask the same questions as for a current competitor. Additionally, and most importantly, consider how much they’ve grown recently.
3. Government policies: To anticipate regulatory and legal changes before they take place, you’ll need to consider the political environment. What kinds of laws are on the table? What laws are currently under debate? Additionally, consider your legal exposure. Look at court cases involving regulations in your industry—what were the rulings?
4. Consumers: Are customers in this industry typically loyal to one brand, or do they switch back and forth? What kind of disposable income do your customers typically have access to? Do their patterns of consumption change seasonally or move up and down with the economy? What are they typically looking for in a product?
5. Suppliers: What are your company’s most important supplies? And how flexible is your supply chain? In other words, what supplies could you easily find from a new buyer, and for what supplies are you dependent on one supplier? Can you foresee any disruptions in their industry?
6. Adjacent businesses: What are your adjacent businesses? For each company selling complementary goods, ask yourself: What are their overall strategies? What are their plans for the future? Are there any reasons to think they might change up their product line? Consider their competitors, their suppliers, and their customers: Are any of your complementors hitting a strategic inflection point? If so, how would you react in their shoes?
To keep tabs on these forces, Grove offers three pieces of advice:
Get People to Speak Up With Psychological Safety
Grove’s advice to keep your ear to the ground and listen carefully to all warning signs—regardless of where they’re coming from—won’t be possible to follow unless employees feel a sense of psychological safety—that they won't be punished or humiliated for their concerns or mistakes.
Experts offer six important pointers for cultivating psychological safety in your teams.
Foster personal connections: Your staff will be more comfortable speaking up or sharing bad news when they feel a sense of personal connection to their managers and coworkers. Try to find things in common with your employees and designate time for your teams to socialize and bond with each other.
Value feedback: Your employees will feel respected and encouraged to speak up if you demonstrate that you value their input on matters large and small. As Grove advises, actively solicit feedback from your employees to show them that you want to hear what they have to say.
Anticipate your team members’ reactions: When handling conflict, criticism, or uncomfortable topics, you may unintentionally undermine your employees’ sense of psychological safety or willingness to take risks if they misinterpret your feedback as an attack on their competence or character. You can minimize this effect by anticipating your employees’ reactions as you prepare for meetings—have a plan for what to say if they don’t take your feedback well.
Approach problems with curiosity: If an employee is not performing well, begin from a place of curiosity rather than blame when you discuss their performance. Instead of leading with criticism, talk to your employee to figure out what’s going wrong.
Turn conflict into collaboration: Conflict among team members can also undermine psychological safety. If someone feels their side or perspective is “losing,” they may doubt the fairness of the process and disengage from the team. They may also feel scorned and focus narrowly on “winning” at the expense of other important goals. Try to frame debates as collaborators seeking a mutually desirable outcome.
Check in often: You can maintain a sense of psychological safety by periodically assessing your teams’ feelings through anonymous surveys. This will provide a sense of whether your efforts at creating a sense of psychological safety are working.
Staying alert to the next strategic inflection point will only help if your company is ready to respond. If you anticipate a change but don't move to counter it ahead of time, you'll still be left adapting on the fly. Grove offers two pieces of advice for building the flexibility to pivot when the time comes: Proactively invest in alternatives before you need them, and build a flexible business culture.
You won’t be able to pivot your company unless you have something to pivot toward. Grove advises you to come up with a plan B before you need it. Think broadly about backup plans. Intel was saved by a new product, but for you, it might be a new marketing strategy, customer base, or partnership.
Intel spent years developing microprocessors and working out the bugs before sending this product to market. They sensed a future market and began research and development in this market as a side project. This allowed them to shift much more quickly to exclusively selling microprocessors when memory was no longer viable.
Compare this to the crisis faced by Ford in the early 1970s. The American auto giant started losing market share when consumers began to prefer smaller, fuel-efficient cars: a market already cornered by firms like Volkswagen and Toyota. Without a sub-compact of their own, Ford rushed the development of the Pinto without taking the time for proper safety testing. They had to recall 1.5 million cars, face over 100 lawsuits, and spend years repairing their reputation after it came to light that a simple fender-bender could rupture the gas line, igniting the entire tank.
Predicting Whether Your Plan B Will Pan Out
While Grove stresses the importance of having a plan B, we must acknowledge that not all plan Bs are created equal. How do you know if you’re investing in a product that actually has a future?
No one has a crystal ball, but there are empirically documented strategies that make some predictions more accurate than others. In Superforecasting, Phillip Tetlock and Dan Gardner write about people who are able to predict future events with far greater accuracy than most. They identify several key methods of so-called “superforecasters.”
You can adopt these methods to forecast the answer to an important question when selecting your plan B: Will this new product or strategy catch on?
Taking an outside view: Superforecasters begin with a broad frame and work their way in. In trying to predict an outcome, they create lists of similar situations in the past to calculate the success rate. Before investing in developing a new product, ask yourself about similar attempted products in the past and their success rates. This will give you a clearer understanding than simply looking at the pros and cons of the product itself.
Drawing on a breadth of information and perspectives: Superforecasters try to pull in multiple perspectives and a broad range of relevant info in making their predictions. This largely confirms Grove's advice to pay attention to all six forces and listen to a range of perspectives. But it also extends his advice: In forecasting, it's better to know a little about a lot of things than a lot about a few things.
Thinking in probabilities: Superforecasters tend to think in percentages rather than a "yes/no" binary. They strive to guess how likely something is rather than state definitively whether or not something will happen. This advice works in combination with the strategy of taking an outside view. Once you identify your analogous situations, see if you can calculate their success rate as a probability. This will give you a clearer understanding of the potential risks and rewards involved in selecting your plan B.
Now that you have a few backup plans, you'll need a company flexible enough to use them when the time comes. Grove’s strategy for creating a flexible organization relies on balancing input and power between upper and middle management. He argues that companies become inflexible when they rely exclusively on one or the other. To give a clearer sense of how this balance works, Grove draws a clear contrast between two styles of leadership: “top-down” and “bottom-up.”
Top-down organizations rely heavily on the decision-making of upper management to function. Middle managers have much less autonomy in these organizations. The strength of this style is its ability to coordinate actions across all the departments. If your entire staff is used to following marching orders, it’s easier to get everyone acting together. The disadvantage of top-down organizations is that upper management often lacks important firsthand information that middle managers and employees who interact much more directly with the business environment have.
Bottom-up organizations rely on middle managers for leadership and direction. The role of upper management is largely to approve or reject decisions handed up to them. The strength of this management style lies in its ability to respond to firsthand information from the business environment. The disadvantage is that it is harder to coordinate actions across departments. If your departments work independently, they might not communicate with each other, and the head of one department won’t have the authority to make decisions for the other ones.
Grove argues that the most flexible companies are those that find a way to balance these two approaches. He suggests fostering a “give-and-take” between upper and middle management, in which they take turns influencing each other. He likens this process to a pendulum swinging back and forth.
He highlights the importance of inputs from both styles of management during Intel’s pivot. Before committing to the pivot, middle managers discovered that microprocessors were more profitable and began gradually re-allocating the resources under their control. Upper management listened to this signal and made the call to shut down memory production entirely, ordering a coordinated response across all departments.
Building Agility From Top to Bottom
Grove’s advice on building agility focuses directly on the interactions between upper and middle management, and how they communicate and share authority. However, this doesn’t cover the full picture of why some companies are more flexible in the face of change than others. Strategy experts argue that you can also increase your company’s agility by making changes to staffing and daily operations. Here are three important strategies.
1. Create cross-functional teams: A cross-functional team is a group that brings together a wide range of skill sets and represents different departments in the organization. These often take the form of working groups tasked with a specific problem. As well as generating insight by bringing many heads together, these teams improve coordination between departments as they develop solutions aligned with each department’s capacities and needs.
2. Accelerate your production cycle: The typical product cycle begins with research and development, then you design and build a prototype, test your product, and then apply what you learned to start the cycle over again. The faster you can make it through this process, the faster your company can adapt. Closely examine your production cycle and eliminate inefficiencies, lag-time, or unnecessary steps.
3. Develop a shared compass: A shared goal or set of values among your employees can keep your company in alignment during a major pivot. It helps to have a vision that is organized around solving a problem rather than offering a specific solution. After all, the solutions to your problems can change from year to year, even if the core problem remains. You’ll also need to make this vision a core part of your company’s culture so that staff can understand your vision and align around its objectives.
So, you've created a flexible company that's well-positioned to respond to a severe market disruption at any time. Now you need to know what types of disruptions warrant a large-scale response. Not every change in your market environment requires an overhaul of your entire company. You wouldn’t want to make a costly pivot for no reason, so it’s important to be sure you’re at a strategic inflection point before responding.
That said, recognizing a strategic inflection point is easier said than done: The business environment changes constantly because the six forces acting on your company—current competitors, future competitors, government policies, suppliers, consumers, and adjacent businesses—are constantly in flux. Furthermore, major changes often come gradually. When does a change in your business environment mean it’s time to re-examine your entire business model?
Unfortunately, there’s no formula to tell you this. But Grove offers two pieces of advice. First, debate intensely over a long period of time. Second, listen to a broad range of perspectives: This isn’t only for keeping an eye on potential disruptions—drawing on a breadth of viewpoints also hones your decision-making.
The Importance of Recognizing When You’re Not at a Strategic Inflection Point
Grove’s work focuses primarily on knowing when you’re at a strategic inflection point so that you can make the pivot in time. However, sometimes one of the most important decisions you can make for your company is recognizing when you're not at one. Reinventing your entire company is costly and risky. You’ll have to expend a lot of time, money, and effort into a major overhaul, and there’s never a guarantee your new strategy will even work.
Furthermore, a lot of companies have maintained long-term longevity by sticking to their core business while making smaller, incremental changes. In Built to Last, Jim Collins and Jerry I. Porras critique the myth that successful companies are always pivoting. After all, Ford still makes cars, Boeing still makes planes, and Disney still makes animated films. Even though a dramatic pivot saved Intel from the fate of other American memory chip companies, they've now stuck with microprocessors for 40 years. Abandoning a business strategy that still has a future could leave your company without a primary source of revenue.
Recognizing you’re not at a strategic inflection point requires the same strategies as recognizing you are: leveraging broad perspectives and debating intensely. But considering the costs of an unnecessary pivot, you’ll want to make sure your debate includes some skeptics. If no one on your team is arguing against the idea of a substantial upheaval, seek out someone who’ll make a case for that point of view.
Grove’s first piece of advice on recognizing strategic inflection points is to debate the issue with your team. He argues that opening your perception of the business environment and your company’s future to criticism and dispute will reveal blind spots in your thinking—key pieces of information you’ve missed or possibilities you’ve overlooked. He encourages you to debate intensely over prolonged periods to leave no stone unturned and consider every angle. For Intel, this process lasted several years.
This may sound like a lot of wasted time, but Grove looks back and sees how his thinking evolved over the course of the debate: from denial, to confusion, to clarity, and finally to decisive action. He insists that without this process of argumentation, Intel wouldn’t have accepted their situation in time to respond effectively.
Keeping Debates Productive
Grove discusses the long, sometimes exhausting debates he had with other senior managers at Intel. Other writers expand on this, offering specific advice on keeping such debates productive and goal-oriented. In Radical Candor, Kim Scott offers several pointers.
1. Press pause on making a decision. If some on your team want to make the decision ASAP—understandable given the time constraints—this can create unnecessary friction or pressure to jump to a decision. Designate and hold time for simply exploring ideas.
2. Debate to explore perspectives rather than to win. Once someone becomes entrenched in a position, they will have a hard time taking an objective view of the problem. Try to redirect the conversation if you notice someone doubling down too hard on their argument. You can also explore perspectives by asking people to switch positions and argue the opposing side.
3. Know when to take a break. While Grove advises you to debate vigorously and energetically, most people reach a point where they just get tired of arguing. If your team reaches this point, they may suppress their opinions or concede their positions simply to get to the end of the meeting. If you sense fatigue setting in, put a pin in the conversation and schedule a follow-up session if needed.
Grove’s second piece of advice on recognizing strategic inflection points is to—again—leverage a wide range of perspectives. This further cuts down on your blind spots by bringing in information and possibilities you might have missed. Grove also suggests that someone from outside your company may be less attached to your company’s way of doing things and make suggestions that wouldn’t have otherwise occurred to you.
He suggests you listen to voices from throughout all levels of the company, including middle management, salespeople, and engineers who may be closer to the six forces that determine changes in your business environment. Grove even includes journalists or critics who might hold a negative view of your company.
How Cognitive Biases Can Lead to Blind Spots
Grove insists that bringing in a wide range of perspectives can cut down on our blind spots. Psychological research clarifies how and why this works. A blind spot could be a gap in information, but it could also be a cognitive bias.
In Thinking, Fast and Slow, Daniel Kahneman explains that we are more likely to consider something exceptional if it’s within our first-hand experience. If something is exceptional, it stands apart from the larger statistical trends that apply to similar situations. This perception is often false.
For example, a survey found that 86% of respondents ages 18 to 29 believed their marriages would last a lifetime. This is highly unlikely, as close to 50% of US marriages end in divorce. This overestimation is caused by the tendency to consider one’s own marriage exceptional.
This explains why you would want to bring in people from outside the organization. They would be less likely to consider your company exceptional, and may make more objective assessments of your situation.
This same principle may cause managers to overestimate their decision-making ability. If you consider your own management to be an exception to larger statistical trends, it’s easy to overestimate your abilities. For Grove, inviting multiple perspectives isn’t simply about gathering information: It’s about staying humble and recognizing your limitations as a manager. He encourages you to consider that there might always be someone else who understands the situation better than you.
To bring these voices to the table, you need to create a business culture where employees feel empowered to speak their minds. Grove offers two suggestions.
Motivating Employees to Contribute
Grove highlights the importance of making space for employees to speak up. However, beyond simply “making space,” you should consider what motivates employees to “step into that space” and speak up. In Leaders Eat Last, Simon Sinek argues that what motivates contributions from your employees is care for their organization and the sense that they are cared about. Sinek offers two pieces of advice for fostering a reciprocal sense of care.
1. Employees must care about their goal. Most people don’t want to feel like they’re simply trading labor for money. They’re much more motivated when they feel like they’re contributing to something larger than themselves. Think about the value your company brings to the world and keep that vision at the center of your company’s culture. This will increase the likelihood of your employees caring about the future of the company and wanting to speak up if they feel something is going awry.
2. You must show care for your employees. Create bonding and psychological safety within your team by making sure that all of your employees feel supported. Find out what kinds of support they need and prioritize providing it. This show of support helps foster an environment where your staff cares enough about the organization and their team to speak up and contribute.
So now you've built a business that's ready to roll with the punches, and you've recognized you're facing a strategic inflection point. All that's left is to settle on a plan and commit to carrying out a coordinated company-wide response.
Unfortunately, there are still some major obstacles that can get in your company’s way. In this section we’ll walk you through four major challenges to enacting your coordinated response, while exploring Grove’s advice for addressing each.
The first challenge Grove identifies is working against your company’s established ways of doing things. You enter a strategic inflection point with processes, strategies, and relationships that allowed your company to thrive under the old market conditions. Now that the business environment has changed, you’ll be working against the very things that once brought you success. Grove identifies three specific problems you may encounter.
In a strategic inflection point, Grove notes, successful and established companies may even be at a disadvantage compared to newer startups. A new company, without established processes in place—and therefore none of the challenges identified above—has the flexibility to build an organization adapted to the new market conditions.
Grove offers some rather blunt advice to get through the problem of working against your established ways: Either you and your staff learn new skills, or you hire new staff. He notes that companies often bring in outside hires during transitions, not because they’re better, but because they’re not tied down to the old ways.
(Shortform note: If you’d prefer to keep—rather than replace—your current staff, make sure you’re providing the tools and empowerment they need to successfully learn a new skill set. Paul Marciano (Carrots and Sticks Don’t Work) suggests regularly asking your employees what they need from you, setting aside dedicated training time, and encouraging your employees to share suggestions.)
The Disadvantages of Established Companies
Grove focuses on the ways established companies can struggle in changing their processes. However, it’s worth noting that they’re also at a competitive disadvantage to startups when it comes to implementing new technologies. In The Innovator's Dilemma, Clayton Christensen explains why.
Christensen argues that disruptive innovations often lack a clear market and customer base at first—a product that doesn’t exist yet is unlikely to have a large group of people waiting to buy it. This puts established companies at a disadvantage in two distinct ways.
Wrong customer base: The established company will try to market the new product to their existing customer base, which isn't interested in the new product—they’re customers because of the old product. On the other hand, a startup must create a new customer base from scratch anyway, so they will try to build it around interest in the new product. While startups might not have as many customers, a higher percentage of their customers will be interested in the new product, giving these companies a more efficient return on their marketing efforts.
Built for the wrong profit margins: The disruptive product may not yet be profitable because there isn't an established market for it. New companies that have built a niche for themselves are likely leaner and built to run on tighter margins—and therefore can deal with this lack of profitability. Meanwhile, larger companies may be operating under expectations from investors to maintain profit margins consistent with their old products, which may not be possible in the emerging market.
In both of these situations, the established company is left trying to adapt to new market conditions. The startup, having built itself from scratch in those same conditions, will already be adapted. Since technology is always changing, large companies will likely need to maintain Grove's stance of vigilant preparedness to keep from being outcompeted by tech-savvy startups.
The second major challenge to responding to a strategic inflection point is emotional. When you've been part of a successful business for years, you become attached to the people, products, and ways of doing things that have been such a big part of your life—letting go of these often causes a sense of grief. Grove writes that during a strategic inflection point, managers often go through the five stages of grief.
A lot of managers will try to distract themselves and avoid their feelings of grief. Grove writes that during strategic inflection points, he sees some managers pour all their energy into mergers and acquisitions, philanthropy, side projects—anything to keep them from facing the fact that they must let go of something important. This prevents the manager from putting their energy into the transition, leaving their company at a disadvantage in overcoming the strategic inflection point.
Grove advises you to confront your grief directly. Admit that this transition is hard and accept how you feel. Let yourself grieve, but don’t let your grief keep you from making the changes your company needs to survive.
Steps to Managing Your Grief
Grove stresses the importance of facing your grief and getting through it. That said, Only the Paranoid Survive does not focus on specific actions you can take to get through your grief. Here are five tips psychologists recommend.
1. Recognize your feelings and your loss. Let yourself experience your emotions of grief. Recognize what you have lost, and honor what it meant to you.
2. Don’t rush your grieving process. Some people see grief as a process to get through as quickly as possible. Give yourself time to process your emotions at your own pace.
3. Reach out to friends and loved ones. Grieving is an important time to stay connected with important people in your life. Talking about your feelings and experiences of grief will help you process them.
4. Stay physically active. Exercising plays an important role in your mental and emotional health. Staying active will help you through the grieving process.
5. Seek counseling. Sometimes grief can feel overwhelming. Seek out a counselor in your area if you would like help from a professional who can guide you through your grieving process.
The Five Stages of Grief
While Grove invokes the five stages of grief, he doesn't specifically discuss each stage and its connection to navigating a strategic inflection point. Here we'll explain what the five stages of grief are and then illustrate how Grove’s experience connects to each of these stages.
The five stages of grief are a framework for understanding the emotions experienced during the grieving process. This model was developed by Swiss-American psychologist Elisabeth Kubler-Ross and includes denial, anger, bargaining, depression, and acceptance. These stages are not necessarily experienced in order, nor does every grieving person go through all five.
1. Denial: A grieving person in denial refuses to accept the loss, defending themselves by discounting or minimizing the news. In Grove’s experience, when the first accounts of Japanese production capacity, pricing, and product quality reached Intel executives, they dismissed these as rumors.
2. Anger: Once the reality of a loss sets in, many people respond with anger and frustration. In your company, you may find employees’ tempers growing shorter. They may take this frustration out on each other and create unnecessary conflicts. In Grove's account, a lot of irritation and anger within upper management would be directed toward each other. He writes that their debates would sometimes become heated, frustrating, and bitter.
3. Bargaining: In the context of grief, bargaining is often associated with a sense of guilt and an effort to regain control over the situation. During the bargaining stage, employees in your company may entertain "what if" and "if only" questions, trying to imagine how this painful situation could have played out differently if only they had seen it coming sooner.
4. Depression: This stage brings the emotions people most often associate with grief, such as despair and hopelessness. In your company, employees may seem down and undermotivated. They may withdraw and lose interest in their roles. Grove frequently described enduring Intel’s transition as walking through a "valley of death.”
5. Acceptance: Acceptance occurs when the bereaved accepts that their world has changed and realizes they will be okay in the new order. When your employees reach this stage, you can expect them to feel relieved, calm, and ready to make the significant changes your company needs. Grove writes that when Intel finally committed to their decision—moving out of a period of pain, confusion, and ambiguity—staff and business partners felt an enormous sense of relief.
The third challenge you face when responding to a strategic inflection point is confusion within the company. The period between suspecting that a strategic inflection point is happening and fully committing to a decisive action is often characterized by misunderstandings between the departments and layers of management. When employees begin to sense something is wrong, they'll naturally try to figure out what's going on and anticipate the future of the company. This leads to staff second-guessing the messaging they receive. Additionally, as your management team debates the future of the organization, each department leader may be planning for the outcome they expect. The company just isn't "in sync" with itself.
Grove identifies two major problems this confusion presents for navigating a transition.
1. Demoralization. When employees aren't sure what's going on, it becomes easier for them to lose trust in the company and its leadership. This can be very demotivating, as your staff may lose sight of—or stop believing in—the company goals they're contributing to. It's hard to get anything done with demotivated employees.
2. Inefficiency. If your departments are confused about where your company is going, they may invest a lot of resources in projects that don't have a future. For example, Intel maintained their operations in memory chip design and production well after most of the team had decided they were going to pull out of the market.
Grove offers two pieces of advice on dealing with your company’s internal confusion.
1. Be transparent with employees about the dilemmas your company faces and the changes you plan to make. If they start asking uncomfortable or difficult questions, challenge yourself to answer directly and honestly instead of deflecting with a boilerplate response.
2. Commit fully and don’t look back once you and your team settle on a response to your strategic inflection point. This advice may seem obvious—essentially, to deal with the confusing interim period by simply getting out of it as quickly as possible. However, Grove notes, in the face of uncertainty, it's easy to get bogged down in endless discussion and debate. Remember the end goal: moving ahead to give employees a clear idea of where the company is going.
Role Ambiguity
Grove's perception—that employee confusion leads to low motivation, poor performance, and burnout—is backed by strong empirical research.
Psychologists have developed a rich literature defining and demonstrating the effects of "role ambiguity." Role ambiguity occurs when employees are uncertain about their responsibilities and rights within the organization. In short, they just don't know what to do with themselves. This creates a lot of additional stress, as most employees feel that they ought to be contributing to the company. Choosing tasks then creates anxiety: Employees risk conflict by stepping on another’s toes, and they risk failure by selecting the wrong tasks.
Additionally, this desire to feel like they’re contributing will drive employees to create unnecessary tasks that waste company resources—which, for some employees, only increases anxiety.
In a large company, you probably won’t be able to sit down and have a one-on-one conversation with all your employees to explain the company’s transition. This creates a fourth challenge to navigating a strategic inflection point: Your reach as a leader is limited. To address this, Grove encourages you to think broadly about the kinds of messages you send to employees, especially when it comes to your actions. Grove insists you must lead by example—you signal your company’s priorities by setting your own.
Grove specifically encourages you to look at your own schedule and consider the message you’re sending by the way you spend your time. If you tell your employees to focus all their energy on a transition but you focus your time on unrelated activities, your staff will get the message that the transition isn’t serious. On the other hand, if you spend most of your time meeting with engineers, suppliers, and customers to hammer out the details of the transition, everyone understands that the company is moving in a new direction and that’s where they should focus their energy, too.
Leading by Example Remotely
Grove’s specific actionable—using your own schedule to signal priorities—focuses on companies housed in an office, where most of your staff can see what you do on a daily basis. However, today many companies are led remotely—making this particular piece of advice a bit more challenging to implement.
Fortunately, there are still ways that remote managers can signal a company’s priorities.
Consider your meeting agendas, especially for an all-hands meeting if your company has one. The more time you devote to a given topic, the more you signal its importance.
Demonstrate the importance of new skills and knowledge by learning about and talking about them yourself. Online, this could take the form of chat channels, working groups, or even organized professional development workshops. Share learning resources you’ve found and encourage your employees to do the same.
Lastly, you can still set an example by how you devote your own time and energy, but you’ll have to be a lot more direct in communicating about it. Tell your employees what you’ve been working on to signal the company’s new direction.
You now know how to prepare for, recognize, and respond to your industry’s next big disruption. Grove encourages you to think of these disruptions not as challenges to endure, but rather opportunities for reinvention. His advice may help you not only survive a strategic inflection point, but come out stronger on the other side. After all, Intel not only survived the memory chip crisis of the 1980s—they also went on to become global leaders in the microprocessor industry.
Not all of us are CEOs of Fortune 500 companies, nor will we all be likely to face a full industry upheaval. Grove argues you can use his advice in facing a much more common situation: a strategic inflection point in your career. This happens when changes in the business environment reshape your career opportunities. For example, companies in your industry may start outsourcing your role to contractors, or a new technology could make your skills obsolete.
(Shortform note: Market research shows that individual employees may actually be more vulnerable to market disruptions than the companies they work for because they are much more replaceable. It takes years of work and education for an employee to develop their skills—whereas hiring new employees with updated skills can happen in months, if not weeks.)
Grove advises you to think of your career as a personal business: Your customer is your employer, and your product is the value your skills and work ethic bring to the company. This mindset allows you to apply Grove’s advice on overcoming strategic inflection points to your personal career. There are four clear ways that this advice translates:
How to Research Your Industry’s Volatility If You’re Not a CEO
Grove advises business leaders to look out for potential market disruptions by paying attention to the six forces that shape their business environment. Yet this advice may be harder to apply personally. While CEOs of Fortune 500 companies can hire a research team to audit their environment, for you, keeping track of trends in all six forces would become a full-time job.
Fortunately, there are other ways of learning about your industry’s exposure to volatility. Relying on published market research can give you a snapshot of how prepared you should be to switch careers without hiring your own research team. Researchers have developed ranking systems to assess an industry’s potential for disruption.
They seek out information such as the cost of entry for new companies, the interconnectedness with other industries, and the potential for technological change. They then use this information to place industries in a matrix along two axes: current potential for disruption and future potential for disruption. This matrix can give you a basic understanding of whether you should start preparing for disruption—and if disruption were to happen, where you’d go.
Staying Prepared for Your Next Career Move
One significant way to stay prepared for a potential career switch is keeping an updated skill set. A strong skill set is neither too specialized—which risks becoming obsolete if your role is no longer needed—nor too generalized—which risks a loss of competitive advantage in highly technical fields. Business experts recommend three strategies to develop a skill set that keeps you adequately prepared for your next career inflection point.
1. Never stop learning. Think of learning as a lifelong process—professional development continues throughout your entire career.
2. Create a list of your skills. Creating a list of what you do best can serve you in three distinct ways. First, it will help you identify gaps in your current skill set and areas for improvement. Second, it will make it easier to consider other careers where you would be a good fit. A list of your skills can make it simple to match with job descriptions as you explore other possibilities. Third, it might provide a boost of confidence. You’re likely more skilled than you realize—seeing everything you’re good at provides a positive reminder of this. This boost can help you overcome fear and self-doubt that often happen when switching careers.
3. Focus on skills you can develop in your current organization. It’s easy to stretch yourself thin by piling “skill builders” such as extra schooling, coaching, or development seminars on top of your job. By finding opportunities to practice your desired skills right within your organization, you can cut back on these external time drains.
Grove talks about the importance of looking ahead and planning for market disruptions in your own career. In this exercise, we’ll walk you through a guided reflection on preparing for your next career inflection point.
Choose an industry, either the one you currently work in, or one you would someday like to work in. Take some time to reflect on a trend that is changing the industry. What impact can you imagine this will have?
Speculate on who you think will be the winners and losers of this change. Which kinds of employees and/or companies will be in a better position to take advantage of this change? Who might be positioned to become less relevant in the industry?
Lastly, brainstorm a list of at least three things you could do to position yourself on the winning side of this trend before it hits. (Are there skills you would need to develop that will help you in the future? Is it time to start planning a career switch?) What can you do today that would put you in a better position for this transition?