Only the Paranoid Survive

Citation

Mesa, W.B. (2003), "Only the Paranoid Survive", Journal of Consumer Marketing, Vol. 20 No. 4, pp. 377-379. https://doi.org/10.1108/jcm.2003.20.4.377.3

In his book, Only the Paranoid Survive, Andrew S. Grove articulates essential ideas, actions, and attitudes towards approaching, confronting, and adapting to perpetual changes in the market environment. The central idea is that organizations need to be paranoid about the inevitable changes that will occur in the market environment. Organizations that are successful are paranoid, which means they identify fundamental changes in the environment and adapt to such changes through planning, learning, and listening to “front‐line” employees who face the consumer daily.

Basically, Mr Grove frames his book around the idea of an organization breeding and cultivating paranoia, which translates into an organization that is vigilantly looking for changes to occur. The issues is not if change will happen. Rather, change will happen. The virtue of being paranoid is this: Organizations that are paranoid will recognize market environmental changes as opportunities to adapt and grow.

Mr Grove defines such market changes in an organization’s environment as 10X factors. That is, every organization has environmental elements that affect and define their operations, and when change occurs in one of those elements, then the nature of operations for the organization changes. A 10X factor, however, is a change that is ten times larger than a routine change in doing business. How the organization reacts and adapts to a 10X factor is a strategic inflection point – the phenomenon where the old strategic postures of the organization are no longer relevant or are in danger of becoming obsolete. This is where managers ask the fundamental questions: “What has changed? Things are different … why?”

Drawing from the work of Porter (1980), in Competitive Strategy, Mr Grove articulates six fundamental forces where a 10X factor can surface. Figure 1 exhibits the six forces relative to the organization. Brief descriptions in the form of questions regarding the six forces are as follows:

1. 1.

   (1) Power, vigor and competence of existing competitors. Are competitors aggressive or non‐aggressive, and what are their numbers?

2. 2.

   (2) Power, vigor and competence of complementors. Who or what in the environment complements the product or service the organization provides?

3. 3.

   (3) Power and competence of customers. Are there many customers, what are their demands, and are they a business or consumers?

4. 4.

   (4) Power, vigor and competence of suppliers. Are there many or few suppliers? Are they aggressive? Are they flexible as to who they can and cannot work with?

5. 5.

   (5) Possibility that what your business is doing can be done in a different way. In essence, are there substitutes and potentially how many?

6. 6.

   (6) Power, vigor and competence of potential competitors. Are non‐competitors potential competitors? What strategic attributes do they possess that are potentially dangerous to our organization in the near future?

Each force that makes up an organization’s market environment is a reality to any entity that operates under some form of profit basis (even for non‐profits). However, a 10X factor, as previously mentioned, is where one of the forces dramatically changes the way a business will operate. That 10X factor becomes the strategic inflection point that can potentially destroy or at least erode the future viability of the organization. This destructive stimulant fosters creativity in a paranoid organization, or more specifically in the Schupterian sense: “creative destruction”. The old methods or assumptions are being destroyed by a 10X factor, yielding a void in which new methods and assumptions are created.

Consumer marketing is continually seeking means to both create markets and sustain the life of a particular market. Developing new products or services necessarily requires an organization to innovatively lengthen or revise the product’s/service’s life cycle. A 10X factor produces strategic inflection points requiring organizations to be innovative in maintaining their markets; 10X factors produce strategic inflection points requiring organizations to create new avenues to better serve both old and new customers; 10X factors produce strategic inflection points requiring organizations to adapt to consumer shifts in preference and need, while at the same time maintaining the overriding vision of the organization. The 10X factor, therefore, creates the destructive momentum required of organizations to, as Mr Grove declares, “navigate through strategic inflection points”, (p. 33), which in turn provide opportunities to reach new heights or go through successive peaks of business decline.

On the downside, to be paranoid is to assume only the inevitable that a 10X factor will occur. This sensibility has the potential to erode the morale of an organization and may contribute to the increased likelihood of employee turnover and thus a loss of intellectual capital – the talent and know‐how of the organization’s employees. Finally, anxiously scanning the environment (being paranoid) for 10X factors emphasizes only the “hows” of reaction and adaptation and rarely the “whys”. Asking the questions of “why” can contribute to a stakeholder theory that is less utilitarian and increasingly socially responsible.