About the book

“This terrific book is a dangerous book. It will make people think”

- Peter Drucker

Title : Only The Paranoid Survive

Author : Andrew S.Grove (known as Andy Grove)

Publisher : Profile Books Ltd., London

Price : Rs. 250

ISBN code : ISBN 1-86197-513-9

Year of Release : 1996

About the author

Early life and Education

Andrew S. Grove was born in Budapest, Hungary in 1936 to a middle class

Jewish family. He graduated from the City College of New York in 1960 with a
Bachelor of Chemical Engineering degree and received his Ph.D. from the
University of California, Berkeley in 1963.

Dr. Grove has written over 40 technical papers and holds several patents on
semiconductor devices and technology. He taught a graduate course in
semiconductor device physics at the University of California, Berkeley for six
years. He currently is a lecturer at the Stanford University Graduate School of
Business, teaching a course entitled "Strategy and Action in the Information
Processing Industry".
Dr. Grove has received an honorary Doctor of Science degree from the City
College of New York (1985), an honorary Doctor of Engineering degree from
Worcester Polytechnic Institute (1989) and an honorary Doctor of Laws degree
from Harvard University (2000).

Career

Upon graduation, he joined the Research and Development Laboratory of

Fairchild Semiconductor and became Assistant Director of Research and
Development in 1967.
In July 1968, Dr. Grove participated in the founding of Intel Corporation as one of
the three members. In 1979 he was named its President, and in 1987 he was
named Chief Executive Officer. In May 1997 he was named Chairman and CEO,
and in May 1998 he relinquished his CEO title. He stepped down as Chairman in
May 2005, and remains Senior Advisor.
Grove is credited with having transformed Intel from a manufacturer of memory
chips into one of the world's dominant producers of microprocessors. During his
tenure as CEO, Grove oversaw a 4,500% increase in Intel's market capitalization
from $4 billion to $197 billion, making it, at the time, the world's most valuable
company.

Honors and Achievements

• On August 25, 2009, California Governor announced that Grove would be

one of 13California Hall of Fame inductees in The California Museum's
yearlong exhibit. The induction ceremony was on December 1, 2009
in Sacramento, California.
• Strategic Management Society's Lifetime Achievement Award (2001)
• IEEE 2000 Medal of Honor (2000)
• Time Magazine's Man of the Year (1997)
• Industry Week's Technology Leader of the Year (1997)
• CEO magazine's CEO of the Year (1997)
• The 1st Annual Heinz Award in Technology, the Economy and
Employment
• AEA Medal of Achievement award (1993)
• IEEE Engineering Leadership Recognition award (1987)
• Franklin Institute Certificate of Merit (1975)
• In 2006 he made a 26,000,000 USD donation to City College of New
York, the largest donation ever made to that school.
Book Review

When I first saw this book accidentally on a shelf in The English Book Shop,
Sector 17, I thought that since it is written by the co-founder and CEO of Intel
corporation, this book must be entirely about the working principles and
functioning of Intel. However, I was to be proved wrong by Andrew S. Grove. The
book is not really about Intel.

As the title of the books suggests, one has to be paranoid for survival in the
market. Paranoid about the changes occurring around us. So, the book is about
the changes in the business and what we can (and we should) learn from
experience. To be more specific, the book is not about changes rather it is about
‘Strategic Inflection Points’
There are ups and downs in every business. But once in a while there arises a
condition which occur are so drastic that makes it difficult for a business to even
survive in a market. These are the times which test the true character of the
organization and calls for a chance in the strategy. Hence these are known as
Strategic Inflection Points (SIP) and the whole book revolves around the concept
of SIP and how to deal with them. When a company or an industry goes through
a SIP, practically everything in it is affected by the change as the author rightly
says “Sooner or later, something fundamental in your business will change” The
book is based on how to exploit these crisis points that challenge every company
and career. In the light of such changes a company has three options:

• Either it is adamant to change and feels that their current way of business
is correct, hence they continue in same old fashion and "DIE"
• Or the company foresees the change as an opportunity or new line of
business. It will then adapt to change and hence, it survives and become
successful or even a market leader like Intel Co.

The book rightly fits the description of ‘Short and Sweet’. The book is divided into
9 chapters and has just 200 pages. I found it quite surprising that the author has
covered such a vast topic in such a few number of pages and that too with ample
number of examples. And to add to it, the contents of the book are neatly
organized. Also each of the chapter covers one or two topics so that the book
doesn’t come down heavily on the reader.

In the incipient part of the book, Andrew Grove talks about the Strategic Inflection
Point in his own company i.e. Intel. Something happened that changed the way
they did business. In 1994, most of Intel’s business revolved around
microprocessors and they were growing at about 30% per year. This was the
year that Intel Co. was going for the full-scale production of Pentium processors.
The perception of the company was that their main customer was the computer
manufacturers who used their microprocessors in their computers. However a
troubling event happened. The FPU (Floating Point Unit) in Pentium developed a
bug and everywhere there was a large hue and cry about it. They had to call
back 1.3 billion microprocessors because of this fiasco and they got phone calls
from 25000 angry customers everyday even though these people didn’t buy
anything directly from Intel Co. This was the time they realized that their main
customers are the people buying the computers, not the computer
manufacturers. This led to reframing of the entire strategy of the company.

Citing the example of his own company, he step by step explains the concept of
Strategic Inflection Point and how should one go about it.

Then he moves on to explain the transformation of computer industry in early

90’s. Earlier, the industry was Horizontal i.e. a whole computer system was built
by one company only which would compete in the market against the computer
system of the other company. For example, a computer system of IBM will have
chips, hardware, OS, software etc of IBM only. Then the industry shifted to
vertical pattern. The customer can have his computer assembled with
microprocessor of Intel, hardware of IBM, OS of Microsoft etc.
Not only had the basis of computing changed, the basis of competition had
changed too. Competitors in each horizontal bar of competence and competition
now fought for the largest share of that bar. The power of this approach to
computing is based on mass production and mass distribution. Those who win
inevitably grow stronger; those that lose, over time gets weaker. Also the
company which was initially stronger is most likely to get adversely affected by a
SIP than a smaller company.

The two most important points of strategic management highlighted in this book
is about recognizing strategic inflection points in a business when the business
and its environment goes through a dramatic change in structure referred to as a
"10X" change in the book. Groves uses 6-forces model which is based on the
classic M.E. Porter model to explain this point. SIP is caused by change in one of
the following forces.

• Competition (e.g. the Warehouse comes to a small town and closes down
small retailers)
• Technology (e.g. when sound took over silent pictures)
• Customers (e.g. Intel's own experience)
• Suppliers (e.g. Airlines telling ticket agents that the commissions are going
down)
• Complementors (those who provide complementary products or services
to yours, e.g. changes with the Internet and share broking)
• Regulation (e.g. the Federal break-up of AT&T in the USA in 1968)
In order to survive something we might not see coming, Grove suggests 3 steps
in transition from pre-SIP environment to what he termed as ‘the other side of the
valley of Death’

• Endure the period of confusion, which is inevitable while you try to figure
out what is going on
• Experiment and allow some chaos to find the new ways of doing business
• Reign in the chaos and pass through a period of single-minded
determination and pursuit of a new direction toward an initially nebulous
goal

The decision by Intel to shift from the memory business, which had been their
mainstay and identity from inception to the inexperienced microprocessor
business, was perhaps one of the most strategic decision or fundamental
realignment of strategy by any Fortune 500 company in the last 25 years. This
strategic decision completely altered the long-term direction of Intel.

Grove also talks about how Intel realized that it had to focus its scope of activities
as it could not afford to fight against the Japanese in the memory business while
trying to break in to the microchip market. The strategic decision to limit their
scope of activities only to chips was perhaps instrumental in ensuring Intel's
success. The decision by Grove to convince the powers at Intel before bringing
about the 10X change in business profile displayed excellent strategic
management because strategy values and expectations of those who have
power in and around the organization always have to coincide for successful
implementation. Grove also evaluates the value of strategic leadership by
comparing people like Dr. Wang of Wang Labs, Brian Sculley of Apple and
himself and how they evaluated strategic choices when selecting and pursuing
certain future options and how far were they instrumental in strategy
implementation. Not only is it problematic to decide upon and plan those
changes, it is even more problematic actually to implement. Some very important
examples of companies who adapted to changing business environment with
excellent strategic management vs. failures who got rooted in their inertia of
success are mentioned. The first group has companies like Intel, Next, HP, IBM,
Toys-R-Us, Singapore & Seattle ports and the failures included the likes of Wang
Labs, Mostek and Unisem who were one time successful ventures which failed to
adapt to the changing forces.

In the end, I would like to conclude that "Only the Paranoid Survive" breaks a
new ground in the business-management genre. The book is well written, well
organized.

Some Interesting Quotes from the book

• “A fundamental rule in technology says that whatever can be done will be

done”
• “Resolution comes through experimentation. Only stepping out of old
routines will brings new insights”
• “A corporation is a living organism; it has to continue to shed its skin.
Methods have to change. Focus has to change. Values have to change.
The sum total of those changes is transformation”
• “Success breeds complacency. Complacency breeds failure. Only the
paranoid survive”
• “There is at least one point in the history of any company when you have
to change dramatically to rise to the next level of performance. Miss that
moment - and you start to decline”
• “If the world operates as one big market, every employee will compete
with every person anywhere in the world who is capable of doing the same
job. There are lots of them and many of them are hungry”

Recommendation

I would definitely recommend this book to every management student because

“Only the Paranoid Survives” talks about change and ours is an age of change.
The technological changes are more prominent now than they were ever before.
The methods of doing business change quickly. This book tells you to how to
deal with such drastic changes. This book is a must-read for one who seeks a
proper insight into an American success story at a time when everything was
becoming computer-dependent. Also, the book is well-organized and the
language is quite simple and does not involve any technical or managerial jargon
which can be understood by everyone. In addition to this, Grove has not limited
his focus on computer industry only and has given numerous examples from a
wide variety of examples. So, it is easy for everyone to connect the book with the
industry of his/her interest.

Other Books by Andrew Grove

• Swimming Across: A Memoir - Andrew Grove (2001)

• Strategy Is Destiny: How Strategy-Making Shapes a Company's Future -

Robert Burgelman and Andrew Grove (2001)

• Strategic Dynamics: Concepts and Cases - Robert A. Burgelman, Andrew

S. Grove and Philip E. Meza (2005)