The Business Book

196

I

t is often easier for people

outside a company to spot

complacency than it is for those

inside; executives are sometimes

blind to it until their company

plunges into a downward spiral.

Research in Motion (RIM),

manufacturer of the once-iconic

BlackBerry, developed the idea of

sending and receiving emails on

mobile phones, and their innovation

helped them to become the market

leader. However, RIM rested on its

success instead of continuing to

innovate, and did not notice or

foresee the direction in which

Apple’s products were developing.

The rival technology company’s

iPhone delivered mobile emails and a

range of other features. RIM quickly

went from being the market leader

into a period of decline, because it

had become complacent instead

of remaining alert to technological

change, or threats from competitors.

It is human nature to relax when

things are going well, but history

shows this is the very moment to

be wary. Former CEO of Intel, Andy

Grove, believes that “Success

breeds complacency. Complacency

breeds failure. Only the paranoid

survive.” The latter phrase was

AVOIDING COMPLACENCY

IN CONTEXT

FOCUS

Business change

KEY DATES

1979 Michael Porter writes

How Competitive Forces Shape

Strategy, saying that managers

must always be aware of what

the competition is doing.

1994 In The Empty Raincoat:

Making Sense of the Future,

Charles Handy uses a graph

to illustrate how organizations

have to be alert and respond

to threats.

1996 Andy Grove writes Only

the Paranoid Survive.

2010 In The Black Swan:

The Impact of the Highly

Improbable, Nassim Nicholas

Taleb explains that we cannot

predict the future from the

past, so must expect (and

prepare for) the unexpected.

Only the paranoid survive.

Grove’s Five Questions

Do you

think your

competition

has changed?

Is your old rival

no longer the

biggest

threat?

Are you

relying on a

complementary

company to make

your company

attractive?

Is everyone

talking about

someone new?

Where would

you point a

gun if you

had one?

framed by five questions (see

below), and became the title of one

of Grove’s books. Grove had fled the

communist regime in Hungary, and

learned from a young age that

paranoia could be a useful survival

skill. Many years later, when he

joined Intel, he transferred the skills

of watching out for himself to

monitoring the company, steering

it safely through a series of threats.

Strategic inflection point

Every business faces change.

Occasionally change can be massive,

and positions once taken for granted

can shift dramatically. Grove calls

A strategic inflection point is

a time in the life of a business

when its fundamentals are

about to change.

Andy Grove