1: “We managers like to talk about change, so much that embracing change has become a cliché of management,” Andy Grove writes in Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company.
But not all changes are the same.
What Andy calls “a strategic inflection point is not just any change,” he notes. “It compares to change the way Class VI rapids on a river, the kind of deadly and turbulent rapids that even professional rafters approach gingerly, compare to ordinary waters.”
The stakes are high.
“A strategic inflection point is a time in the life of a business when its fundamentals are about to change,” Andy observes. “That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”
Bluntly put: “Let’s not mince words,” he says. “A strategic inflection point can be deadly when unattended to.”
However, inflection points can also present an opportunity.
“It creates opportunities for players who are adept at operating in the new way,” he notes. “This can apply to newcomers or to incumbents, for whom a strategic inflection point may mean an opportunity for a new period of growth.”
2: So, what exactly is a strategic inflection point?
It is when “the old strategic picture dissolves and gives way to the new,” Andy explains. “It is a point where the curve has subtly but profoundly changed, never to change back again. . .
“Of all the changes in the forces of competition, the most difficult one to deal with is when one of the forces becomes so strong that it transforms the very essence of how business is conducted in an industry.”
Handled well, the business may reach new heights. “However, if we don’t navigate our way through an inflection point, we go through a peak and after the peak the business declines.”
So how can we tell if we are facing a true inflection point?
“Picture ourselves going on a hike with a group of friends and getting lost,” Andy suggests. “Some worrywart in the group will be the first one to ask the leader, ‘Are you sure you know where we’re going? Aren’t we lost?’
“The leader will wave them away and march on,” he observes.
“But then the uneasiness over lack of trail markers or other familiar signs will grow and at some point the leader will reluctantly stop in his tracks, scratch his head and admit, not too happily, ‘Hey guys, I think we are lost.’
“The business equivalent of that moment is the strategic inflection point,” Andy notes.
“In fact, participants who live through one develop a sense of it being an inflection point at different times, just as the group of hikers suspected they were lost at different moments.”
Navigating a strategic inflection point tests organizations deeply.
“The arguments in the midst of an inflection point can be ferocious,” Andy writes. Someone will say: “If our product worked a little better or it cost a little less, we would have no problems.”
And they are likely partially right.
“It’s just a downturn in the economy,” another will say. “Once capital spending rebounds, we’ll resume our growth.”
That person, too, is partially right.
Another person returns from a trade show, puzzled, and says, “The industry has gone nuts.”
They hardly get anyone’s attention.
But Andy reflects that the hike metaphor understates the intensity.
He likens it to “entering the valley of death,” a perilous transition between old and new ways of business.
“We march in,” he says, “knowing full well that some of our colleagues will not make it across to the other side.
“Ideas about the right direction will split people on the same team. After a while, everyone will understand that the stakes are enormously high.
“There will be a growing ferocity, determination and seriousness surrounding the views the various participants hold,” Andy notes. “People will dig in.
“These divergent views will be held equally strongly, almost like religious tenets. In a workplace that used to function collegially and constructively, holy wars will erupt, pitting coworkers against coworkers, long-term friends against long-term friends.
“Everything senior management is supposed to do—define direction, set strategies, encourage teamwork, motivate employees—all these things become harder, almost impossible,” he explains.
“Everything middle management is supposed to do–implement policy, deal with customers, train employees–also becomes more difficult. . .
“Yet the senior manager’s task is to force that march to a vaguely perceived goal in spite of the casualties, and the middle managers’ responsibility is to support that decision,” Andy writes.
“There is no other choice,” he says. “When we’re caught in the turbulence of a strategic inflection point, the sad fact is that instinct and judgment are all we’ve got to guide us through.”
The good news?
“Even though our judgment got us into this tough position, it can also get us out,” Andy writes. “It’s just a question of training our instincts to pick up a different set of signals. These signals may have been out there all along but we may have ignored them. The strategic inflection point is the time to wake up and listen.”
More tomorrow.
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Reflection: Am I treating the shifts around me as routine ups and downs, or am I willing to ask whether I’m actually in a strategic inflection point that demands new instincts and bold decisions?
Action: Identify one area of my work or organization where the “old rules” seem less effective, and start a candid conversation with my team this week about whether we’re facing an inflection point and what new signals we need to watch.
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