Archive for: Andrew S. Grove

In this book, the former CEO of Intel Corporation, Andrew Grove, describes the major crises Intel suffered from his experience at running Intel. He introduces a strategic model that can be used to thrive and adapt to crises. He tagged this strategy SIPs or Strategic Inflection Point, a strategy that can be implemented to bring out the most from a company’s sink moments. The author also describes the strategic inflection point as a point when balances of forces shift from old structure and way of doing business to new. 

There are three different forces that may cause SIP, which include: 

1. Strength of competitor (i.e. competitors’ focus and funding. Are they well-funded? Do they have a clear focus of the business?)

2.Strength of Suppliers (are they so much that the business has a lot of choices or are they few such that they have the business by the throat), existing customers( are there a lot or few of them and what is their demand rate?), potential competitors ( this is about those that are not competing yet but have the potential to join the competition when it becomes favorable) 

3.Substitution (are there other substitutes for your product/service? If yes, this is more deadly), and lastly, complementor (does your product have a complement and how powerful and complementary are they). 

 

A strategic inflection point is also a time in the business trajectory cycle when its fundamentals are about to change. That change can either be an opportunity for a company to thrive or collapse. SIPs are likely to be caused by technological change when not maximized or competitors when they become more efficient or deliver more value. It can be a threat when ignored. An example of such change was IBM, when consumers could easily handpick computer parts such as microchips, drives, software, and build a customizable PC for themselves. IBM didn’t see this coming, so they did not compete well with companies that sold individual components. Some of these changes are hard to track, more reason why companies have to be on a lookout for any changes in a proactive way.

Intel adopted the SIP strategy, and that was what changed them into Microprocessor Company. They became a market leader in a short time. The need for strong leadership at this point cannot be underestimated. Strong leadership is needed to remain focused and relevant. Organization CEO’s need to be cautious of changing the core of the business. Especially because human beings get emotionally attached to past and present processes, to avoid staff getting emotionally attached to the current state of business, a lot of staff have to go, and others will have to be retrained for the new position. Some existing employees of companies get glued to the old way of doing things because a person’s work is part of the person’s self-image. Therefore changing the nature of a person’s job puts their personality in question, which is more reason why companies prefer to bring in external consultants to analyze their business with fresh objective of view.

The author also identifies the need for effective communication in an organization. A company should gladly open up to both leaders, managers, and subordinates about new product development to remain competitive. Middle management is, most times, the first to identify a business problem, have ideas on how to improve the process, and have a solid bead on daily operation. A flexible team builds a trusting environment for new ideas to develop and prosper. A flexible and versatile workforce is always challenged to be creative. 

In conclusion, Managers and employees should have a clear communication to and from leadership and middle management. Also, getting a consultant for objective opinion will go a long way when SIP occurs.

THE BIG THREE – KEY POINTS

Key point #1: SIPs does affect not only the CEO but also a significant concern for the employees in an organization

Key point #2: SIP could either result in a catastrophe for a company or open a tremendous opportunity.

Key point #3: If SIPs are adopted at just the right time, then the company gets the opportunity to lead an entirely new market.

One Last Thing

Bad companies are destroyed by crisis; Good companies survive them. Great companies are improved by them. – Andrew Grove