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Only the Paranoid and Fast Will Survive

January 31, 2014, 12:00 AM

"Only the paranoid survive," was the famous dictum of Intel's Andy Grove, which he laid out in a 1996 book. Grove has certainly been proven right in recent decades, as the pace of technological change has been dizzying, wiping out entire industries seemingly overnight. 

Every 12 to 18 months computers get twice as powerful while the price goes down. This has resulted in a golden age for consumers, who can expect that products will continue to get better and cheaper.

However, this is a daunting challenge for businesses, particularly those ones in industries that aren't used to the type of change we have seen in recent years. For change isn't only happening rapidly, innovations are also coming out of left field. And so if disruptions can come from outside your industry, how can you see them coming? 

As the technology writer Larry Downes tells Jeff Schechtman in this week's Specific Gravity interview, paranoia might be too strong a word. After all, companies can use the tools of technology to keep their noses to the ground. For instance, companies can use social media to find out what customers are talking about. And you can find out about potential disruptions very early on. 

Downes, the author of the new book, Big Bang Disruption: Strategy in the Age of Devastating Innovation, says the challenge then is to scale up quickly. A company that chooses the right innovation strategy might yet fall victim to what Downes calls "catastrophic success." All of a sudden you might have millions of new customers in a very short period of time. "You have to be ready with the right kind of infrastructure to absorb these new customers," Downes says. 

Furthermore, there is a shorter life cycle for a new innovation. "Don't imagine that tremendous growth will keep going and going," Downes warns. You're going to reach the point where everyone has your product, and competitors will notice your success. Very quickly you will need to start looking for your next product or service or otherwise decide to sell your company. 

Certain institutions, like government, which is designed to change slowly, have great difficulty adapting to dramatic change. But technology, Downes argues, will ultimately force the issue. For instance, change is very slow in the health care and medical services industries because of the way they are regulated. Nonetheless, Downes says, technology is starting to break down those barriers.

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Only the Paranoid and Fast ...

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