Day 329: Only the Paranoid Survive

I’m often credited with the motto, “Only the paranoid survive.” I have no idea when I first said this, but the fact remains that, when it comes to business, I believe in the value of paranoia. Business success contains the seeds of its own destruction. The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left. I believe that the prime responsibility of a manager is to guard constantly against other people’s attacks and to inculcate this guardian attitude in the people under his or her management.

The things I tend to be paranoid about vary. I worry about products getting screwed up, and I worry about products getting introduced prematurely. I worry about factories not performing well, and I worry about having too many factories. I worry about hiring the right people, and I worry about morale slacking off.
And, of course, I worry about competitors. I worry about other people figuring out how to do what we do better or cheaper, and displacing us with our customers.

But these worries pale in comparison to how I feel about what I call strategic inflection points.

I’ll describe what a strategic inflection point is a bit later in this book. For now, let me just say that a strategic inflection point is a time in the life of a business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.

Strategie inflection points can be caused by technological change but they are more than technological change. They can be caused by competitors but they are more than just competition. They are full-scale changes in the way business is conducted, so that simply adopting new technology or fighting the competition as you used to may be insufficient. They build up force so insidiously that you may have a hard time even putting a finger on what has changed, yet you know that something has.

Let’s not mince words: A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness.

But strategic inflection points do not always lead to disaster. When the way business is being conducted changes, it creates opportunities for players who are adept at operating in the new way. This can apply to newcomers or to incumbents, for whom a strategic inflection point may mean an opportunity for a new period of growth.

You can be the subject of a strategic inflection point but you can also be the cause of one. Intel, where I work, has been both. In the mid-eighties, the Japanese memory producers brought upon us an inflection point so overwhelming that it forced us out of memory chips and into the relatively new field of microprocessors. The microprocessor business that we have dedicated ourselves to has since gone on to cause the mother of all inflection points for other companies, bringing very difficult times to the classical mainframe computer industry. Having both been affected by strategic inflection points and having caused them, I can safely say that the former is tougher.

I’ve grown up in a technological industry. Most of my experiences are rooted there. I think in terms of technological concepts and metaphors, and a lot of my examples in this book come from what I know. But strategic inflection points, while often brought about by the workings of technology, are not restricted to technological industries.

The fact that an automated teller machine could be built has changed banking. If interconnected inexpensive computers can be used in medical diagnosis and consulting, it may change medical care. The possibility that all entertainment content can be created, stored, transmitted and displayed in digital form may change the entire media industry. In short, strategic inflection points are about fundamental change in any business, technological or not.

We live in an age in which the pace of technological change is pulsating ever faster, causing waves that spread outward toward all industries. This increased rate of change will have an impact on you, no matter what you do for a living. It will bring new competition from new ways of doing things, from corners that you don’t expect.

It doesn’t matter where you live. Long distances used to be a moat that both insulated and isolated people from workers on the other side of the world. But every day, technology narrows that moat inch by inch. Every person in the world is on the verge of becoming both a coworker and a competitor to every one of us, much the same as our colleagues down the hall of the same office building are. Technological change is going to reach out and sooner or later change something fundamental in your business world.

Are such developments a constructive or a destructive force? In my view, they are both. And they are inevitable. In technology, whatever can be done will be done. We can’t stop these changes. We can’t hide from them. Instead, we must focus on getting ready for them.

The lessons of dealing with strategic inflection points are similar whether you’re dealing with a company or your own career.

If you run a business, you must recognize that no amount of formal planning can anticipate such changes. Does that mean you shouldn’t plan? Not at all. You need to plan the way a fire department plans: It cannot anticipate where the next fire will be, so it has to shape an energetic and efficient team that is capable of responding to the unanticipated as well as to any ordinary event. Understanding the nature of strategic inflection points and what to do about them will help you safeguard your company’s well-being. It is your responsibility to guide your company out of harm’s way and to place it in a position where it can prosper in the new order. Nobody else can do this but you.

If you are an employee, sooner or later you will be affected by a strategic inflection point. Who knows what your job will look like after cataclysmic change sweeps through your industry and engulfs the company you work for? Who knows if your job will even exist and, frankly, who will care besides you?

Until very recently, if you went to work at an established company, you could assume that your job would last the rest of your working life. But when companies no longer have lifelong careers themselves, how can they provide one for their employees?

As these companies struggle to adapt, the methods of doing business that worked very well for them for decades are becoming history. Companies that have had generations of employees growing up under a no-layoff policy are now dumping 10,000 people onto the street at a crack.

The sad news is, nobody owes you a career. Your career is literally your business. You own it as a sole proprietor. You have one employee: yourself. You are in competition with millions of similar businesses: millions of other employees all over the world. You need to accept ownership of your career, your skills and the timing of your moves. It is your responsibility to protect this personal business of yours from harm and to position it to benefit from the changes in the environment. Nobody else can do that for you.

~~Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company -by- Andrew S. Grove

Day 221: The Honourable Company

Although for much of the seventeenth century the Dutch and English were bitter rivals throughout the East, on the long voyage to and from Europe hostilities were usually suspended. At the Cape and at St Helena ships of the London Company amicably exchanged news and provisions with those of the V.O.C. Hadah was postman for both Companies; and occasionally Dutch and English ships actually sailed together.

This was not the case with the Portuguese. Anywhere outside European waters Spain/Portugal continued to regard the ships of the Protestant powers as little better than pirates and, peace treaties notwithstanding, they jealously maintained the exclusive character of their eastern bases. In the Arabian Sea further English endeavours at Surat and Swalley between 1612 and 1620 were seen as a direct challenge to Portugal’s maritime supremacy on the very threshold of its eastern metropolis at Goa. The Portuguese would respond vigorously. But once again a purely Indo-centric reading of these engagements is misleading. At stake was a dominant role not just in India’s external trade but in that of all the trading coasts of the Arabian Sea including the Red Sea and the Persian Gulf. Naval battles in the Gulf of Cambay would have counted for little had not the Portuguese also been challenged at Hormuz, Goa, and a host of lesser ports from the coast of Mozambique to that of Malabar. Hostilities would last for twenty years; and they would embrace the whole trading world between Africa and India.

In 1612, blissfully ignorant of Sir Henry Middleton’s débâcles at Mocha and Surat, the Company had despatched two more ships for Surat, the Twelfth Voyage, under the command of Thomas Best, a highly experienced master mariner. The commander, or ‘General’, of an East India Company fleet controlled two distinct establishments, the one nautical and headed by his subordinate captains and masters and the other commercial and headed by one or more chief merchants. Almost invariably commanders were appointed on the strength of their performances during a previous voyage; and usually they were merchants who had thus acquired some knowledge of navigation. Hence the ideal commander should be part sailor, part merchant and, if possible, part ‘man of fashion and good respect’. But Thomas Best was just a sailor. Presumably the loss of the Ascension had convinced the directors that amongst Gujarat’s treacherous mud banks navigational skills were more important than social graces. The difference is evident in Best’s journal which triumphantly belies the idea that seventeenth-century travelogues were necessarily discursive and entertaining. True to his calling, Best merely kept a log.

Terse and laconic as it is, it is nevertheless odd that this document contains no mention of the fleet’s first contact with the Portuguese which occurred in the Mozambique channel north of Madagascar. In what may be a reference to it, Best elsewhere refers to ‘the goodliest ship thatt ever I sawe’ as being a Portuguese carrack ‘with a tower of ordnance beseeming a castell’. From the journal of one of his subordinates it appears that there were in fact two such ships off Madagascar, each of over 1500 tons and each intent on putting its tower of ordnance to good use. Broadsides were exchanged and at least three Portuguese killed before Best ‘steered away his course’. ‘For yt was contrarie to commission to meddle with them in respecte of peace we have with their king.’ But the English crews were ‘prepared to feight’ and if they felt somewhat cheated by Best’s delicacy, their rancour would be short-lived.

Best reached the mouth of the Tapti river in September 1612, only six months after Middleton had been ordered to sea by Mukarrab Khan. The news that all the English factors had been withdrawn was depressing enough but when word arrived of Middleton’s retaliatory activities in the Red Sea, Best despaired. The news affected him ‘like a drinke of cold water to a man on a cold and frostie morning’. Already two of his factors had been captured by the Portuguese. As soon as he could secure their release he was all for beating a hasty retreat towards Bantam.

But his remaining factors were more sanguine and Best, reckoning they knew their own business best, sensibly deferred to them. It seemed that for once the Moghul officials were being positively obliging. Perhaps they were worried that Best might follow Middleton’s example and blockade their shipping in the Red Sea. Perhaps they had simply reevaluated the advantages of a new trading partner and a new source of largesse. At all events a farman granting interim trading rights was immediately forthcoming, a promise was made that within forty days it would be ratified by Jehangir, and the English were invited to send another representative to Agra to negotiate a permanent agreement. It was as if the dismissals of Hawkins and Middleton had all been a terrible mistake. Within days of the fleet’s arrival new emissaries and a new letter from King James were on their way to Court. So were some of the presents known to please the dilettante emperor. There were paintings ‘espetially such as discover Venus’ and Cupid’s actes’ and there were various musical instruments in the care of Lancelot Canning, a virtuoso on the virginals, and Robert Trully, a cornettist. The latter found high favour with Jehangir. He converted to Islam and eventually blew his cornet in half the courts of India. Not so Lancelot Canning. The virginals proved too insipid for Moghul tastes and the mortified Canning, a distant kinsman of India’s future Viceroy, is described as having ‘dyed of conceitt’.

Best meanwhile repaired to Swalley to await Jehangir’s confirmation of the farman. As usual during any period in port the crews took to drinking and gambling. Even at ill-appointed Swalley Hole two men were ducked from the yard-arm for swimming ashore on the Sabbath and getting ‘drinking drunke with whores ashore’. Instructions issued to the commanders of all Company fleets proscribed such conduct in the most vigorous terms. But as with the injunctions against private trade, those against blasphemy, gaming and drunkenness were habitually ignored. They may be seen as implying not that the English seafarer of the seventeenth century was a God-fearing paragon of Puritan virtues but exactly the opposite.

It took the arrival of an impressive Portuguese fleet to bring the Swalley revellers to their senses. There were four galleons (warships, smaller than the cargo-carrying carracks but larger than any of the English vessels) and twenty-five inshore frigates. They had been dispatched from Goa and their instructions were to disperse the new English challenge by force of arms.

In the engagements that followed – and in those fought by ships of Richard Downton’s fleet two years later – the Portuguese were apparently the stronger. They had more ships and their ships had more men. They were also larger and, under full sail, faster. But they were of deeper draught, less manoeuvrable, poorly crewed, and under-gunned. Portuguese tactics still relied heavily on grappling-irons and fire-ships, the idea being to panic the enemy and then get alongside him for a full-blooded boarding in which higher superstructures and numerical superiority must prove decisive.

But all this assumed that men-of-war were just floating castles and that their defenders would always heave to and fight it out. This was not how the English had frustrated the Armada and, according to a disgruntled Portuguese account, it was not how Best chose to conduct his battles in the Gulf of Cambay.

~~The Honourable Company: A History of The English East India Company -by- John Keay