Only the Paranoid Survive

Only the Paranoid Survive

It was Tuesday, November 22, 1994, the Tuesday before Thanksgiving. Andy Grove was at Stanford with his colleague, Professor Robert Burgelman, grading student papers. Then the phone rang. His office was calling to say a CNN crew was on its way. They had found out there was a flaw in the Pentium processor.

The flaw was real. A mathematics professor had run into it doing complicated calculations, and he posted it on an internet forum. Intel already knew. It was a small design error that produced a rounding mistake roughly once in every nine billion divisions. By the company's own estimate, an average spreadsheet user would hit it once every 27,000 years. Intel judged it insignificant, quietly corrected it in the next run, and everything went on as before.

Four weeks later the company took a write-off of 475 million dollars. That was half a year of research and development budget at the time. Or five full years of Pentium advertising.

The staggering part is not the money. It is that Intel did nothing differently from what it had always done. It behaved exactly the way it had for twenty-six years, and exactly the way the whole semiconductor industry behaved. Meanwhile the rules had been rewriting themselves underneath them, unnoticed.

Andy Grove, Intel's chief executive at the time, wrote this book out of that experience. He goes after three questions. How do you find out that the rules of your own industry are being swapped out right now? What do you do when your proven recipes stop working? And why does all of this apply, one for one, to your own career, even if you have never run a company in your life?