Surviving the New World of Retail: What We Can Learn from Andy Grove and Gordon Moore

The end of the year is typically a time of reflection, with any luck a satisfied look back at things accomplished, a wistful look at things left undone and a hopeful (if not overly enthusiastic) look ahead at all that lays before us.
For me, it’s a time to reflect on my first foray into the world of regular blogging. My initial fears—that I would run out of things to say—dissipated early on as I discovered an unending stream of things to write about. I could credit my over-active imagination for this, but in reality I owe most if not all of this outpouring of words to the material I found before me and the people I’ve been fortunate to interact with on a daily basis. The new technologies, omnichannel strategies, smaller format stores, Big Data, generational change, and all of the rest of the epic upheaval sweeping through retail today provided for a what seemed like a never ending array of topics to choose from. Very simply, there has been no shortage of things to write about.
Recently, a team of Intel executives conducted a round of the futurecasting sessions on the future of retail with the goal of getting out in front of the huge changes that are taking place in the industry. At one of these sessions, David Roth, CEO of The Store WPP, EMEA and Asia, noted that what makes this such a momentous and challenging time in retail is that it’s not just one or two factors that are in play: that would be a challenge, but a manageable one. Today, because so many things once taken for granted are under assault, retailers find themselves in something akin to quicksand, furiously grabbing at lifelines, hanging on, but often feeling as if they are not getting anywhere.
Hearing these comments and observations got me to thinking about Andy Grove, the legendary Intel CEO and his discussion of “strategic inflection points” in Only the Paranoid Survive. We now hear the term “inflection point” so often that we forget the role that this book played in taking essentially a mathematical term and popularizing it for us business folks. A strategic inflection point is that chaotic time in the life of a business when the fundamentals are changing. The old rules no longer apply. The tried and true can no longer be tried because it’s no longer true. Everything is up for grabs. That’s a pretty good description of what is happening in retail today.
Grove, born into a Jewish family in Budapest, Hungary, survived the Nazi occupation and later fled the communists—excellent preparation for surviving chaotic if not desperate situations. He arrived in the United States in 1957 which was a good time to pursue a career in electronics: John Bardeen, Walter Brattain and William Shockley had just won the Nobel Prize in Physics “for their researches on semiconductors and their discovery of the transistor effect.” Educated as a chemical engineer (Ph.D. from UC Berkeley) he worked at Fairchild Semiconductor along with Robert Noyce (co-inventor of the microchip) and Gordon Moore (“Moore’s Law”) and joined them when they left Fairchild to found Intel. He was CEO of Intel from 1987-98.
Only the Paranoid Survive describes how those in senior management are typically among the last ones to realize an inflection point is underway. It’s not necessarily something that will show up in your data, even if it’s “Big Data.” In fact, the people who first intuit the existence of the inflection point typically collide with people who count on winning their argument based on data. The arguments become emotional. Grove argues that it is extremely important to be able to listen to the people who bring you bad news. Being a bit paranoid makes you open to listening and believing what they have to say—hence your higher survival rate.
Only the Paranoid Survive describes how Intel confronted an inflection point in the mid-80s when Japanese semiconductor companies challenged the company in memory chips. Intel had been highly successful in memory chips, a huge chunk of the organization was invested in it, but now we were losing money at it. At one point Grove and then-chairman and CEO Gordon Moore were batting around ideas when Grove asked “if we got kicked out and the board brought in a new CEO, what do you think he would do?” “He would get us out of memories” was Moore’s response. And from that day, Moore and Grove began the long and difficult journey of getting Intel to shift its attention solely to microprocessors.
Andy Grove worked alongside Gordon Moore for years. Moore preceded him as CEO of Intel and Moore’s law—that the number of transistors found in complex integrated circuits like microprocessors doubles roughly every two years—is really the underlying premise that causes so many technologically-driven inflections. The steady increase in performance with the equally steady decline in costs is why shoppers are now wondering through stores comparing prices on their mobile phones; why a retailer can showcase his or her entire inventory on an LCD display; why sales associates can check out customers on tablet-based point-of-sale systems and much, much more.
Despite the use of the term “law,” Moore’s claim is really an observation that has the added virtue of having held true for more than four decades. Similarly, despite its mathematical provenance, there are no hard and fast rules on what constitutes an inflection point. Neither Andy Grove nor Gordon Moore would ever claim to be so prescient that they predicted what we are experiencing today. And I doubt that had blogging been part of the scene when they were active, that they would have offered up their “top 10” forecasts for the coming year. Instead, to those struggling with the kinds of epic transformations that they both experienced, their advice would be to stay engaged and keep listening. Follow the data and trust your instincts. Gordon Moore liked to say that this year’s failure is next year’s opportunity to try it again. “The lesson is,” Andy wrote in Only the Paranoid Survive, “is that we all need to expose ourselves to the winds of change.”
Never easy to do. But achieving real success never is.
Happy Holiday’s everyone and here’s to a 2014 filled with lots of engagement, experimentation and success.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>