The Council as a Mechanism to Understand the Inflection Points of Change

Audio Transcript

I was recently reading a copy of Andy Grove’s book Only the Paranoid Survive. The essential point of this book is that organizations hit strategic inflection points that force a dramatic change in one form or another.

For example, in the case of Intel, there was a crucial point in its history when they woke up and they realized something was different, something was wrong. Their memory business was starting to erode and the Japanese were coming in. There was a major change in the industry happening underneath their feet. And as they went through it step by step, turn by turn, they were wrestling with, what does this mean? Only later did they realize how big a change it was.

Once they realized it, they made a dramatic shift that was very much like Darwin Smith selling the mills. They actually decided to get entirely out of the memory business, which is what they had built as a startup and as an early-successful-stage company, and to throw all their resources into the microprocessor business, which eventually led to things like Pentium and the fact that they power most of our personal computers today.

In any case, with that as background, the interesting thing is how Grove talks about strategic inflection points, noting that they are usually clear only in retrospect. As he points out, they don’t come and knock on the door and pound and say, “I’m here. The inflection point has arrived. Get ready to change, because I’m here to force you to change. Knock, knock. Pound, pound.” No, it doesn’t work like that. As he put it in the book, drawing upon that great literary reference about the fog rolling in, he said strategic inflection points don’t announce themselves; rather, they sneak up on you from behind with little cat feet.

Now, the other side of the coin, as I began to think about this, I realized that our study of good to great is also a look at inflection points. It’s two sides of the same coin. He’s looking at external inflection points that impose themselves upon a company. We were looking at internal inflection points—internally created inflection points related to taking a company from good to great.

The interesting thing we also found is that a number of the good-to-great companies had the exact same experience. In fact, all of them did. None of them said that there was single moment, single breakthrough, single incident that made it clear that “We’re making the leap from good to great.” It was more gradual. For most people in the company, in fact, it kind of snuck up upon them with little cat feet.

What does this have to do with the notion of the council, which is really the main thing I want to bring together in this clip. As you’re working through this difficult period of either trying to decide whether something is from the outside, a significant inflection point, and it’s a brutal fact and how should you deal with it, how should you respond to it; or if you’re trying to bring about an internal inflection point, a shift from bad to good or good to great, it’s an organic process. It’s a step-by-step process. It’s a developmental process. And it’s often very unclear as you’re going through it.

So, you need a mechanism to help gain clarity and that mechanism is the council. The council, as we write about in Good to Great—you can find it in Chapter 5—is a key group of people infused with a few brutal facts who argue and debate, trying to make sense and maybe make some decisions and autopsying those decisions and thinking about, “What does it all mean? How does it fit, ultimately, with what will allow us to be passionate, allow us to be the best in the world, allow us to have our economics at a significant level?” The mechanism of the council is the place where this debate can take place, where the autopsies can take place, so that eventually you go from a lack of clarity to clarity to eventually good decisions.