Press Room

Programmed Paranoia

The uncomfortably comfortable sweet spot for business leaders to take bold action.

One of our biggest challenges at NextStep is motivating our clients to take bold, corrective actions in their firms while time is still on their side. A task I have learned over the years that has proven to be very difficult for business owners until they face the direst consequences. My partner, Bob Draizen, and I have come to understand that even in the face of absolute certainty of impending short and long-term operating problems perhaps even failure, an owner taking bold steps to redirect their firm is more often than not “avoided”. We have come to realize that many business owners’ act in a very counter intuitive way where what seems right actually turns out wrong and vice versa. As I thought about this phenomenon and owner’s avoidance of taking bold steps, the first word that came to mind was “paranoia”.

Taking bold steps usually means cutting expenses by laying off employees or managers, implementing across the board pay cuts, withdrawing from community philanthropy and involvement and even firing poorly producing employees. So was my gut intuition of “paranoia” an over statement or exaggeration? Here’s the test. Try and identify a synonym that softens the universally dreadful definition of paranoia. I did and I came up empty…at first. I found words like mental illness, emotional disorder, and nervous breakdown, even sick or troubled mind. Then I goggled “great business leaders” & “paranoia”, and I broke through.
Within a few clicks I was directed to a series of articles that featured business leaders and change agents who actually used the notion of paranoia as a positive motivator to keep their focus on the critical success factors that had to get done in order for their business to survive. My first hit led me to Jack Welch, former chairman and chief executive officer of GE. A few clicks later I found Andy Grove, the former chief executive at Intel.

Welch spoke of paranoia in terms of foresight by leaders who also serve as change agents in their firm and the way they see around corners and make tough calls with great courage. Further he said that true change agents are willing to take bold action – and accept consequences. Welch also noted how these leaders and the actions they take actually galvanize the team and turn people on. That is definitely counter intuitive.

Grove wrote a book that proved to be a best seller nearly 20 years ago, in which he imparted advice that stands the test of time. His book called “Only the Paranoid Survive” shares the fact that, on the subject of business, Grove flatly states that he believes in the value of paranoia. Grove defines his paranoia – a secret of his success, as his worries about what he calls strategic inflection points – the 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. He goes on to warn that a strategic inflection point, often unnoticeable in the early stages, can be deadly when unattended to.

What we learn from both Welch and Grove is that they discovered the virtue in finding their uncomfortably comfortable sweet spot – they used paranoia as motivation to boldly and decisively see around corners to manage their organizations. So what do we make of this paranoia Welch and Grove refer to? Both men clearly see paranoia as a motivator to help leaders guide their tough calls. In a sense both men validated, at least in my own mind, my gut instinct that there is a place in business for what I call “programmed” paranoia. That means business owners acting with foresight and intention in decisive ways to figure out the inflection points that will affect their business – positively or negatively and then to take swift and bold action.

If “programmed” paranoia motivates our clients and other business owners to act before they are faced with dire consequences, I am all over it. Avoiding extreme outcomes associated with a failing business like mental illness, emotional disorder, nervous breakdown, as business owners discover their uncomfortably comfortable sweet spot is a great thing. They empower themselves to counter intuitively spend their time building a healthy business by making tough calls and driving towards financial results with growing top line, consistent profits, and a solid balance sheet. They also intentionally develop long-term capabilities with good people, efficient processes, and metrics driven management.

At NextStep we want our clients to discover their uncomfortably comfortable sweet spot. What I refer to as motivation through programmed paranoia. Business leaders acting with intention to make bold calls so their firm remains on a sustainable track with new customers, realistic sales growth and steady profitability in the face of the toughest economy arguably in our lifetime. This is a totally counter intuitive thought process for a huge number of business owners who unfortunately act in indecisive ways and only when faced with the direst consequences – often when the window of opportunity to survive has passed.

Peter Herrmann