SURVIVING IN DIGITAL TIMES

By JOSHUA COOPER RAMO

A surprising smell emanates from Only the Paranoid Survive (Currency Doubleday; 202 pages; $27.50), a literate new business-technology book from Intel CEO Andy Grove. The first wave comes as he describes how the microprocessor giant narrowly avoided tanking after shipping defective Pentium chips and then ignoring customer pleas for help in 1994. Another whiff drifts by as Grove recounts Intel's stumbling exit from the memory business just in time to avoid becoming lunchtime sushi for chip-dumping Japanese megaliths. And the scent grows stronger as he chronicles his decision not to orient his company to the Internet. The aroma will be sweetly familiar to patrons of casinos, racetracks and presidential elections. It's the smell of luck.

Good fortune, of course, hasn't been the only thing that helped Grove build Intel into one of America's most profitable corporations (while pocketing a few hundred million of his own in the process), but the inescapable--albeit unstated--message of this book is that Grove's tremendous success owes a substantial debt to fate. In a high-tech economy where sudden change is the norm, the book reminds us that it takes more than a good head for business to survive.

Unfortunately, that's exactly not the premise of this otherwise fascinating treatise, in which Grove offers up a readable user's manual for the new digital economy, plus a how-to for managers worried about their business and, by extension, their career. This book is about finding rational ways to survive what Grove calls the "10x"--tenfold--factors that can threaten to change everything about a business in an instant. Just as the car turned horse buggies into curiosities, new technology like the Internet, Grove predicts, will render obsolete hundreds of businesses that are thriving today. The lessons Grove has learned in building Intel into a giant resonate beyond the inside of a PC. "People who try and fight the wave of a new technology lose in spite of their best efforts," he writes. "They waste valuable time."

Grove argues that change can be managed if CEOs are smart enough to listen to their employees, who usually spot such shifts on their purchasing orders eons before boardroom execs see the impact on the bottom line. And to help filter real, important change from the vagaries that trigger expensive false starts, Grove offers a useful primer on what to look for. His deep understanding of the history of technology and his engineer's perspective on scientific revolutions make him a companionable guide. Among his "tests" for recognizing approaching shifts: imagine you have one silver bullet to place in the heart of your toughest competitor; when you start aiming the pistol at a new player, you'll know things are changing.

But if Grove's book is a great help in spotting a 10x change, it offers little advice on how to survive one. Of course the solution to that problem would doubtless be worth more than Intel's insanely profitable microchip business. For many companies, life in the digital age means placing expensive, high-risk bets on the future and hoping against the odds that they are the right ones. But the record of even the industry's wisest CEOs shows how often the wagers are wrong: witness the disasters Time Warner (Interactive TV), General Motors (electric cars) and Sony (Minidiscs). Their executives somehow passed through the bountiful buffet of American business and picked out the losers. Grove, more often than not, has dined on sweetbreads.

It is tempting to read all this as a morality tale of sorts. In the meritocracy that is late 20th century America, good luck and good work are allegedly indistinguishable. As the saying goes, you make your own breaks. Grove would certainly agree. Having arrived in the U.S. in 1956 from Hungary with little more than an education, he has ample reason to feel that way. But for all his attempts to codify and quantify the rules of high-tech business success, it is hard to miss the loopy logic of a poker table in the pages of this book: the paranoid may survive, but only the lucky get rich.

--By Joshua Cooper Ramo