Productive Paranoia - Essay Sample on Management

Great by choice - CH 5

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Productive paranoia is a behavioral trait that helps a company to thrive through a chaotic period of the economy and enables it to navigate through the uncertain circumstances. It keeps the company arrives. The paranoia is developed when the leaders of a given company project into the future. They accept the reality the though the things might be running smoothly at that moment, though things might be well planned for at the moment, anything unexpected can happen and the tables can turn abruptly. The subjects on acknowledging this don't just become paranoid rather; they develop strategic plans in preparations to the unpredicted dangers. Productive paranoia in the case of Intel was involved in the building of cash reserves and buffers and oxygen canisters in preparing for unexpected events and bad luck before they happened.

As indicated in the Great by Choice article, Andy Grove of Intel looked for the black cloud in the silver lining. In this case, he lived with the acknowledgement of possible dangers, which came without warning. During the 90s when the company's cash position was at the peak of $10 billion, which meant that they reached 40% of their annual revenues. In this scenario, the company had gained a 95% chance of being inefficient due to the high cash amounts they had. The management however, led by Andy Grove was paranoid of the 5% chance of them being hit by a catastrophe at a surprise. The company thus decided to reserve the cash for such surprise catastrophes.

In other words, the company chose to keep for itself extra oxygen canisters that would help them soar through a financial upheaval unharmed. They would be able to keep inventing and producing and creating more products which made sure they kept growing into a great company. Normally, a company which would reserve such voluminous amount of cash would be considered as to have a sort of irresponsibility in managing its capital. However, the company's leaders had a different perspective; they had a long-term view of what could happen if they released a whole lot of money into the market (investments or production practices). They for a fact saw that the company would reach an unforeseen time in which it would require some emergency reserve cash if it were to keep afloat in the shifting and unpredictable world economy and it did just that. The whole move by the company can be referred to as maintaining a conservative balance sheet. In which case, the company always maintained a bigger cash ratio than both the liabilities and also a bigger cash ratio than the assets.

In conclusion, productive paranoia is a necessary trait in the success of any company and it should be a major goal for a company to maintain a large margin of cash reserves as they soar towards greatness. It is all a matter of choice. The dangers are inevitable and it is only through such choices of being ready for anything that one can manage to make it through any sort of catastrophe without a scratch. Any company striving to be great should not hope for stiller waters nor depend on luck for the company to survive through the catastrophe. It is only through such skillful planning, through that small percentage of being productively paranoid that one develops that chance to be great amidst all circumstances regardless of the general, high or low, smooth or rough season for the company.