Leaders often have information about their businesses, their industries or the world in general that can be interpreted as positive or negative, depending on the frame of reference. Andy Grove, the former Chairman of Intel famously said, “Only the paranoid survive” revealing his tendency to see the danger signs in information. This stance caused him to get out of the memory business (DRAM) and bet the farm on microprocessors in the early 80′s. He also established the practice of investing heavily in new facilities when the economy turned bad, on the theory that when the turnaround came, Intel would be in the best position to meet new demands. This practice reflected a realism that downturns eventually lead to upturns and the well prepared paranoid can then strengthen his hand.
Kodak had years of information about the acceleration of microprocessor speeds (Moore’s Law, named for Andy Grove’s partner Gordon Moore) and knew with some accuracy the time at which the cost and quality of an image produced by a digital camera would supersede that of a Kodachrome image. The senior executives of that company were not paranoid, however. They were complacent. It’s not that they didn’t act. It’s just that they did not act quickly and decisively until it was too late. They also ignored weak signals of what was to come. A former client of mine recently told me of a meeting he attended back in the 1990′s while running a non-core venture within Kodak. One of his colleagues presented a new product concept that was essentially a BlackBerry. The concept was dismissed as not being consistent with the Kodak brand. Could Kodak have had the iPhone? Could they have been Facebook (they had the early digital photo gallery, through their purchase of Ofoto)? It’s hard to see it. Why? Because even in the days when the company was downsizing manufacturing, there was a disbelief in the possibility that the whole business model would collapse.
Pessimism is a bias toward a negative interpretation of circumstances. It can be a drag to be around a pessimist, but it can also be useful to learn what the such people see in the information they are watching. There were people in Kodak who knew that as soon as computing technology got cheap en