The concept of “productive paranoia”

A beautiful nuance of greatness that could be generally misunderstood is the idea of “productive paranoia”.

Productive paranoia is a classic example of the Genius of the AND — yes, it is being paranoid, but being paranoid AND productive with that paranoia. It is a lot more than mere pessimism, it is the mental discipline to ask “what if X? What if Y? What if Z?” without becoming discouraged or paralysed due to over-analysis.

Great by Choice Introduction

Jim Collin’s 2011 book “great by choice” is a 9 year extensive study in an attempt to answer the question: “Why do some companies thrive in uncertainty, even chaos, and others do not?”

If you take a look at the Google Books description, it gives this brief snippet of some of the insights gathered in this book:

“The best leaders were not more risk taking, more visionary, and more creative than the comparisons; they were more disciplined, more empirical, and more paranoid.”

But I thought that to be highly successful you need to maintain a fearlessly positive attitude? I thought that positive energy alone could change the world and drive us all to accumulate great wealth?

… Well, if the world were that simple then there would be a lot more rich people around.

The term “productive paranoia” is coined within the book Great by Choice. I hope the book’s production team “won’t mind” my quoting some excerpts from their copyrighted book, I just believe the way they’ve articulated it is exceptional — here are a few sections — (take it as promoting the book!)

Productive Paranoia

“In early 1986, Microsoft leaders met with underwriters and lawyers to edit the prospectus for an initial public stock offering. The underwriters and lawyers came prepared to be the purveyors of darkness, to engage in a battle with Microsoft leaders to adequately describe the risks investors should consider. But instead of encountering an overly optimistic entrepreneurial leader who painted a rosy picture of unstoppable success, they met DOCTOR DOOM. Steve Ballmer, then a vice president, reveled in coming up with scenario after scenario of risk, peril, danger, death, crippling attack, misfortune, and catastrophe. Grim possibilities poured into the conversation, underwriters scribbling away. Finally, after pausing to digest all the possible carnage, one of the underwriters said to Ballmer, “I’d hate to hear you on a bad day.”

Ballmer became the Commissioner of Concern under tutelage from the Grand Master of Productive Paranoia himself, Bill Gates. Ballmer had abandoned his studies at the Stanford Graduate School of Business to join his friend’s adventure. As Ballmer recalled, he did some calculations about growth and concluded that Microsoft needed to hire 17 people. Gates threw a fit. Seventeen people? Did Ballmer want to bankrupt the company? Seventeen people? No way! Seventeen people? Microsoft would never expose itself to financial ruin! Seventeen people? Microsoft should have enough cash on hand to go a year—an entire year!—without a penny of revenues.

“Fear should guide you, but it should be latent,” Gates said in 1994. “I consider failure on a regular basis.”…

Gates showed his fearful side in what became known as the “nightmare memo.” In a four-day period, from June 17 to June 20, 1991, Bill Gates’s personal fortune dropped more than $300 million as Microsoft stock suddenly fell 11 percent when a memo filled with “nightmare” scenarios leaked its way to the San Jose Mercury News. Written by Gates himself, the memo listed a series of worries and threats—about competitors, technology, intellectual property, legal cases, and Microsoft’s customer-support shortcomings—and proclaimed that “our nightmare … is a reality.” Keep in mind that at the time of the memo, Microsoft was rapidly becoming the most powerful player in its industry, with Windows on the verge of becoming one of the most dominant software products ever. Anyone who understood Gates would’ve known that the memo didn’t signal a change; he’d always lived in fear, always felt vulnerable, and he would continue to do so. “If I really believed this stuff about our invincibility,” he said the year after the nightmare memo, “I suppose I would take more vacations.””

Harnessing the power of fear

Nobody would turn around and say that Bill Gates hasn’t been immensely successful in many dimensions, but did you know that he was an intrinsically “fearful” person? Fully aware of his exposure and vulnerability? That he understood the possibility of the sky falling down in any number of different ways at any point in time?

But again I repeat, it is far more than simple, primordial fear that Gates had.

Fear is a fundamental emotion of all animals. As we mature we come to understand the role of fear in our lives; fear motivates us to take steps necessary for our survival, it warns us of danger, reminds us of our limits, and protects us from carelessness.

But fear in and of itself is a debilitating emotion. It engenders great hesitation. It gives us great pause.

But Bill Gates (as an example of someone who achieved great success) learned to trust and channel his fear in a positive fashion. He took his paranoia, extracted the part that paralyses, and moved forward with the rest, in a truly spectacular example of the “Genius of the AND”.


“lOXers differ from their less successful comparisons in how they maintain hypervigilance in good times as well as bad. Even in calm, clear, positive conditions, lOXers constantly consider the possibility that events could turn against them at any moment. Indeed, they believe that conditions will – absolutely, with 100 percent certainty – turn against them without warning, at some unpredictable point in time, at some highly inconvenient moment. And they’d better be prepared…

lOXers distinguish themselves not by paranoia per se, but by how they take effective action as a result. Paranoid behavior is enormously functional if fear is channelled into extensive preparation and calm, clearheaded action, hence our term “productive paranoia.”…

Gates didn’t just sit around writing up nightmare memos; he channelled fear into action by keeping workspace inexpensive; hiring better people; building cash reserves; and working on the next software release to stay a step ahead, then the next one, and the next one after that… they succeed in an uncertain and unforgiving environment through deliberate, methodical, and systematic preparation, always asking, “What if? What if? What if?””

Let’s face it, all waves eventually crash, all “true” bubbles eventually burst, there are times and seasons for everything in our lives; good times, bad times, mediocre times. Hypervigilance is the idea that we be prudent and thrifty in the good times so as to be able to survive in the bad times.

Hypervigilance keeps us above the death line, and productive paranoia is a key element of hypervigilance.

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