Using Productive Paranoia as a Critical Leadership Tool

Paranoia can be a healthy thing – when it’s productive. When you put it to work.

Jim Collins has written extensively about this concept in his books, particularly in Great by Choice, and it’s something I live and breathe.

If you keep cycling through worrying or obsessive thoughts – scanning for something bad to happen – you’ll drive yourself mad.

But what if you used those thoughts to identify a risk, and then do something constructive about it? That would be productive.

Black clouds, silver linings

Let’s compare that to optimism. Pure optimism can be dangerous if you always believe things will be great and don’t stop to flip over the coin – to identify those risks that can take you out of the game,

Andy Grove, founder and CEO of Intel, described it well when he said he’s always looking for the black cloud in the silver lining. He also recommends having a “helpful Cassandra”, someone to criticize his ideas, and to look for problems and gaps in his thinking.

The only way to survive and build an enduring business is to constantly scan with a measure of productive paranoia.

For example, an executive team I work with became very excited about a massive expansion for the company, and the bank was on board, willing to give them all the money they needed. But I just couldn’t get on board with levering up the balance sheet with a lot more debt until I knew they had identified all the brutal things that could take them out – and had done the work and to see if each one could be either mitigated or absorbed. Using productive paranoia the company to be able to endure, no matter how well or poorly the expansion went.

A mindset

In a super-positive environment with an exciting vision and a strategy that you believe in – or after a series of big wins or a booming market – you can get separated from the data, overly confident or too relaxed about notable risks. It’s a great way to get knocked out.

You can’t just keep pushing blindly ahead. You have to keep looking over your shoulder and ask, “What if this happens, or what happens if that happens?”

I’m the guy who started ordering N95 masks and other supplies, in February, when I first heard about the Corona virus. And I’m the guy with a 72-hour emergency bag in my vehicle, and the best studded snow tires because I regularly drive through mountain passes in winter.

I identified the risks and then got productive with my paranoia.

It’s a mindset to be super prepared and set yourself up to win.

“The only mistakes you can learn from are the ones you survive.”

Ask “What if?”

What if this customer fails or doesn’t pay?

What are the outcomes if our product doesn’t get delivered on time?

If half of our employees resigned, what would happen?

What if the plane crashes? (That’s why many companies won’t allow the whole executive team on the same plane.)

This isn’t about worrying about everything, all the time. It’s about putting yourself in a superior position by being prepared with plans to mitigate foreseen and unforeseen risks. Call it risk management.

And if you are wrong 90% of the time, the 10% you are right enables you to survive.

This is about responsibility – to your customers and your employees, to make sure your organization exists, and is healthy years from today – and leads and connects to using productive paranoia.

Two examples chosen by CEOs:

  • Keep cash on hand

One CEO keeps about 10% of revenue in cash. So, if you’re a $200 million business, that’s about $20 million on hand, at any time.

  • Act quickly

Start with plans A, B and C, so that you don’t have to spend a lot of time obsessing over the risks. When you need to, proceed aggressively and optimistically with Plan A, knowing the worst-case scenarios are covered.

The Challenge

  • How could you be more effective using productive paranoia:
    • At Work?
    • For your Self?
    • In your Life?

For more stories and example of productive paranoia, listen to Episode 86 of The Growth Whisperers.

Lawrence & Co’s work focuses on sustainable and enhanced growth for you and your business. Our diverse and experienced group of advisors can help your leaders and executive teams stay competitive through the use of various learning tools including workshops, webinars, executive retreats, or one-to-one coaching.

We help high-achieving leaders to have it all – a great business and a rewarding life. Contact us for simple and impactful advice. No BS. No fluff.