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.

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