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Oil & strategic inflection point

Andrew Grove is one of three founders of Intel, along with Gordon Moore and Robert Noyce. I intend to write about each of them separately in subsequent articles, as they have all three written or said something very interesting on three different subjects. First we explore the strategic approach of Andrew Grove.

Strategic Inflection Point
Grove is a chemist by training.  He served as Intel's CEO from 1987 to 1997. Now retired, he is professor of strategy at Stanford University (which is what interests us here). In his book, evocatively titled "Only the paranoid survive"  Grove developed the concept of  the Strategic Inflection Point This is to say,  the point in time at which one must change strategy and adjust to avoid decline. Mr. Grove explains how Intel maintains their  No.1 position in the manufacture of computer memory and  microprocessors by having to regularly adapt to the emergence of Japanese competitors.

Peak Oil
The difficulty with the concept of the Strategic Inflection Point comes when it is necessary to determine when a change in strategy is needed. But we have before us a major strategic inflection point, a prominent and obvious one: Peak Oil.
With the proximity of peak oil, we have a strategic inflection point even more important than the appearance of the railway in the 19th century or the automobile in the 20th. Ignoring oil peak now is tantamount to betting on the future of animal traction vs. the automobile in the early 20th century...
This is not to say that tomorrow there will be no more oil: rather that it will gradually become rarer, more expensive to extract, and coveted. Darwin pointed out that species that survive are not necessarily the strongest nor the most intelligent, but those that adapt to changing circumstances. A Strategic Inflection Point in this context would be a business, industry or an individual changing tactics to adapt to increasingly scarce oil.  This shift will cause the next big bang in the energy world. If you look closely you'll see that many large global companies in very different areas have already initiated major strategic changes to adapt to peak oil. But others seem too timid to do so.  Their perspective causes them to see change as inappropriate and they will disappear as surely as the Tyrannosaurus.

The Strategic Inflection Point for oil prices is behind us. Prices began to rise with the gradual reduction of surpluses. The brief downward trend in oil prices ran its course by 1998 bottoming out at $11 per barrel.  The long-term trend is bullish. Even during the 2008 crisis, the worst economic crisis since 1929, oil prices fell to $ 30 for only 8 days. Falling fast and violently, and rising slowly and continuously afterward are typically seen in the correction in a bull market.
The next strategic inflection point for black gold will be the point when the world starts to do without oil because the alternatives are sufficiently numerous.
Suffice to say that we have not finished talking about the rising price of oil..

Dr Thomas Chaize

































































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