The 5 Strategy Rules of Bill Gates, Andy Grove, and Steve Jobs

 
 
David Yoffie and Michael Cusumano find common leadership lessons from the tech titans of Microsoft, Intel, and Apple in the new book, Strategy Rules.
 
 
by Michael Blanding

If there were a Mount Rushmore for technological innovation, Bill Gates, Andy Grove, and Steve Jobs would be the faces looking outward. The longtime CEOs of Microsoft, Intel, and Apple have done more than anyone to popularize the modern-day personal computer, and in doing so, also created three of the most highly valued companies in the world.

But how were they able to steer their companies through the volatile ups and downs of decades of changing technologies? What did they have in common? And what can we learn from them about successful strategy?

“The notion that you could brand a product that no one had ever seen and that no one understood what it did was brilliant”

Those are the questions David B. Yoffie and Michael A. Cusumano address in their new book, Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs. "I have known all three of these individuals," says Yoffie, the Max and Doris Starr Professor of International Business Administration at Harvard Business School. "By looking at what they had in common, I thought there was a great opportunity to understand what distinguishes a really great strategist from your average CEO."

Yoffie has had access to all three men—having served on Intel's board since 1989 and written numerous business cases on Apple and Microsoft. He first started talking about the idea for the book more than six years ago with Cusumano, the Sloan Management Review Distinguished Professor of Management at MIT Sloan School of Management. But, Yoffie says, they wanted to wait until all three had finished their tenures. "The idea was to wait until Steve's departure, which unfortunately came with his death. Literally a week after Steve's death, we had lunch and agreed we would do the book."

The result is a look into the minds of three tech pioneers who, to outside appearances, don't share much in common.

"When I mention I wrote the book, the first response I get is, 'I can't imagine three more different people,'" says Yoffie. Besides their contrasting personalities—Gates the pragmatic technocrat; Grove the disciplined engineer; and Jobs the visionary perfectionist—their companies had unique business models and filled very different niches in the technology value chain.

5 Key Strategies

 

As they examined what the three CEOs had in common, however, Yoffie and Cusumano homed in on five key strategies that any manager, entrepreneur, or CEO can learn. Each of the lessons reads like a paradox or Zen koan that takes intelligence and practice to unpack. "Look Forward, Reason Back," for example, takes its lead from game theory, in which a great chess master will simultaneously be able to see the eventual path to checkmate and the best next move to get there.

Gates, Grove, and Jobs's Keys to Success

  1. Look Forward, Reason Back
  2. Make Big Bets, Without Betting the Company
  3. Build Platforms and Ecosystems—Not Just Products
  4. Exploit Leverage and Power—Play Judo and Sumo
  5. Shape the Organization around Your Personal Anchor


"Where many CEOs fail is they can espouse these great ideas about what the world is going to look like in five years, but they aren't able to look at what they need to do today to achieve that result," says Yoffie.

Bill Gates was able to envision a world in which there was a computer on every desk at a time when personal computers didn't exist. But he also realized that the way to capitalize on that future was to focus his energies on controlling software, not hardware.

Andy Grove foresaw the eventual break up of the vertically integrated computer industry, and was able to specialize in creating the core component of computing—the microprocessor. And then he championed that silicon part with the famous "Intel Inside" marketing campaign. "The notion that you could brand a product that no one had ever seen and that no one understood what it did was brilliant," says Yoffie. "That changed the entire structure of the semiconductor industry forever."

“They were all in many ways highly imperfect leaders. We didn't want to idealize them or sugarcoat them”

Steve Jobs saw a future in which consumers would move beyond the computer to use a range of electronic devices for entertainment and communication and then systematically rolled them out one step at a time—the iPod, iPhone, and iPad.

Building An Ecosystem

Gates was the first of the three to demonstrate another of Yoffie and Cusumano's lessons: "Build Platforms and Ecosystems—Not Just Products." Early on Gates realized that no one product could provide a lasting competitive advantage, but if consumers became hooked on a particular platform, such as the Microsoft operating system, then you could roll out new products that they would adopt, such as Word, Internet Explorer, and Windows Media Player. Even more importantly, such platforms would allow creative developers outside your organization to add their unique value.

Grove faced a crucial decision regarding Intel's own platform when in the late 1980s his engineers figured out a way to make a more efficient processor that nevertheless wouldn't be compatible with Intel's previous architecture. After agonizing about the decision for a year, Grove chose to stick to the platform Intel had already developed, even if it meant jettisoning a potentially better product. "That was the moment of truth whether he was going to be a product company or a platform company," says Yoffie. "In the end, the opportunity to build an ecosystem was more important."

Interestingly, Jobs stubbornly held out the longest in his vision of the product as supreme—pushing the proprietary Mac as the central hub of Apple's product line despite falling market share. Eventually he was persuaded to shift focus and allow the iTunes music platform to be used on PCs as well as on Apple iPods and iPhones. That decision, of course, was a game-changer, establishing Apple as the dominant player in mobile computing. "If iTunes had been available for the Mac only, it would have always remained a niche product and nothing more," says Yoffie.

As that example illustrates, even brilliant CEOs make mistakes sometimes. But Gates, Grove, and Jobs recognized their own strengths and weaknesses and had the ability to cut bait, as Jobs did, and change course when it mattered.

Yoffie and Cusumano express this in their last lesson, "Shape the Organization around Your Personal Anchor," using the image of the "anchor" in a double-sense, both what grounds you and what can weigh you down. "These guys were not supermen," says Yoffie. "They were all in many ways highly imperfect leaders. We didn't want to idealize them or sugarcoat them."

All three CEO-strategists, however, were self-aware enough to surround themselves with executives who helped compensate for their own weaknesses. Gates, for example, knew his strength was not in operations, so he brought in an outside COO to run the day-to-day operations. In the same vein, Jobs nearly destroyed Apple in the early 1980s by trying to do too much himself. When he returned in 1997, Tim Cook was one of his first hires to run operations, which allowed Jobs to focus on overall strategy and design.

"These guys each had very different skills they brought to the table," says Yoffie, "but they also became successful in part because they were able to figure out what they were not good at, and they were able to fill those gaps by recruiting individuals and forming teams to do the things they couldn't do or wouldn't do or shouldn't do."

That kind of self-aware recognition of weakness is not something you often see listed in the traits of a great strategic leader. Based on the example of these three men's success, it may be the most important lesson of all.

About the Author

Michael Blanding is a writer based in Brookline, Massachusetts

Post A Comment

    • Hugh Quick
    • Home, None
    I doubt if analysis will help much. People are all different, not equal. Some, a few, change a lot, mostly through the power of their personality (which is manifested in their own unique way) Most of us change very little.
    • Roger Sterling
    • President, Sterling, Cooper & Partners
    Don't go to war armed with the previous war's weapons.
    • Dimitri O. Ledenyov
    • Researcher, James Cook University, Townsville, Australia
    Let us remember that the winning succesful strategy creation is a complex research problem...
    • Peace Joseph ighodaro
    • President, New destiny center
    Great book
    • Oriyomi Adeniji
    • Team Lead Sales, Credit Direct Limited
    its an insightful piece on lead and delegating, above all, you need your team to make it work.
    • Dr. Bill Eickhoff
    • founding member of the John Maxwell Team, Leadership Business Council of the Palm Beaches
    I totally agree with the last strategy. These guys all played to their strength but were wise enough to realize they had scotomas/(blindspots). These blindspots were their weaknesses. Their wisdom was surrounding themselves with people that had corresponding strengths that complimented their weaknesses. They did not ignore their weakness. That's where the real blind spot is.
    • Chip Ellis
    • Consultant, Chip Ellis Consulting
    It's always helpful to be reminded of the obvious.
    • Laxshmi
    • HR Manager, New Era Inda- En World Group
    A good piece to read!
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited
    Even successful leaders do not self introspect regularly to know their weaknesses - many seem to show that they are too confident of their plus points and live imagining (or feigning to do so) that they are epitomes of total perfection. This, however, is a gross undue appreciation of their own strengths. One could be a jack of all trades but cannot be master of all. Hence, he needs to be supported by others from time to time.
    Gates, Grove and Jobs did not suffer from such a mental block. They were visionaries who went ahead using their faculties to the full with adequate external support whenever required.
    We are indeed indebted to the trio for their products which are so useful in the digital world.
    • G.P.Rao
    • Founder Chairman, Spandan, Foundation for Human Values in management and Society, India.
    An excellent, and thoughtful, addition to the management education and profession.As a person involved in propagation and inculcation of human values in management and society, I feel the useful add on would be to integrate suitable human values to the above five strategic rules. For instance, the spectrum of human values with work situation as a framework could be visualized, as Spandan (Heartbeat) approach has attempted, as comprising three basic human vales: Transformational, Transactional and Terminal.
    A hypothesis, when such integration is achieved, is that the fifth rule, viz.Shape the Organization around your Personal Anchor, may come out at the top. A human values essentially is an individual's perception of worldview with the self as 'focal person'. Equally true, as Chris Argyris stated long ago, 'An organization is a shadow of its CEO'.
    • Edward Stern
    • Researcher/Adviser on Workplace Violence, Stern Research and Analysis
    There is no doubt that Steve Jobs was a visionary and a man of great accomplishments. It is also clear that Jobs was a first class bully who drove away some of the talent around him. So, one wonders how much more Steve Jobs could have accomplished if he had more civility.
    • Eva von Schmilowski
    • Founder, Heartsurge Fund
    Very inspiring article. Thank you. I believe that self-awareness and a deep understanding of ourselves and the world around us are crucial to create anything meaningful and sustainable. As Napoleon Hill put it: 'If you do not conquer self, you will be conquered by self.'
    • Kwasi Akotia
    • CEO, Akotia & Partners
    Its a good point made on delegation but lets be mindful of the fact that, even the people you delegate to help fill that gap, i.e. your weakness, should be the kind who would have the interest of the company at heart as a priority.
    • Sahibzada Anees
    • Research Student, Institute of Management Sciences, Peshawar, Pakistan
    Bill Gates, Andy Grove, and Steve Jobs are world fame CEO's and they have revolutionised the concept of entrepreneurship. The book will certainly give young entrepreneurs a good guide line to follow.
    • connie Chen
    • founder CEO, chenplanning consultants,Inc.
    Therein manifest the essence of Judo awareness. Great insight! Thank you Professors. Hope to hear your lecture again in our next alum only breakthrough INsight coming soon. Thank you. Connie chen
    • Aastha Vijay
    • student, none
    I strongly agree with buliding platforms and ecosystems rather than just making products!
    Perfect and precise article.
    • David Martinez
    • Chief Audit Executive, Accudyne Industries
    Great and thoughtful insight.
    • Tank Neupane
    • Lecturer, Sky International College Nepal
    Strategy is not razor to cut butter
    • GODWIN ONOKPACHERE
    • PARTNER, IMPACT TRAINING AND MANAGEMENT CONSULTING LAGOS NIGERIA
    Good observation of what Gates, Grove and Jobs have in common except for a great omission INTUITION
    • Wendy Webb
    • independent board director & advisor
    Terrific book, with the synthesis of simple concepts that inform setting of corporate strategy, from the boardroom and down the line. Wendy Webb
    • Keerthi K Weragoda
    • Retired, Free lance consultant
    Very interesting analysis of the leadership and management skills of three great products of the modern technological era. I wish the political leaders who make the major decisions for the future of this world read these lessons and follow them in their work.Bane of this world is most political leaders think they are all knowing and seldom identify any weakness even if it is quite obvious to the rest of the world.
    • Nameer Khan
    • Head of Business Planning and Strategy, Pak Qatar Takaful Group
    Thank you for sharing Michael.

    I personally feel, that some of the most important building blocks to these mega companies, was their leadership's visionary skills and their ability to see beyond the fog.

    Second, was their self-awareness over their own weaknesses which indeed needs a lot of Ego-wash! And those weaknesses were a locomotive to hire those individuals who were best at it.

    Attaining the aforementioned points, is easier said than done - hence, needs a substantial amount of mental efforts being put in.
    • Bashist kumar
    • Dy. General Manager, Vasu Chemicals, Mumbai, India
    Its worth reading to get an insight on the common strategies of 3 great leaders of the decade who created customer delight by launching niche products which touched the life of millions of people in the world.
    • Sam Rufus
    • Founder Director, EPIC - Enriching People In Creativity
    Thank you Michael for culling and sharing profound insights of three legendary strategists. Very, very generous of you for this extraordinary reading and learning. Stay blessed!
    • Jose' Godinho
    • Financial Consultant, Ministry Of Finance, Govt. of Timor-Leste
    Its great to read, and want know more and more greater ideas,admire about 'creating world look like five years.
    • Tema Frank
    • Omnichannel Customer Experience Expert, author, speaker & podcaster, Frank Reactions
    These all make sense, especially the point near the end about surrounding yourself with great people whose skills complement yours. ... But SO much hard to do than to say.