The Five Strategies of Bill Gates, Andy Grove, and Steve Jobs
By Zulfiqar Ashraf Chaudhry
Roseville, CA
To live atop the Pleiades is the heart’s wish of everyone of you;
First produce a discerning soul who can make the dream come true.
We are all looking for ways to succeed in this world and the next. In this article, we will review the book Strategy Rules by David Yoffie and Michael Cusumano to see how successful leaders, namely Gates, Grove, and Jobs (GGJ), used five strategies to take their companies to unprecedented heights. Bill Gates started with nothing and when he retired, operating profits were $11 billion (approximate Market capitalization of Microsoft in late 2014 was $410 billion). Andy Grove started at $135 million and retired at $10 billion (approximate Market capitalization of Intel in late 2014 was $165 billion). Steve Jobs started at $403 million and retired at $34 billion (approximate Market capitalization in late 2014 was $688 billion) (p 5).
Interestingly, the strategies of these great CEOs need not confine to the business world only. They can be applied by individuals, families, and leaders. Indeed, there are general threads that runs through them, which if someone can hold onto tightly, will change their destiny, both in this world and (hopefully) the next.
Here are the five strategies.
- “Look forward, reason back.
- Make Big Bets, without betting the company
- Build platforms and ecosystems—not just products.
- Exploit Leverage and Power—play Judo and Sumo
- Shape the organization around your personal anchor.”
- “Look forward, reason back.”
This strategy flies in the face of conventional wisdom. Edmund Burke thought, “Those who don’t know history are destined to repeat it.” But the strategy under-discussion, “look forward, reason back”, asks one to do exactly the opposite. It encourages people to drive their cars (and their lives) by looking through the front window, not the rear-view mirror. It encourages people to solve their problems using their imaginations, not their memories. Could India and Pakistan solve the Kashmir problem using their history?
GGJ used their imagination to figure out what people will want in future, and then aligned their resources to provide that product. For example, Grove was famous for designing his meetings to answer this simple question: “what can I do today to solve—or better, avoid –tomorrow’s problems” (p 44). He based his vision on the Moore’s law, which states that “number of transistors on an integrated circuit would double every 18-24 months.” To realize this vision, in 1993 he started investing heavily in Intel’s manufacturing capacity. “He told his senior management team that it had cost $1 billion in capital to make the 486 (microprocessor), but he was prepared to invest $5 billion in plants to manufacture his successor, the Pentium. The impact of this decision on the competitive landscape was profound. In the early 1990s, the “entry fee to be a major player in the global semiconductor market was already $1 billion payable in advance,” in Gordon Moore’s words. So, by raising the bar (sort of like India building dams on the Indus River), Intel made it impossible for newcomers to enter the market (which is what Pakistan is finding out with respect to its neglect in building dams).
Bill Gates also realized the power of the Moore’s Law. He realized that it is not the computing power, but the software that will be the scarce resource. Software will be needed to harness this raw computing power. “Gates was adamant about the importance of focus, later explaining, "you have to have as much of a single strategy as possible. There are separate businesses and there are separate competitive battles, but it’s got to be within one jihad.” The central goal of Microsoft’s jihad was to dominate in the operating system market, first through the DOS and then with multiple versions of Windows. Secondary fronts focused on desktop productivity applications (Word, Excel, and PowerPoint], a Web browser (Internet Explorer), an operating system for servers (Windows Server), and other complementary software products. Microsoft largely ignored hardware, until the launch of Xbox in 2001, more than a quarter of century after the company’s founding.” (p35) Do we (or our country) have this all-encompassing single focus? Or do we have multiple gods?
When I prostrated before Allah, I heard a voice saying “what would you get out of Sal'aah, when you still have idols in your heart.”
Steve Jobs also concentrated his attention and resources on handful of products. He was well known for saying, “I’m as proud of what we don’t do as I am of what we do.” He was able to resuscitate Apple from near death experience in 1997 by ruthlessly “pruning” the endless line of products. “The way we have succeeded is by choosing which horses to ride carefully. (Our) products SUCK! There’s no sex in them anymore (p 35).” He focused his energies with laser-like intensity on a few products. “The printer division, the low-end Macs, and Apple’s advanced technology group were all shut down. But Job still felt lost in the thicket of Apple’s products. Fed up, Jobs drew a simple grid of two rows and two columns. He labeled the columns “Consumer” and “Professional” and the rows “Desktop” and “Portable.” He insisted that the company focus on just four products, one computer for each quadrant in the grid (p 35).” When Jobs retired, he had taken the company from mere $403 million to impressive $34 billion (approximate Market capitalization in late 2014 was $688 billion). Pakistani politicians need to do the same!
For once, O awaited Reality, reveal Yourself in a form material,
For a thousand prostrations are quivering eagerly in my submissive brow.
Next, we will discuss GGJ’s second strategy: “Make Big Bets, without betting the company.”
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