Book Summary “Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs”
Introduction:
After reading “Strategy Rules” by David B. Yoffie and Michael A. Cusumano well know authors who studied almost 30 years about Steve Jobs, Andy Grove, and Bill Gates and their companies, while teaching business strategy, innovation, and entrepreneurship at Harvard and MIT.
The lessons that can be learned from some of the world’s most successful businessmen are keeping their focus on five strategic rules.
Lesson #1: Look Forward, Reason Back
The lessons that others will find easiest to relate to. Put simply: decide where your company must be within the future, then work back to how you’ll get there from here. The problem, of course, is that no amount of extrapolation and analysis will assist you to forecast the longer term, particularly in fast-changing industries. Interpretation is all. While the anecdotes about Microsoft and Apple are mostly well-known, it’s the insights into Intel’s Andy Grove that feel the freshest. Grove, as an example, foresaw a time when the tech industry would devolve into “horizontal” layers, opening the way for Intel to dominate the marketplace for PC microprocessors while leaving less profitable hardware to others. It wasn’t just a flash of inspiration: because the authors describe it, Grove, the master of detail, was constantly measuring and adjusting, feeling his thanks to the longer term.
“You cant just ask customers what they want and then try to give that to them, By the time you get it built,they’ll want something new” — Steve Jobs
Here is the breakdown process of looking forward and reasoning back:
- Look forward to develop a vision of the future ,reason back to set boundaries and priorities.
- Look forward to anticipate customer needs; reason back to match with capabilities
- Look forward to anticipate competitors’ moves; reason back to build barriers to entry and lock in customers.
- Look forward to anticipate industry inflection points; reason back to commit to change and stay the course
By mastering the above four principles, any manager can learn to plan more effectively for the future.
Lesson #2: Make Big Bets, Without Betting the Company
A second lesson — “Make big bets without betting the company” — also sounds simple but takes mastery that comes from a deep knowledge of a situation and a strong gut. Yet even the master strategists could be overcautious: in his only personal anecdote from Intel, Yoffie describes how he admonished Grove on several occasions for a “tendency to be too risk-averse”. Ultimately, the authors attribute the outsized success of the three pioneers of the personal computing age, as well as their sometimes damaging inflexibility, to the driving passions that shaped them: Gates for software, Jobs for design and Grove for an iron management discipline.
One of Jobs’ business rules was to never be afraid of the cannibalizing yourself. If you don’t cannibalize yourself,some one else will,” he said — Walter Isaacson
Gates, Grove and Jobs were bold leaders, but they were not reckless, write Yoffie and Cusumano. They knew how to time or diversify their big bets so that even huge strategic bets were not irreversible.
Lesson #3: Build Platforms and Ecosystems — Not Just Products
Another important rule, the authors write, was to create platforms and ecosystems, as against pursuing a product strategy. Build Platforms AND Ecosystems. Most industries think in terms of products. Technology companies, however, succeed once they build industry platforms, not stand-alone products. Bill Gates wouldn’t be among the world’s richest men and Microsoft wouldn’t be the dominant company it became if Gates had sold his product — the DOS operating system — to the client that had requested it: IBM. Instead, in exchange for a way lower payment from IBM, Gates kept the proper to license the system to other companies. The rest is history.
“Microsoft is the company that has worked with independent software developers more than any other company…Why did we beat other operating systems? Because we worked with independent software companies to get them to write applications.” — Bill Gates[1991]
Lesson #4: Exploit Leverage and Power — Play Judo and Sumo
All three men, consistent with the authors, could play Judo and Sumo. Judo requires using the opponent’s strength. Gates, Grove, and Jobs could each find how to show the strengths of their opponents into weaknesses. One notable example is Jobs’ successful negotiation skills with the music companies for a license to their music. Paying little attention to the small company (only 2 percent market share in its own industry!), the music companies negotiated an agreement highly favorable to Apple and which might be the foundation of the iTunes revolution. At an equivalent time, the three didn’t hesitate to freely use their power, once that they had it, to dominate their competitors, even as a wrestler uses his pure strength to dominate his opponent.
Lesson #5: Shape the Organization Around Your Personal Anchor
Strategy without execution is as worthless as execution without a strategy. Getting both right is a challenging task, but one that Bill Gates, Andy Grove, and Steve Jobs all accomplished to an impressive degree.
“Execution is God!”- Andy Grove
Gates, Grove, and Jobs relied on their personal anchors in similar wats as they tackled the challenges of strategy execution and organization building
How many business leaders could find that if they looked for it?
Personally, the three men had vastly different strengths and interests. Gates was the software coding genius, Grove a precise engineer and Jobs a wizard at design. The companies they built reflected these strengths.
Conclusion:
The book brings together a few of the best practices in the field of strategic management and high-tech entrepreneurship from three path-breaking entrepreneurs who emerged as CEOs of huge global companies. Their approaches to formulating strategy and building organizations offer unique insights for start-up executives as well as the heads of today's modern multinationals.
The big message is look forward and reason back the idea, extrapolation, and interpretation, readers have to keep the focus on what their future will be,the strategy is not an innate skill. Rather, it is something that has to be learned.
No one is born strategist — not Bill Gates, Andy Grove or Steve Jobs. Jobs almost drove Apple to the bankruptcy during his first period there. Andy Grove’s 1st book on how to run a business was a guide for an operations-oriented middle manager. When Bill Gates dropped out of Harvard, his knowledge of management and business strategy could best be described as un-impressive.
The authors pose this important question here: “What would you rather have — a great strategy which is poorly executed or a bad strategy that is executed perfectly?” The answer is: its neither desirable because strategy and execution are linked, as Gates, Grove, and Jobs demonstrated.
“The successful executives learn over the time, the way to think more strategically and the way to execute effectively, at the tactical and organizational levels,”
If this task seems daunting, remember that our three CEO’s were not always the “titans of industry” who inspired this book. Yes, they were all gifted with unusual intelligence, intensity, and passion.
