Strategies from Three Great CEO's
Steve Jobs, Andy Grove and Bill Gates are probably the three best CEO’s of all time. So it was with great interest that I read the book “Strategy Rules” by David Yoffie and Michael Cusumano. It was a wonderful read and getting into the minds of the three greatest strategists was enormously helpful
The five rules they identified to describe the framework were
- 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
To understand the impact of three please read the following. Bill Gates was Microsoft’s CEO from 1975 to 2000. Over that span the company’s annual profit grew from practically zero to $11 billion. Andy Grove became Intel’s CEO in 1987 and the prior year Intel had lost $135 million. In 1997 Grove’s last year on the job, Intel earned nearly $10 billion. In 1997, when Steve Jobs returned to Apple, the company lost more than $400 million: in 2011, when he resigned Apple earned almost $34 billion.
Rule 1: Look Forward, Reason 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 competitor’s 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.
Rule 2: Make Big Bets, Without Betting the Company
- Bet big to change the game.
- Don’t bet the company
- Cannibalize your own business
- Cut your losses
One of the examples I liked from this chapter is Steve Jobs who in 2005 insisted on killing iPod Mini before launching its successor, the Nano. Although demand for the Mini was still huge, Jobs wanted to move to the next device before it had been market tested.
Rule 3: Build Platforms and Ecosystems – Not just products
- Think platforms, not just products.
- Think ecosystems, not just platforms.
- Create some of your own complements.
- Evolve and invent new platforms to avoid obsolescence.
I like this quote from Steve Jobs “We are the only company that owns the whole widget – the hardware, the software and the operating system. We can take full responsibility for the user experience. If you have an extreme passion for producing great products, it pushes you to be integrated, to connect your hardware and your software and content management. You want to break new ground, so you have to do it yourself. If you want to allow your products to be open to other hardware or software, you have to give up some of your vision.”
Another great one from Bill Gates “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.”
Rule 4: Exploit Leverage and Power – Play Judo and Sumo
- Stay under the radar.
- Keep your enemies close.
- Embrace and extend competitor’s strengths.
- Don’t be afraid to throw your weight around.
The authors day that both Bill Gates and Steve Jobs became masters of “co-opetition” competing and cooperating with other companies at the same time. Knowing when to stay under the radar, when to work with your rivals, when to embrace and extend competitor’s strengths and when to throw your weight around can make the difference between failure and success.
Tactical judo requires mental flexibility, the ability to compromise, and the discipline necessary to put aside corporate pride and follow a competitor’s lead. Tactical sumo requires toughness above all.
Rule 5: Shape the Organization around Your Personal Anchor
- Know thyself – warts and all.
- Pay extraordinary attention to detail – selectively.
- Never lose sight of the big picture.
- Give power to people with “the knowledge.”
This Steve Jobs quote is awesome “Getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”
I found this book to extremely engaging and had a lot of food for thought. It is a very well researched book based on solid evidence from the three greatest strategists of all time.