5 Lessons in Strategy from Apple, Microsoft and Intel
I’m writing this article on a PC while I listen to music on my iPhone, and you will probably be reading it on a Mac or iPad. This is all possible thanks to the legacy of three businesspeople who made groundbreaking work in the technology industry: Steve Jobs at Apple, Bill Gates at Microsoft, and Andy Grove at Intel.
According to David B. Yoffie and Michael A. Cusumano, authors of the book, “Strategy Rules,” these three founders of tech empires used the same 5 strategies:
- Have a strategy with a vision, establishing priorities and anticipating your customers’ needs
Gordon Moore, co-founder of Intel, predicted in 1964 that computers’ power will double every 18-24 months. Andy Grove, CEO of Intel, used this information to change his company’s priorities from producing computers complete with all their hardware and software, to producing microprocessors, and specific components, which led to Intel dominating the field.
Steve Jobs was able to anticipate his customers’ needs, which allowed him to stay the course. In 1979, he visited the Xerox Center for Investigation and saw the first Graphic User Interface (GUI). Until then, interaction with operating systems was only through code. Jobs was convinced that making PCs easier to use would attract more customers, so he adopted GUI technology to create a friendly user-interface that would make PCs dominate the market.
- Ensure your product’s success by evaluating market conditions and discouraging the competition
Gates agreed to develop an operating system for IBM’s computers under the condition that he be able to sell it to other manufacturers. IBM agreed and Gates developed the now famous DOS (Disk Operating System). Gates could have made a lot of money in licenses if his software had been exclusively for IBM, but his vision went further: selling DOS at a low price and to a high volume of computer manufacturers, it soon became the industry standard. Because of this, he not only got into the right market, but also established measures to create barriers to entry.
- Assume risks to remain competitive, without betting on the whole company
In the early 2000s, the Mac PowerPC architecture had come up short and Jobs knew it was time for a change. Intel had undoubtedly better microprocessors, but changing hardware would mean completely rewriting the Mac operating system and applications. Not to mention the risk of losing loyal customers. An analyst even predicted that the change could lead to Apple’s demise, as it would lose customers and developers. It seemed too big a risk. But Jobs knew that the additional revenue he had earned from the iPod (more than 10 million units) would give his company a financial cushion, so he could take the risk because Mac sales weren’t the company’s only source of income to survive. And he was right: Mac’s market share doubled in the following 5 years.
- Instead of developing a great product, build a solid platform that enables exponential growth
Andy Grove knew that Intel could only sell more microprocessors if more computers were being sold and that the biggest obstacle was the conflict between hardware standards. So Grove opened a research lab to understand what modern consumers were looking for in computers, and it was there he found the need for a universal connector like the USB. Until then, each manufacturer had different specifications, and simple needs like connecting a printer were a nightmare. Grove patented the lab findings, and made them accessible to everyone. Computer manufacturers leveraged the information, creating a robust, standard platform of computers that were easier to use and sold much better. And each one of them contained an Intel microprocessor.
- Infuse your company with unique skills, but consult experts for the rest
Jobs, Grove and Gates infused their skills into the DNA of their companies. Job’s love of design led Apple to drive standards for product design and user experience. Grove turned its discipline into a clean and systematic process, leading Intel to master engineering and manufacturing. And Gates, the passionate hacker, personally rewrote his developers’ code because he “didn’t like the way they coded.”
But these talented entrepreneurs’ skills were not enough to achieve success. Jobs didn’t care about finances or operations, but he found a collaborator in Tim Cook, his partner and successor, who shared his vision of the company and could efficiently manage it. For Gates, an often introverted and sarcastic nerd, his perfect match was Steve Ballmer, an energetic salesman who loved competition.
Author: Conciliac Team.
David B Yoffie, Michael A. Cusumano: “Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs”, Harper Business
“Strategy Rules Summary and Review, by David B. Yoffie and Michael A. Cusumano”, LifeClub