This document discusses five timeless strategy rules that Bill Gates, Andy Grove, and Steve Jobs followed based on a study of their leadership and business success. The five rules are: 1) look forward and reason back, 2) make big bets without betting the company, 3) build platforms and ecosystems not just products, 4) exploit leverage and power, and 5) shape the company around your personal anchor. Each leader had a different personal anchor of strengths they built their companies around. They also learned to compensate for weaknesses by hiring others with complementary skills. The document analyzes how each leader applied these rules through their visions and strategies for Microsoft, Intel, and Apple based on anticipating technological changes from Moore's Law

1. INBOUND15
STRATEGY RULES
Five Timeless lessons from Bill Gates,
Andy Grove, and Steve Jobs
Michael A. Cusumano
MIT Sloan School of Management

2. Study Context
Three Very Different People
Never Compared Before
Gates − privileged, geek, drop-out
Grove − Holocaust, engineer, Ph.D.
Jobs − orphan, flower child, drop-out
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3. Three Extraordinary Records
Profit growth under Gates, Grove, and Jobs
Profits at
Beginning
of CEO Tenure
Operating Profits
at End
of CEO Tenure
Peak Market
Capitalization
Gates
(25 years)
 $11 billion $612 billion
(12/27/99)
Grove
(11 years)
($135 million) $10 billion $501 billion
(08/31/00)
Jobs
(14 years)
($403 million) $34 billion $750 billion (03/15)
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4. Franchises Endured, Post-CEO,
With Some Drop Off…
Revenue Growth Cumulative
Operating Profit
Recent Market
Capitalization
Microsoft after
Gates
(15 years)
$23b to $87b $285 billion $400 billion
Intel after Grove
(17 years)
$25b to $54b $172 billion $180 billion
Apple after Jobs
(3 years)
$108b to $182b $79 billion $750 billion
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5. Five Strategy Rules
Gates, Grove, Jobs – A Common Approach
We believe these should be common to all strategists.
1. Look Forward, Reason Back
Extrapolate, interpret, then tie vision to concrete actions
2. Make Big bets, Without Betting the Company
Bold and ambitious to change the game, but not reckless
3. Build Platforms & Ecosystems, Not Just Products
No firm is an ‘island,’ especially in technology markets
4. Exploit Leverage & Power
Master the tactics of both strategic “judo” and “sumo”
5. Shape the Company Around Your Personal Anchor
Focus on personal strengths but build a team to compensate for weaknesses 5

6. How Look Forward?
• Create a vision of the future, such as by
– Extrapolation (from what you & others know today)
– Interpretation (what does the data really mean?)
– Point of view (what the future will/should look like for your firm &
market, looking out 1-3, maybe 5-10 years?)
• Vision statement = should be simple, clear, actionable
• Then reason back:
– What are the specific action items to take TODAY?
– 6 months from now? Next 6 months? Etc.
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7. Implications
• Most of us want to learn from history, so we “look back,
and then reason forward.”
• Gates, Grove, and Jobs did some of this!
 Gates -- IBM’s history with the mainframe
 Grove -- Fairchild’s history & early Intel
 Jobs -- Hewlett-Packard & Silicon valley culture
• But mostly, they “looked forward, and reasoned back” –
very carefully. We think great strategists need to do this
themselves or with a trusted team.
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8. Moore’s Law Drove the Vision of Gates,
Grove & Jobs – But Differently
8

9. Gates’ Vision (1975)
"a computer on every desk and in every home,” running Microsoft
software. (Company filing, 1975)
Note: Microsoft co-founder Paul Allen wanted to sell hardware & software,
which most computer companies did at the time (IBM, DEC, and also Apple,
founded in 1976)
Gates: “I thought we should do only software. When you have the
microprocessor doubling in power every two years, in a sense you can
think of computer power as almost free. So you ask, why be in the
business of making something that’s almost free? What is the scarce
resource? What is it that limits being able to get value of out that infinite
computing power? Software.”
(1994 interview, quoted in Microsoft Secrets)
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10. Jobs’ Vision
1976: A computer as easy to use as a typewriter or a toaster, right
out of the box! Apple II (1978) then the Macintosh (1984)
2001: “We think [the PC] is evolving… The future of computing lay in
finding a way to allow users to create, share, and add value to the
explosion of digital devices… The Mac can become the ‘digital hub’
of our emerging digital lifestyle.”
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11. Grove’s Vision (late 1980s)
Moore’s Law would break the vertical computer industry.
Intel would try to dominate the microprocessor layer.
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12. 1991 Grove Board Presentation
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13. Les Vadasz (Intel SVP) on Andy Grove:
“There are many managers who make that five-year plan and then
around year three they start to think about the next five-year plan. Not
Andy. Grove …understood a basic truth: You can only look so far,
and so you better just keep looking frequently. That’s the most
important element of strategy: You understand the direction you’re
going, but you also know what you’re going to do in the next six
months. Most companies will do a pretty good job many times about
the direction, but then they never break it down to shorter metrics. Intel
did a super job on that.”
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14. On Making Bets
Andy Grove: “There is at least one point in the history of
any company when you have to change dramatically to rise to
the next level of performance. Miss that moment and you start
to decline.”
Steve Jobs: “Dylan and Picasso were always risking
failure. This Apple thing is that way for me. I don’t want to fail,
of course... If I try my best and fail, well, I’ve tried my best.”
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15. Apple
Revenues
($billion)
Operating
Profits (%)
Market Value
($billion)
2014 $183 29% ca. $700
2013 171 34 500
2012 157 35 413
2011 108 31 425
2010 65 28 312
2009 37 21 180
2008 32 19 118
2007 24 18 74
2006 19 13 46
2005 14 12 29
2004 8 4 8
2003 6 (loss) 4
2002 6 -- 5
2001 5 (loss) 8
What changed at Apple in 2003?
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16. Apple Microsoft
Revenues
($billion)
Operating
Profits (%)
Market Value
($billion)
Revenues
($billion)
Operating
Profits (%)
Market Value
($billion)
2014 $183 29% ca. $700 $87 32% ca. $350
2013 171 34 500 78 34 300
2012 157 35 413 74 30 235
2011 108 31 425 70 39 247
2010 65 28 312 62 38 245
2009 37 21 180 58 35 247
2008 32 19 118 60 37 150
2007 24 18 74 51 36 288
2006 19 13 46 44 37 251
2005 14 12 29 40 37 234
2004 8 4 8 37 25 256
2003 6 (loss) 4 32 30 252
2002 6 -- 5 28 29 216
2001 5 (loss) 8 25 46 258
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17. Platform Over Product
When did “the light” go on ?
• Bill Gates: 1980 DOS contract with IBM
• Andy Grove: 1990 CISC vs. RISC debate
• Steve Jobs: 2003 iPod/iTunes & Windows
– What can we learn from this history?
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18. • A personal anchor:
– A foundation and direction for a company building on the leader’s
personal background and strengths.
– Provides a grounding & focus for the individual and the organization,
especially in times of disruption
• But, like a physical anchor, a personal anchor limits
what the organization can achieve unless:
– Leaders identify their gaps & fill those holes – such as with a “brain
trust,” teamwork, process, culture, etc.
“Personal Anchor” Defined
18

19. Their Personal Anchors
Bill Gates − a deep understanding of software, insight to write
once & sell a million times (Software Product-to-Platform Model)
Andy Grove − pursuit of “discipline” as an engineer/manager
tasked with making Moore’s Law a reality (“Fab & Marketing”)
Steve Jobs − an unmatched sense of product design to bring
complex technology to the average person (User Experience)
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20. Gates: No interest/skill in operations, sales, mktg., etc.
– Intense commitment to learning (“think weeks”)
– Recruits executives/personnel from outside
Grove: Limited knowledge of the science & management
– Develops internal talent to help with the science
– Immerses himself in the study of management
Jobs: More artist than technologist or entrepreneur
– Almost bankrupted the company multiple times; too controlling
– In Round 2 hired “domain experts” & learned better to delegate
Know Thyself, Warts and All
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21. • Focus on a few key leverage points
• Dive into details where you can really add value
• Use detail to “teach” the organization
• Provide direction from the top
• Encourage “constructive confrontation”
• Dedicate time to thinking & learning
Pay Attention to Detail − Selectively
Never Lose Sight of the Big Picture
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22. Give Power to People with
“The Knowledge”
• Intel and the move from memory chips to microprocessors,
and then from product to platform
• Microsoft and the decision to move beyond the PC and
“embrace & extend” the Internet with Windows
• Apple and the decision to open up iPod/iTunes to Windows
users or add an App Store for iPhone
22

23. SVP Paul Maritz on Microsoft
(Why MSFT succeeded from PC to Internet – but not Mobile)
“None of us had a consumer bone in our bodies. It was
just not what really at the end of the day motivated us. We
were system software guys. . . . We got excited about internal
architecture … In spite of protestations to the contrary, we
didn’t really care much about the user interface.”
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24. • You as a leader DO NOT have to be perfect!
– Gates, Grove & Jobs had strong personal anchors but numerous flaws;
they learned to become masters of strategy & effective organization
leaders (eventually)
• Leverage your anchor but don’t let it “freeze” you!
– “Innovator’s dilemma” to “platform leader’s dilemma”
– How create flexibility – capabilities, organization, strategy?
• Complements are not substitutes!
– When “imperfect leaders” select partners as successors
– How prepare the organization for a future without you?
Conclusions
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25. To Think About
• What is occurring now that might transform YOUR
business – what Andy Grove called an “inflection point”
(a “10x” change)?
– Current “facts” for extrapolation & interpretation?
• How far can you see, with some confidence?
– What other “resources” might become “almost free”?
– What resources might become more scarce – leading to
disruptions or new opportunities, with the right bets?
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26. INBOUND15
THANK YOU!