Strategy Rules: A book review by Bob Morris

Strategy RulesStrategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs
David B. Yoffie and Michael A. Cusumano
HarperBusiness/An Imprint of HarperCollins (2015)

Valuable lessons to be learned from those who “paved an extraordinary path as the first generation of high tech superstar CEOs”

As David Yoffie and Michael Cusumano explain in the Introduction, they had studied Bill Gates, Andy Grove, and Steve Jobs for more than 35 years when they began their collaboration on this book, one in which they share what they learned about three CEOs who “paved an extraordinary path as the first generation of high tech superstars.” However different those three were in many respects, Yoffie and Cusumano identify and discuss five “commonalities” in terms of approach to the essentials of strategy and execution:

1. Look Forward, Reason Back
2. Make Big Bets, Without Betting the Company
3. Build Platforms and Ecosystems — Not Just Products
4. Exploit Leverage and Power — Play Judo and Suma
5. Shape the Organization Around our Personal Anchor

I agree with them: “Gates, Grove, and Jobs owed part of their success to the explosion of activity launched by the invention of the personal computer, the advent of the Internet, and the widespread adoption of digital mobile devices. They were undoubtedly in the right place at the right time…[and] stand out because they achieved and maintained dominance in their industries, even as seismic shifts altered the landscape around them. In the process, they had a lasting impact on their companies, their sector, and their era.” Yoffie and Cusumano devote a separate chapter to each of the “commonalities,” providing an abundance of information, anecdotes, and insights.

The first three chapters examine the basic strategy rules that help drive Gates, Grove, and Jobs to their greatest successes. The next two chapters analyze and illustrate the execution guides that all three followed at the tactical and organizational levels. The Conclusion summarizes what is required of other business leaders to master and execute the five strategy rules. These are among the several dozen passages of greatest interest and value to me, also listed to suggest the scope of Yoffie and Cusumano’s coverage:

o Mastering the Rules of Strategy (Pages 2-9)
o The Three CEOs: A Briefing (9-18)
o Analogies in Game Theory and Chess (26)
o Lessons from the Masters: Look Forward, Reason Back, Part 1 (27-32)
o Lessons from the Masters: Look Forward, Reason Back, Part 2 (58-59)
o Bet Big to Change the Game (63-72)
o Cannibalize Your Own Business (79-85)
o Lessons from the Masters: Make Big Bets, Without Betting the Company (91-92)
o Think Ecosystems, Not Just Platforms (109-115)
o Lessons from the Masters: Build Platforms AND Ecosystems — Not Just Products (128-130)
o Stay Under the Radar (134-139)
o Keep Your Enemies Close (139-143)
o Lessons from the Masters: Exploit Leverage AND Power (162-163)
o Know Thyself — Warts and All (168-174)
o Never Lose Sight of the Big Picture (180-188)
o Lessons from the Masters: Shape the Organization around Your Personal Anchor (197-198)
o The Next Generation: Larry Page, Mark Zuckerberg, Jeff Bezos, and Huateng “Pony” Ma (203-208)
o Beyond the Five Rules (209-216)

One of Yoffie and Cusumano’s notable points is that “complements” to great CEOs have substantial value but “are not substitutes.” Steve Ballmer, Craig Barrett, and Tim Cook “were absolutely essential to the success that Gates, Grove, and Jobs enjoyed. Yet [they] struggled to replace our three CEOs…[who] could have looked for new leaders more attuned to the next generation of technology, customers, and competitors [as GE’s Reginald Jones once did when selecting Jack Welch to succeed him], or encouraged a more competitive process. In any case, the choice of successors should not be about loyalty to the team or to past ways of doing things. It should be about grooming or choosing successors who demonstrate the ability to learn new things, break with the past when necessary, and champion the products, services, and platforms we have yet to imagine.”

Opinions are divided (as they always seem to be) as to whether or not Bill Gates, Andy Grove, and Steve Jobs would be the best choices to succeed Steve Ballmer, Craig Barrett, and Tim Cook as CEO of Microsoft, Intel, and Apple, respectively, in today’s global marketplace. Those present at the creation of a great company are seldom the right persons to serve as its CEO 15-20 years later. I again agree with David Yoffie and Michael Cusumano that all new leaders must discover their own paths forward. “They will need to reshape these powerful organizations around their anchor and lead their companies into yet another uncertain future — through new generations of technologies, customers, and business models.” And let’s also include competitors. New rules and new strategies will be needed. That was certainly true when Jones selected Welch and that will certainly be true when other CEOs are selected in months and years to come.

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