Mastering Strategy

Book description

How can executives develop their skills as strategists? One good way is to learn from the masters. In a recent book, Strategy Rules: Five Timeless Lessons From Bill Gates, Andy Grove, and Steve Jobs (HarperCollins, 2015), David B. Yoffie and Michael A. Cusumano examine strategy lessons from the careers of the iconic CEOs of Microsoft Corp., Intel Corp., and Apple Inc. MIT Sloan Management Review editorial director Martha E. Mangelsdorf interviewed Yoffie and Cusumano to discuss how Gates, Grove, and Jobs approached strategy. While Yoffie and Cusumano observed that each of the three executives began with their own skills and capabilities, they were all able to learn and grow. In the interview, Yoffie and Cusumano discussed the five important strategy lessons they drew from studying Gates, Grove, and Jobs. 1. Look forward, reason back. While it’s natural for managers who are figuring out what to do to look backward and reason forward, this approach may be less effective than the reverse. Like chess players, Yoffie explained, strategists “need to think several steps ahead towards the end of the game and then reason back to what that means about what they need to do today.” Gates, for example, realized that computers would become commodities and that value would reside in the software. 2. Make big bets, without betting the company. One of Microsoft’s biggest bets, noted Cusumano, was its 1991 decision to break with IBM. It was “a huge gamble,” he said, but by that time Microsoft had lots of other customers. 3. Build platforms and ecosystems, not just products. Cusumano observed that all three of the CEOs learned that platforms had more strategic power than products. “I can’t think of any three CEOs who have clarified our thinking more on that enormously important strategic concept,” Cusumano said. 4. Exploit leverage and power — play both judo and sumo. Yoffie pointed out that great strategists need to be both clever and tough. Clever means “trying to find ways to take advantage of your competitors’ strengths and turn them to your advantage,” he explained. But in addition, “you have to be tough enough to extract as much value as possible in your interactions with other businesses,” without triggering antitrust problems. Shape the organization around your personal anchor. “You want to dive deep into the things you’re really good at, but at the same time stay at a high level and always keep the big picture in mind,” Yoffie said. “You have to know yourself, know what you’re good at, and know your weak spots.”