The Big Boys

David B. Yoffie, professor of international business administration at Harvard Business School, and Michael A. Cusumano, management professor at the Massachusetts Institute of Technology, have written 21 books between them. Here they apply their combined experience to dissect how exemplary CEOs master the often-contradictory disciplines of strategy and execution. Unsurprisingly, their subjects are Microsoft’s Bill Gates, Intel’s CEO Andy Grove and Apple’s late CEO 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.Steve Jobs

Yoffie and Cusumano appreciate that Gates, Grove and Jobs embraced having a new crisis to deal with every day. The CEOs understood what their competitors and collaborators – the three men interchangeably played both roles for one another – could and might do. They showed equal discipline at recognizing what people who weren’t them couldn’t do. Though many leaders can’t spot – much less exploit – pivotal moments, these CEOs recognized crucial tectonic shifts that changed their industry or parts of it.

That recognition guided their reactions to change; often they led innovative responses that turned future perils into profitable prospects. Yoffie and Cusumano capture turning points in each leader’s career to illustrate his individual genius. The authors extracted five strategic rules from studying how each man acted during crucial moments.

Strategic Rules

Gates, Grove and Jobs knew how to look to the future while never forgetting where they came from. They took big gambles, but not too big, and created platforms and ecosystems for their products. They were not shy about using whatever leverage or strength they had as they built their companies around their personalities, philosophies and methods.

Tougher

Yoffie and Cusumano admire their subjects’ toughness and repeatedly suggest these Übermenschen thrived due to personal qualities others lack. This hero-worship fuels the point of the book, but it soon grows tiresome. These men get the larger-than-life treatment in nearly every work that mentions them. Still, tales of their unrelenting ambition, their conviction that they were tougher than everyone else and their confrontational tactics prove instructive and entertaining.

Gates, Grove and Jobs shared an extraordinary refusal to back down. Each new success made each man feel more confident and unconquerable. Their tough tactics always worked, even on one another. They grew increasingly certain they could overrun anyone they opposed.

The less successful a platform is in terms of broad industry adoption, the greater the incentives for the platform company to innovate it and try something new.David B. Yoffie, Michael A. Cusumano

But the authors raise a crucial distinction: Gates, Grove and Jobs didn’t simply steamroller those they sought to conquer. They also subtly applied leverage. Gates, Grove and Jobs wielded power, but they were too subtle to rely on power alone.

[Bill Gates, Andy Grove and Steve Jobs] were willing to set aside traditional hierarchies in order to get fresh perspectives and new ideas, drive accountability, and gather information about changes in technology, customers or the competition.David B. Yoffie, Michael A. Cusumano

In the early days, Gates hard-balled Jobs continually. In 1985, Gates stopped Apple from creating its own version of BASIC155, known as MacBASIC, which Apple intended to run in the Macintosh. Gates threatened not to renew Apple’s BASIC license, and Jobs backed down. That same year, Apple’s attorneys notified Gates that Windows 1.01 violated Apple’s intellectual property. Gates couldn’t get a clear answer from Apple CEO John Sculley about whether Apple intended to litigate. When Gates threatened Sculley that Microsoft would cease work on its two most popular Mac programs – Word and Excel for Apple. Sculley capitulated.

Quoting Sun Tzu’s The Art of War, Yoffie and Cusumano insist that true battlefield winners are leaders who disempower their enemies without a battle. Gates liked to instill “FUD – fear, uncertainty and doubt” and bigfoot his opponents into strategic errors, simply by announcing upcoming Microsoft offerings that would later prove to be vaporware.

No Win-Wins

When Jobs returned to Apple in 1997, he developed a reputation as an unremitting power player. Jobs didn’t care about generating win-wins. He took everything he could. For example, when Apple launched the iPad, Jobs entered negotiations with book publishers who already had e-book rights deals with Jeff Bezos at Amazon.

Bezos steamrolled publishers, forcing them to offer a uniformly low e-book price. Bezos paid them more for e-books than the sales price he charged readers. He purposefully lost money on e-books because he wanted to sell Kindles. Jobs let publishers set any prices they liked for their e-books in Apple’s iBookstore for the iPad. But they had to give Apple 30% of the purchase price and allow Apple to match any other distributor’s lowest price. That translated into less per book than publishers got from Amazon.

Masters of strategy like Gates, Grove and Jobs need to position themselves and their companies to take advantage of new opportunities as they emerge.David B. Yoffie, Michael A. Cusumano

When HarperCollins balked, Jobs pointed out that Amazon would soon follow suit and offer booksellers only 70% of the consumer price – less than Amazon paid at the time. HarperCollins – and every other publisher – gave in.

Bottomless Cash

The authors explain that Grove changed the game in 1990 by investing $5 billion to manufacture Intel’s Pentium chip. This created a barrier of cash and long-term capital planning no competitor could match. It meant that entering the global semiconductor market would cost at least $1 billion. Each time Grove invested Intel’s bottomless cash in research to create the next new semiconductor, he denied competitive entry into Intel’s markets.

World-Beating Strategies

A glance at the title might make you turn away in anticipation of another rehash of clichés or a too-familiar trudge through the Great Man theory of leadership. Indeed, with these subjects of obsessive reportage, the authors can’t avoid telling tales you’ve already heard. Crucially, they turn both familiar and new episodes from these superstars’ careers into cogent, applicable lessons in leadership, foresight, nimbleness and self-belief. The result is an astute, readable, handy assessment of world-beating strategies.

David B. Yoffie and Michael A. Cusumano also co-wrote Competing on Internet Time: Lessons From Netscape and Its Battle with Microsoft. Michael A. Cusumano’s books include Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Uncertain World; and The Business of Software: What Every Manager, Programmer, and Entrepreneur Must Know to Thrive and Survive in Good Times and Bad. David B. Yoffie’s books include Strategic Management in Information Technology; and Beyond Free Trade: Firms, Governments, and Global Competition.