On the surface, Bill Gates, Andy Grove, and Steve Jobs seem like radically different people. You could say Gates was a geek from a privileged background who dropped out of college; Grove was a Holocaust survivor who became an engineer with a PhD; and Jobs was an orphan with more of an artist's or designer's mentality.

But as strategic thinkers, they shared several traits--traits that helped them build three of the most extraordinary companies of the past 50 years.

In their 2015 book, Strategy Rules, David B. Yoffie of Harvard Business School and Michael A. Cusumano of the MIT Sloan School of Management compare the strategic approaches of all three leaders. This week at HubSpot's INBOUND conference, Cusumano distilled several lessons still relevant to founders today.

The building of an extraordinary company.

One of the most important traits these entrepreneurs shared was an ability to "look forward and reason back," Cusumano explained. This trait--the "reason back" part, in particular--is what separates them from ordinary tech entrepreneurs. It's not uncommon for tech entrepreneurs to speculate with some accuracy about what the next five, 10, or 20 years will look like. That's the "look forward" part. But if you can "reason back"--linking your vision of the future to concrete actions in the present--then you have a chance to build a company with long-term impact. 

How did Gates, Grove, and Jobs look forward? In three ways:

  • Extrapolation. This is looking forward based only on what you and others know to be true in the present.
  • Interpretation. This is taking a stab at what all of the knowns--all of the data--really mean or signify for the future.
  • Point of view. This is narrowing your look forward to the vantage point of your particular company, the one you're running or the one you're thinking of starting. What will the future look like for your business, and for your market, over the next 10 years? 

Once you've looked forward in all three of these ways, Cusumano says, you should create a vision statement summarizing your look forward. It should be simple, clear, and actionable. "You need to take a stand and make a judgment," says Cusumano. A Microsoft company filing from 1975 reveals a great template to follow: "a computer on every desk and in every home running Microsoft software."

That's the "look forward" part. The more challenging part is to "reason back." You need to ask yourself: What are the specific decisions my company needs to make today? What about six months from now? And six years from now?

Brilliant decisions.

One of Gates's early decisions was to focus only on software. In the 1970s, that was risky. It was a hardware-filled world. Microsoft co-founder Paul Allen wanted to sell both hardware and software, the way most computer companies (such as IBM and DEC) did at the time. 

But Gates, relying on Moore's law, felt that the power to grow exponentially and dominate lay in software. He saw that microprocessing power was doubling every two years, and believed it was simply smarter--at once safer and the path to more exponential growth--to bet on software.

As for Jobs, his vision, as early as the 1970s, was to make a computer as easy to use as a typewriter or toaster. You can see the way he "reasoned back" on this vision in early Apple products like the Apple II (1978) and the Macintosh (1984). Like a toaster, both of those computers came out of the box ready to use. In the 1970s and 1980s, that was a key point of differentiation for Apple. Anyone over the age of 40 can recall a time when you had to manually load a non-Apple computer with most of the software you needed to use it.

As for Grove, he "reasoned back" in a presentation to the Intel board in 1991. As part of a strategic, long-range planning session, Grove argued that the company, in the future, should not build Intel-branded PCs--instead, it should only focus on microprocessors.

You can see how Grove's decision here was comparable to the one Gates had made earlier about focusing only on software. Both leaders were betting heavily on Moore's law, and both of them were narrowing their focus to a niche where their strategy--if it worked--would allow their company to grow exponentially and become a dominant market leader.

Today, Microsoft, Intel, and Apple remain powerhouse companies. That's in large part because of the strategic foresight--and ability to "reason back"--of three leaders whose entrepreneurial legacy stands as strong as anyone's.

Published on: Sep 11, 2015