Experimenting different strategic paths: do it the Bill Gates way (HBR)
I took the week-end to catch up on my never ending reading list. I came upon a very interesting article in the Harvard Business Review Working Knowledge section, “Creating Strategy in an Unknowable Universe”, by Eric D. Beinhocker (the article is said to be derived from the author’s last book, The Origin of Wealth).
Eric Beinhocker, a McKinsey & Company senior advisor, makes a point in illustrating, using Bill Gates’ experience, how strategy is the ex-post outcome of the action taken in a uncertain given business environment. There can be no anticipated strategy unless all parameters are frozen, which hardly occurs in today’s fast-changing and flattening world.
Back in 1987, Bill Gates had take action against the maturation of MS-DOS and the rise of graphical user interfaces in most competitor’s R&D labs and..store shelves (ie Apple’s Mac OS).
Facing this what could’ve been an overwhelming competitive threat, Bill Gates, instead of playing the maverick focusing all Microsoft’s resources on what he thought would’ve been the very best option, chose to go for a “portfolio of experiments” – as Beinhocker brillantly put it.
Bill Gates explored 6 differents pathways, the time for him to look at how the market was reacting, slowly divesting from the experiments he saw were fruitless, and then, ex-post, focusing on what would pay off.
Here are the 6 pathways, extracted from Eric Beinhocker´s writings, although I suggest you take 10 minutes to read the full article, since it’s sincerely worth it:
1) “Microsoft continued to invest in MS-DOS”;
2) “Gates and IBM agreed to turn IBM’s OS/2 operating-system project into a joint venture”;
3) “Microsoft held discussions [...] about participating in joint efforts on Unix”;
4) “Microsoft bought a major stake in the largest seller of Unix systems on PCs”;
5) “Microsoft built its position in software for the Apple Macintosh, passing Apple itself, as the leading supplier”;
6) “Gates made major investments in Windows”.
That is a lesson of humility by Bill Gates: only God would’ve known what were the right steps to take before the market decided a few years later. And it looks as if the right decisions often come from humility. That’s what we call “common sense” – unfortunately not so common.
I found this whole little story a great example of why & how experimentation may help decision-making processes. It applies to business, but to many other fields too (diplomacy, love, charity, etc. – to French-readers, here’s a link to an article I wrote almost 2 years ago, advocating for experimenting during business and/or geopolitical negotiations in the Middle East).
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