The popular myth is that Bill Gates is a visionary. He foresaw his MS-DOS operating system as a goldmine, and he tricked IBM, the biggest computer company on earth, into letting him retain the copyright. Microsoft software still dominates the desktop more than 30 years after Gates helped launch the personal computer revolution.
This story fits with the widely-held notion that coming up with a “big idea” is what it takes to accomplish a lot, and become very wealthy.
Though most people I surveyed for books, Business Brilliant and The First Habit (click here to get it for free!) also hold this belief, an important subset do not. The most successful, the ones who have become enormously wealthy, know better. They say that success requires extraordinary execution on an ordinary idea.
Indeed, if you look more closely at the details of Bill Gates’ entrepreneurial life, you’ll find it supports the latter point, too.
Gates took Microsoft to the top by executing brilliantly, and always in service of other people’s visions, never his own. By parlaying his way through a series of ever-bigger business deals–all with fairly ordinary products–he went from zero to billions in less than a decade.
Here are the three critical ways Bill Gates aced execution:
Rather than merely innovating or dreaming, Gates took a disciplined approach toward software as a potential source of business opportunities.
He and his partner Paul Allen wrote the first version of Microsoft BASIC just to get in on the ground floor with a pioneer maker of home-built computer kits. Gates quit Harvard and moved to New Mexico to work with the company, named MITS, hoping to make Microsoft BASIC an industry standard. A few years later, Gates and Allen made similar moves to get close to Digital Research, then the leading maker of the most popular PC operating system. They even marketed a translator that allowed Digital Research software to work on Apple computers, as a strategic move to ride on Digital Research’s coattails.
Microsoft’s ties to Digital Research led directly to its big opportunity, with IBM. When IBM couldn’t get Digital Research to provide an operating system for IBM’s new PC project, Gates was there to volunteer for the job. It didn’t matter that Microsoft had no expertise in operating systems.
Strategic positioning, as well as a little luck–not some “big idea”–gave Gates the opportunity to make billions with MS-DOS for IBM.
Gates was never too proud to be the second banana. Like a true entrepreneur, Gates saw the “structural holes” in the personal computing marketplace and moved in to occupy them, always in a subordinate spot to the big players.
First Gates positioned Microsoft as the junior partner to the pioneering MITS, and then served in a similar junior-partner role with industry leader Digital Research. The little-known version of Microsoft’s marriage to IBM is that Gates started out as an ardent matchmaker between Digital Research and IBM. Gates eagerly tried to bring the two giants together, content to be the second-class software in a marriage between big players. But when Digital Research and IBM couldn’t tie the knot, Gates stepped into the void, fearing that IBM might quit the PC project altogether. No matter what, Gates respected IBM’s potential power in the PC market and wanted to be a part of it.
The irony is that by the time Gates had gone on to become the richest man on earth, the first two of his “senior” partners were long gone and forgotten. The third, IBM, stopped making PCs in 2004.
And, by the way, Gates never duped his partner IBM into letting him keep the licensing rights to MS-DOS. IBM’s policy was to not hold the rights for any product developed outside its doors, for fear of legal liability. Gates got the same deal on licensing that IBM would have given to Digital Research or anyone else.
Gates always helped his partners succeed on their terms, not his own. With MS-DOS, timing was IBM’s paramount concern. Missed deadlines might cause IBM higher-ups to pull the plug on the PC project, but Microsoft had only a few months to produce the software. So Microsoft took a quick-and-dirty shortcut. It bought the rights to a PC operating system made by another Seattle software company, and built MS-DOS on top of it. Gates later admitted it would have taken a year for Microsoft to create MS-DOS from scratch.
IBM was notoriously hard on its vendors. During the development phase of MS-DOS, buttoned-down IBM executives hounded Microsoft employees on security breaches and little procedural details. It drove Gates’ team members nuts and they compared working with IBM to “riding the bear.” But Gates persisted and told his team to suck it up. MS-DOS was delivered on time.
At first, the software was so buggy that IBM engineers had to rewrite the entire thing. But the point is that Gates did what the partner needed. It didn’t matter if MS-DOS was a shoddy operating system based on someone else’s design. It came in on time and preserved the project. Rather than vision, and certainly not pride of workmanship, Gates was all about execution.
That’s the Gates method: Act strategically, partner powerfully, and “ride the bear.”
You too can look for the structural holes in your industry, work with the strongest partners that will have you, and do everything you can to help those stronger partners succeed.
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