Learn From Bill Gates’ “Greatest Mistake Ever”

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Bill Gates would have earned by his own estimate a $400 billion return on his educational investment had he taken the Device Platforms & Business Models course (or its predecessors) over a decade ago and applied unbiased, rigorous and structured strategic thinking to identify a more promising path for Microsoft in mobile:

“In the software world, particularly for platforms, these are winner-take-all markets. So the greatest mistake ever is whatever mismanagement I engaged in that caused Microsoft not to be what Android is. That is, Android is the standard non-Apple phone platform. That was a natural thing for Microsoft to win. It really is winner take all. If you’re there with half as many apps or 90 percent as many apps, you’re on your way to complete doom. There’s room for exactly one non-Apple operating system and what’s that worth? $400 billion that would be transferred from company G to company M.”

This brings to mind another Bill Gates quote: “Success is a lousy teacher.”

Unfortunately, it appears failure doesn’t appear to be a good teacher, either.  

Articulate the specific issues revealed through the above quote that suggest even if Bill Gates had the opportunity for a “do over,” Microsoft would still fail in mobile.  How is Bill Gates misguided in his approach to strategic thinking?

And Bill Gates is not alone.  Identify the failures in strategic thinking in the following statements:

Here’s a quote from Steve Ballmer, Gates’ successor and former CEO of Microsoft:

“I would have moved into the hardware business faster and recognized that what we had in the PC, where there was a separation of chips, systems and software, wasn’t largely gonna reproduce itself in the mobile world.” 

And a quote from Paul Otellini, former CEO of Intel:

Even Otellini betrayed a profound sense of disappointment over a decision he made about a then-unreleased product that became the iPhone. Shortly after winning Apple's Mac business, he decided against doing what it took to be the chip in Apple's paradigm-shifting product. 

“We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we'd done it... The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought... The lesson I took away from that was, while we like to speak with data around here, so many times in my career I've ended up making decisions with my gut, and I should have followed my gut... My gut told me to say yes.” 

This exercise is not merely of historical value or a purely intellectual pursuit.  The takeaways of key participants from the past impact not only their own future behavior but also influence the expectations and actions of everyone else going forward.  Misinterpretations, biases, and sloppy strategic thinking have huge implications for the future.