: A LEADER IN INNOVATIVE TECHNOLOGY

Bill Gates: A Leader in Innovative Technology

Richardo Coccia

Baker College

MGT 451R: Management Styles and Strategies

Tim Martin

July 8, 2008

Abstract

The Microsoft Corporation has been a giant in the software industry for over three decades. The company’s founders, Bill Gates and Paul Allen, put together an operating system for the computer world that ultimately captured the attention of every one on earth. However, it was Bill’s pure genius and leadership qualities that took his software to a level that was unmatched by anyone. Paul was the mastermind behind the hardware that needed Bill’s software to operate effectively.

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Bill Gates: A Leader in Innovative Technology

Everyone in the world wants a computer that is compatible with worldwide technology. Bill Gates is a gigantic leader in that innovative technology field. In spite of being a Harvard drop out, Mr. Gates transformed the revolution of technology into an industry of computer software that is unmatched in recent history.

Gates used the charismatic, transactional, and the transformational styles.

While utilizing his charismatic style, Bill Gates used ethics, morals, self-confidence, enthusiasm, and a passion for creating an empire as well as inspiring his subordinates. As noted in Dubrin (2007), leadership is defined as “the ability to inspire confidence and support among the people who are needed to achieve organizational goals”. (p.2) Bill Gates showed that ability in a way that has been, for the last three decades, unmatched by anyone.

Not only is his mind genius in the creation of software, his leadership at Microsoft Corporation has been the most dignified in recent history. Microsoft has been the world leader for quite some time; however, in these past few years, Gates has opened the door for other companies to make their own software while he has contemplated retirement.

Purpose of Study

This study is being conducted to find out how Bill Gates became a leader of one of the most profitable companies in world history. Plain and simple, Bill Gates was and is a genius, pure genius. His leadership in the technology field will be discussed here and it will come to the conclusion that he was a truly great leader in the computing industry.

Limitations of Study

In today’s society, everyone who owns a computer uses software developed by Microsoft. However, there is some competition by other software companies. This study will be limited to the leadership traits that Bill Gates developed, utilized his leadership abilities, and launched the Microsoft Corporation into a world giant.

Definition of Terms

Terms that will be mentioned will be abbreviated throughout. Examples would be MS-DOS, which means Microsoft Disk Operating System. The definition of BASIC simply stands for Beginner’s All-Purpose Symbolic Instruction Code. Personal Computer will be abbreviated PC. TRW stands for Thompson, Ramo, Woolridge, which is strategically focused on providing products and services with a high technology or engineering content to the automotive and space & defense markets (Lowery, n.d.).

Review of Literature

Bill Gates was born on October 28, 1955. He was born into a very successful and historically rich family. His great-grandfather was a state legislator, his grandfather was a vice-president of a national bank, and his father was a prominent lawyer (Mirick, 1996).

Bill’s parents recognized his academic intelligence in elementary school. They decided to enroll him in a private school named Lakeside, known for its intense academic environment. It was at this school that Bill was first introduced to computers. Lakeside needed to find a way to purchase computer time; the school launched a fundraiser and raised a few thousand dollars to buy computer time. The time for computing they had purchased would have lasted into the next school year. However, Lakeside underestimated the allure this machine would have on some of their students (Mirick, 1996).

Bill Gates, Paul Allen, and a few other Lakeside students would stay in the computer room day and night. They formed what they called the Lakeside Programmers Group (LPG). They would write programs, and

read anything they could find on computing. They even started skipping classes and did not turn in their homework or, turned it in late. Unfortunately for Lakeside, they used up all of the computer time the school had raised the money for (Mirick, 1996).

In 1968, Computer Center Corporation (CCC) opened a business in Seattle that offered both, a computer and computing time at reasonable rates. However, their computers seemed to keep catching “bugs”. These bugs would ultimately slow down the computer’s speed and keep it from working properly. Lakeside and CCC reached a deal that would allow Lakeside’s students to use that computer time (Wallace, 1993, p.27). Gates and his friends did not take long to cause problems with this new computer. However, they caused the system to crash several times and destroyed the computer’s security system. The corporation then banned the students for several weeks. The CCC began to suffer financially in the late 1960’s, and the students (LPG) were then hired to find any bugs and expose any weaknesses in the system. The CCC went out of business in 1970. The LPG now had to find a way to get computer time (Wallace, 1993, p.30). In 1971, Gates and Allen decided to start a company called Traf-O-Data. They built a small computer that was used to measure traffic flow. This computer was a teletype machine that used a tape using only binary numbers one and zero (Dickinson, 1997). This business provided an income of $20,000. TRW started having problems with their operating system. This included the system crashing and viruses. Gates and Allen were then offered jobs to fix the bugs on TRW’s computer system instead of finding them (Wallace, p.49).

Birth of Microsoft

Along with Paul Allen, Bill was very strongly driven to program software to run the operating systems Paul was creating. Bill spent many, many hours and days working, reading, and writing the software. BASIC had already been developed by two professors at Dartmouth College in 1964. Bill decided, along with Paul, to create an adapted version of the program. In 1975, the world’s first micro-computer was developed. It was named the Altair 8800. While already having adapted the BASIC software, Bill decided to contact the owner of that Altair and informed him that he had a program that they needed, even though he and Allen were not really, truly sure that it would work (Dickinson, 1997).

It was Bill’s task-orientation and strong goal achievement that drove him to succeed. After making an appointment with Altair, Bill decided to send Paul to demonstrate what they accomplished. This decision was based on the fact that, although they both were in there early 20’s, Paul looked more mature than Bill due to Paul’s beard. While at Altair, Paul was quite nervous but did not show it. When Paul told the machine to add two plus two, the computer then told them that it equaled four. This is where history started to be made, Microsoft was born. However, Bill wasted no time in protecting his newly found technology. The word Microsoft stands for Micro-computer and software. To enhance the security of Microsoft, Mr. Gates published a letter to hobbyists stating that “piracy prevented good software from being written” (Dickinson, 1997, p.47).

Microsoft already had a license agreement with Altair and Microsoft’s trade name had already been registered (Dickinson, 1997). Bill’s emotional intelligence played a key role in the beginning. His sense for business made him realize that he needed to quickly establish a way of preventing piracy. Piracy

would mean that someone could copy the software and sell it to consumers also. His management of the program initiated his responsibility for himself and his partner Paul. Sending Paul to Altair was very clever. What would the owners of Altair have thought if they saw this 20 year old, looking like a teenager walk in?

Leadership Styles

Lussier and Achua, (2001), identify six leadership styles that are often used when leading organizations: Charismatic, Transactional, Transformational, Strategic, Stewardship, and Servant. Mr. Gates uses the charismatic, transactional, and the transformational styles, and perhaps also the stewardship and servant leader styles to a certain point (Bradley, 2003).

Charismatic Leadership

A charismatic leader is defined as a person who has a purpose, power, and extraordinary determination that makes them different than others (Dubrin, 2007, p.68). One of the keys to Bill’s success was the interpretation he gave while speaking at trade shows. Even going against the norm, he e-mailed his customers in his own name which was unusual for a corporate leader to do. In doing so, it could be said that he was a quality leader in this technology. He just may have set a new standard for other corporate leaders by this inclination. Mr. Gates was a visionary with superb communication skills, had self-confidence and moral conviction about the direction of his company, that he was able to inspire trust in customers and employees, that he had high energy and a self-promoting personality (Bradley, 2003).

He had a vision when he started developing software. “We started with a vision of a computer on every desk and in every home”, he stated. (Gates, as cited in Bradley, 2003) “A combination of the PC and the Internet is making news and information travel faster and more freely than ever before, helping to open up closed economies and bring democracy to repressive nations” (Gates, as cited in Bradley, 2003, p.7).

Transactional Leadership

According to Lussier and Achua (2001), “Transactional leadership seeks to maintain stability within an organization, through regular economic and social exchanges that achieve specific goals for both the leaders and their followers”. (pp. 383,384) According to Mr. Gates, “Grants of stock options are a central part of our corporate culture. They are a mechanism that permits Microsoft employees to share in both the risks and rewards of our business.” This is a classic example of transactional leadership, exchanging tangible rewards for performance. It seems clear that Mr. Gates used this leadership style as a foundation upon which to build the outstanding corporate performance of Microsoft. (Lussier & Achua, 2001)

He believed in his software so adamantly, he sold private shares of stock in Microsoft to only his employees. In doing so, he believed that his employees would work very hard to achieve the company’s goals. And they did. They worked just as hard as he did. In 1986, Microsoft stock went public. This meant

that Microsoft employees could sell their shares of stock for cash. This incorporated instant millionaires among several of Bill’s employees. Worried about how the effect would change his company, those several millionaires continued to work every day just as Bill did (Lesinski, 2006). He knew then that this leadership style was working very well.

Transformational Leadership

According to Dubrin (2007), “a transformational leader is one who brings about major, positive changes by moving group members beyond their self-interests toward the good of the group, organization, or society”. (p.84) In other words, Bill had employees think “outside the box” in order to have them stay focused on the creation of software. In raising Bill’s employees’ awareness of where Microsoft wanted to go, Bill made them all aware of the importance and values of certain rewards. This is to include what they needed to do in order to accomplish the task. Even if one were to attribute some of the growth of Bill Gates’ wealth and the success of his company to luck, good market timing, or even questionable business practices, it is clear that from the very beginning, his focus was on building a company that defied conventional wisdom (Bradley, 2003).

In an article entitled “Introduction: Inside Out” (2000), Gates spoke about what Microsoft had accomplished in the last two and a half decades. With all of the myths that people thought a PC could not do, Gates was determined to prove them wrong, and did. In the beginning, both he and Allen were very ambitious. However, to their astonishment, neither expected that their ideas would become such an important role in the global economy. Not to mention leading an industry that was vastly becoming a phenomenon (Bradley, 2003).

Stewardship and Servant Leader Styles

Stewardship is an employee-focused form of leadership that empowers followers to make decisions and have control over their jobs (Bradley, 2003). In a way, this form of leadership goes along with transactional leadership. Bill Gates accomplished this feat by letting Microsoft’s employees buy into the company. Once several of them became millionaires, they decided to keep working at Microsoft even though they did not need the money.

Servant Leadership is leadership that transcends self-interests to serve the needs of others, by helping them grow professionally and emotionally (Bradley, 2003). Mr. Gates’ thought process was able to fill this philosophy of leading change that benefits others.

He wanted children to grow up to where technology was empowering. He expected that technology to enrich learning and to improve their way of life. While being committed to seeing this through, he stated that “in many ways it is more challenging than the hardest software problem”. (Gates, as cited in Bradley, 2003, p.4) His thought process to most is that of a pure genius. He believed that you cannot throw money and technology at problems and expect them to go away. A person has to

think very hard to come up with ways to increase the effects that would become most beneficial. To make substantial changes, a person needs to have a long-term approach. (Bradley, 2003)

Leadership Strategies

Lessons Learned

In his book entitled “The Road Ahead” (1995), Bill Gates talks about some lessons he learned about the computer industry. He stated that “success is a lousy teacher; it seduces smart people into thinking they can’t lose” (p. 35). Some mistakes people make in business are what Bill calls “positive and negative spirals, the necessity of initiating rather than following trends, and the role of compatibility and the positive feedback it can generate” (p. 36).

A positive spiral is when you have a hot product and investors notice and willingly invest their money. Unfortunately, there are companies that fall into negative spirals. This is when companies start to lose market share or deliver one bad product. When this happens, the press and analysts thrive on this type of news and begin accusing those who are responsible for mismanagement (Gates, 1995). He knew that he had a hot product and the spiral effect would just go up.

As far as being compatible within industry, Ken Olsen, founder of Digital Equipment Corporation (DEC), had designed a very large computer in the 1960’s. After turning DEC into a $6.7 billion company in the late 1960’s, Olsen’s vision faltered. According to Gates (1995), “part of Olsen’s legend is that he is now famous for repeatedly, and publicly, dismissing the PC as a passing fad; after years of innovating, he missed a big bend in the road” (p. 37).

Hiring the Best Talent

Bill Gates was very strongly driven to succeed. While he talks about the lessons he learned from the industry as mentioned before, he was determined not to continue toward the trends others have made. Bill’s adaptability toward his task orientation is a good example. Microsoft recruited nothing but the best programmers it could find. Microsoft looked for students at every major university in the United States. He believed that the recruitment of talented software engineers was one of the most critical elements in the software industry. These students were at the top of their class in computer programming.

Dearlove (2003), in an article entitled “Leadership: the Bill Gates Way”, talks about the way Gates got Microsoft to excel. What he looked for in the recruits was “the capacity to grasp new knowledge quickly, the ability to ask probing questions, and a deep familiarity with programming structures”. (Dearlove, 2003, p.5) Although a great number of potential recruits applied for jobs at Microsoft, Gates assumed that the best talent would never apply directly. Consequently, Microsoft's HR managers had to hunt for the best talent and offer them a job (Dearlove, 2003).

Market Thrust

Bill Gates met with a lot of Microsoft’s customers. He mastered the art of making deals with them. Basically, in those meetings, he would get them to purchase a significant amount of software and give

them a lower price for purchasing a large quantity. In the purchase of the DOS, he paid a very little amount, and took that operating system to new heights. The DOS was actually the key in the development of software. His own predictions on future trends were beyond anyone’s way of thinking. He took his products while in the process of development, and put them on the market at the right times (Dearlove, 2003).

The Criticism

Even though Bill Gates received praise from analysts, they also gave him some criticism. Some critics believed that Microsoft was not an innovative company. Even though Bill Gates did not invent software, he designed software in order to satisfy a customer’s needs (Dearlove, 2003). The critics also argued that the market share Microsoft benefited from selling their software was overwhelming to the innovation of software. Not only did Microsoft lead the market in software, their standards provided a way that businesses can succeed (Dearlove, 2003).

Even though Bill was criticized, he overlooked that obstacle and kept his focus on the task at hand. A good leader can always solve conflict. Bill Gates simply shrugged his shoulder against said criticism. In anyone’s mind, he approached that conflict with the simple solution to overlook what was said and put it behind him.

The Leader

Gates transformed Microsoft from a $1 million company in 1978 to a market leader in the software industry with revenues of $28.37 billion in 2002. Even though Microsoft was the market leader, Gates felt that the company should not become satisfied where it was at, and that it should constantly reinvent itself (Dearlove, 2003). He used his charismatic charm and leadership styles to have people believe that they could get the job done, while following his adamant lead.

Employee Experience

While conducting this research, it was astonishing to find an actual article on one of his former employees commenting on the way Bill handled himself as the Chairman at Microsoft.

Incorporated Magazine columnist Joel Splosky (2008), described his experience back in 1992, when he was a program manager for Microsoft’s Excel software; and how Bill Gates tried to rattle him in a meeting. “Back then, they were called BILLG reviews; which was when Bill went over every major new software feature personally” (p. 72). Splosky’s job was to come up with a new programming system so users could automate the Excel software. The day before Joel’s review, he was instructed to send a copy containing specifics of this automation to Bill’s office. Joel states: “I still had to tackle details to figure out if Excel’s internal date and time functions were compatible with BASIC” (p. 72). According to Joel (2008), he found that all of the dates were the same assigned numeric code. However, he became confused when he went back to the turn of the last century. Excel and BASIC was one digit apart in the binary code. The binary code is simply an arrangement of numbers that a computer needs to initiate

certain letters to become words. After consulting with a long time Excel programmer, Joel figured it out. He found that the reason for the different numbered codes, Excel repeated March 1, 1900 twice because that year was a leap year and the calendar showed February 29, 1900. (Splosky, 2008)

Joel was now ready for his “BILLG review”. Seeing Bill for the first time made him a little uncomfortable. Especially when he saw that his specifications had writing on the margins. This led Joel to believe that Bill had read the whole thing. Bill started off by asking three simple questions which Joel had no problem answering. (Splosky, 2008)

All of a sudden, Bill asked a tough question to make sure Joel was on top of it:

I don’t know you guys, is anyone really looking into all of the details of how to do this? Excel has so many date and time functions, is BASIC going to be able to coordinate the same functions. Were the date and time functions compatible? (p.72)

Joel then informed Bill that the date and time functions were compatible except for January and February 1900 because that was a leap year. Bill then acknowledged Joel’s good work and left. There was a moment of silence. This was due to the question counter was at only four. Joel’s colleagues were astonished. He was told that Bill’s questions try to get you to a point where you don’t know, and then Bill will yell at you for not knowing. Joel had this in hand though. At that time, the four questions were the lowest Joel’s colleagues had ever seen (Splosky, 2008).

Bill Gates was a very determined leader to succeed. At these so called reviews, he would really make the employees think real hard to answer the questions he was asking. If they did not know the answer to a question, Bill would get very adamant and tell the employee to work harder to find the solution.

Discussion

Bill Gates really applied his genius to make Microsoft the largest technological organization in the world. He utilized his leadership styles mentioned earlier to their fullest extent. Even though Paul Allen was his partner, it was Bill’s way of thinking and the lessons he learned from other corporate executives that drove him to the top.

Review of Findings

Bill Gates was a charismatic and very influential leader in innovative technology. He worked day and night, hired the best talent, and marketed his product that was unmatched by anyone in the industry. Plain and simple, Bill knew how to get attention from people. His way of interpretation on how the software would work and how the audience could benefit from the software was unmatched. His task orientation toward the corporation’s success was conducting a transactional leadership approach. In letting his employees purchase shares of stock in the company was a very wise decision. His

transformational leadership style set out to prove, and did prove that all of the myths about the not known capabilities of the PC in the beginning was overrated (Bradley, 2003).

When this study was started, everybody knew who Bill Gates was and how wealthy he became. The task was to find out why and how he did it. Finding out why is evident. Everyone wants to be able to not have any money problems. He definitely did that and beyond. To find out how was the challenge. There was quite a lot of research to be done and at last, it is complete. Searching for the right information was the biggest challenge. After all of the research, the reading and writing, it is conclusive that Bill Gates was a very effective leader in Microsoft, and the world of technology due to his commitment, for people have an easier way to communicate, and to do their work easier than with the typewriter. That being said, the typewriter is still today, a very integral part of any computing system. Without the “keyboard”, (as it is now called) how would a person operate a computer?

Interpretation/Analysis of Findings

It is now clear that Bill Gates took a computer program that was developed in 1964, adapted it, and created a technology that everyone wanted and needed, despite what the critics have said. Even if the BASIC was there, where would the world be if no one decided to do what Bill did? This criticism is just plain jealousy. There is basically a PC on every desk in every home in this day and age. It is all owed to Bill Gates. In order to show this man’s humility, after 33 years, he has now retired from Microsoft. He is now focusing on his and his wife Melinda’s foundation which has something to do with less fortunate children and; computers of course.

Summary and Conclusions

From his days in Lakeland school, Bill Gates was driven to succeed in technology. He spent many days and nights learning software and was determined to make this software compatible with the PC. His leadership styles are very well thought of. Taking care of his employees was the key to his success. His employees trusted him, and usually hung on his every word. This man took $20,000 and turned it into billions.

Although this paper sums up the leadership styles of this icon, we can assume the next step would be to follow his proceedings with his foundation. Bill Gates is a very remarkable leader. He did this while utilizing empathy, ethics, and morals. This is what a leader must do in order to accomplish their organizational goals. In a nut shell, Bill Gates was and is a genius, pure genius.

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