How Leadership Style and Characteristics Affect Business Success and Failure –
“Bill Gates of Microsoft and Steve Jobs of Apple”
Table of Content
1
Introduction
2
2
Review of the Literature
3
Background and Overview
3
Characteristics of Effective Leader
4
Characteristics of Transformational Leaders
8
3
Research Methodology
13
Microsoft and Bill Gates
14
Apple Computer and Steve Jobs
16
4
Data Presentation and Analysis
19
5
Conclusion
24
6
References
25
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Introduction
While the debate over nurture versus nature continues, it is clear that some
people appear to be “natural-born” leaders who are capable of motivating others to
achieve far more than others. These leaders seem to possess the right combination of
personality, vision and motivational skills and can use them to their maximum
advantage in a wide variety of organizational settings. These leaders also have an
enormously positive impact on an organization’s bottom line, and it is not surprising that
an increasing amount of research in recent years has been devoted to identifying what
characteristics these leaders share and what they do that is so fundamentally different
from ineffectual leaders. The purpose of this study is to provide an overview and
background concerning leadership and its importance in helping an organization
achieve its goals and improve its profitability, and to examine how two such leaders, Bill
Gates of Microsoft and Steve Jobs of Apple fame, have used their leadership skills to
guide their respective organizations to the success they enjoy today. To this end, a
critical review of the peer-reviewed and scholarly literature is followed by case studies of
these two business leaders and their companies. A summary of the research and
salient findings are presented in the conclusion.
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Review of the Literature
Background and Overview. Because of its importance to the survival of virtually
all organizations, leadership has been the focus of an intensive amount of study in
recent years. Indeed, the 20th century witnessed the emergence of various leadership
styles, all of which were intended to improve the interaction between management and
employees with a view to motivating everyone to superior performance and results.
Over a decade ago, industry analysts recognized that the leadership talents of two
individuals in particular were going to model the way for others: “It is the wizards of the
computer companies -- Steve Jobs of Apple and William Gates of Microsoft who are
looked to as harbingers of a new and leaner American competitive stance” (Gardner &
Laskin, 1996 p. 144). Since that time, both Gates and Jobs have been referred to in less
than “harbinger” terms by many critics, but the fact remains these leaders have
managed to steer and guide their organizations through some tough economic times to
emerge as robust and renewed companies with innovative products and services that
continue to enjoy large shares of their respective markets.
By any measure, an individual’s leadership style can make or break a company.
It just makes sense: if a leader recognizes that something is wrong and takes action to
correct it, this is an opportunity gained rather than a mistake. Organizations that have
effective leaders can learn from them and this is one of the essential qualities of the
individuals that emerge as top-notch leaders in their fields today. Throughout history,
though, there have been examples of people that have modeled the way for others.
These people seem to just know what needs to be done and how best to motivate
others to help them achieve it. In recent years, these types of leaders have often been
referred to as “transformational” leaders, because, well, they somehow manage to
“transform” an ineffectual organization into an effective one. According to Avolio and
Bass (2002), “Transformational leaders motivate others to do more than they originally
intended and often even more than they thought possible. Such leaders set more
challenging expectations and typically achieve higher performances” (Avolio & Bass,
-3-
2002, p. 1). Therefore, it can be reasonably posited that both Jobs and Gates have
achieved this level and style of leadership by motivating their followers to achieve
beyond their own expectations.
In reality, though, and despite the importance of effective leadership to the
success of any type of organization, these broad conceptualizations of leadership
according to various styles and traits are fairly recent in origin. For instance, Storey
(2004) reports that prior to the 1980s, “leadership” and “management” were largely
considered in the same context: “They [leadership and management] were regarded as
either interchangeable or as extensively overlapping activities. When 'leadership' was
studied or taught it was usually regarded as a small sub-set of management and the
focus was on 'influencing' of small groups” (p. 8). During the past few decades, though,
an increasing number of studies have examined various leadership styles to identify
what works and why, and these issues are discussed further below as they relate to
transformational and charismatic leadership styles that appear to apply to both Jobs and
Gates alike.
Characteristics of Effective Leadership.
Because every individual and organization is unique, it can be misleading to
describe every type of leader as possessing specific characteristics, but studies have
shown that many transformational leaders possess some commonalities that are
important for the purposes of this analysis. According to Sosik (1998), “Leadership
scholars have identified transformational leaders as highly effective in enhancing group
creativity. Transformational leaders use intellectual stimulation, promote consideration
of different viewpoints, and inspire collective action to promote group creativity” (p. 112).
Much of the seminal work on transformation leadership was conducted by Bernard M.
Bass, who based his work on the 1978 book Leadership by Burns wherein the author
defined transformational leadership as occurring when one or more persons “engage
with others in such a way that leaders and followers raise one another to higher levels
of motivation and morality” In other words, both leader and followers -- as well as the
social system in which they function -- are transformed” (quoted in Rosenbach & Taylor,
2000, p. 52). According to organizational leadership guru Bass (1998), transformational
leadership is actually an extension of what has been termed “transactional leadership”:
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“Transactional leadership emphasizes the transaction or exchange that takes place
among leaders, colleagues, and followers. This exchange is based on the leader
discussing with others what is required and specifying the conditions and rewards these
others will receive if they fulfill those requirements” (p. 4). As to the various traditional
transactional, or managerial, aspects of leadership, Bass further identified three
subcategories that were comparable to those identified through studies conducted by
earlier researchers, as noted below:
1. Laissez-faire. This component refers to a tendency for the leader to abdicate
responsibility toward his or her followers, who are left to their own devices.
Laissez-faire leadership really indicates an absence of leadership.
2. Contingent reward. Frequently termed reward-and-punishment or simply carrotand-stick leadership, this approach means that the leader rewards followers for
attaining performance levels the leader had specified. Performance-contingent
strategies are by no means completely ineffective; in general, they are
associated with both the performance and satisfaction of followers.
3. Management by exception. This type of transactional leadership involves
managers taking action only when there is evidence of something not going
according to plan. There are two types of MBE: (a) active and (b) passive; the
former describes a leader who looks for deviations from established procedure
and takes action when irregularities are identified. The passive form of this type
describes a tendency to intervene only when specific problems arise because
established procedures are not being followed (Rosenbach & Taylor, 2000, p.
53).
It can also reasonably be argued that almost any type of leader – notwithstanding
a pigeonholed definition as to style – engages in these types of leadership processes
from time to time as circumstances dictate, but there are some specific characteristics
involved in each leadership style that researchers point to in an effort to distinguish one
from the other according to a preponderance of the leadership style used. According to
Rosenbach and Taylor, “Each of these is different from the forms of transactional
leadership just described, because there is no tit-for-tat, no reward (or punishment) from
the leader in exchange for followers' efforts” (p. 53). As Erez, Kleinbeck and Thierry
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(2001) caution, though, “There is some question as to the mechanisms by which
transformational leadership produces beneficial organizational outcomes, if it does” (p.
20). In order to determine whether such leadership styles can in fact help organizations
better achieve their goals, Miner (2002), that in a traditional transactional leader:
1. Recognizes what it is people want to get from their work and tries to see that they
get what they want if their performance justifies it;
2. Exchanges rewards and promises of reward for their workers’ effort;
3. Is responsive to their immediate self-interests if they can be met by their getting
the work done.
By contrast, transformational leaders tend to motivate people to do more than
they had previously expected to do by:
1. By raising their level of awareness, their level of consciousness about the
importance and value of designated outcomes, and ways of reaching them;
2. By getting their workers to transcend their own self-interest for the sake of the
team, organization, or larger polity; and,
3. By altering their need level on Maslow's (or Alderfer's) hierarchy or expanding
their portfolio of needs and wants (Miner, 2002 p. 741).
Therefore,
transformational
leadership
theory
takes
into
account
and
incorporates such hierarchy of needs and prepotency concepts as these, as well as the
concepts of self-actualization; other processes, though, may also be engaged through
transformational leadership styles (Miner, 2002). Furthermore, there are a number of
similarities and overlaps between such leadership theories that do not prevent their
being characterized as transformational in nature. For example, “Most leaders behave
in both transactional and transformational ways in different intensities and amounts; this
is not an entirely either-or differentiation” (Miner, 2002 p. 743).
One of the more interesting issues to emerge from the research is the need for
transformational leaders to teach what they know to others. Certainly, it would be
reasonable to assume that most leaders got where they are by virtue of some innate
skill or ability within an organization, and while it would likely be easier – and faster -- for
them to simply do some things themselves, teaching others how to become effective
leaders in their own right is a fundamental responsibility and effective leaders and
-6-
serves to differentiate a truly transformational leader from others leadership styles:
“True transformational leaders raise the level of moral maturity of those whom they lead.
They convert their followers into leaders. They broaden and enlarge the interests of
those whom they lead. They motivate their associates, colleagues, followers, clients,
and even their bosses to go beyond their individual self-interests for the good of the
group, organization, or society” (Avolio & Bass, 2002, p. 2). Beyond these distinctions,
there is also a clear emphasis on how transformational leaders pay close attention to
their follower’s needs as well: “Transformational leaders address each follower's sense
of self-worth in order to engage the follower in true commitment and involvement in the
effort at hand” (Avolio & Bass, 2002, p. 2).
Furthermore, while many believe that some leaders are born and others are
made, there is some indication in the research that people can become transformational
leaders – or assume some of these virtues – if the situation calls for this type of
leadership style. In this regard, Burns (1978) suggests that transformational leadership
takes place when a leader engages with a follower in such a way that both parties are
raised to higher levels of motivation and morality with a common purpose. These
heightened levels of motivation among followers toward an increased level of
performance were also explained by the concepts evaluated by Shamir, House, &
Arthur (1993) wherein they maintained that one of the main reasons transformational or
charismatic leaders can increase followers' motivation to perform beyond initial
expectations is that followers accept and internalize a vision articulated by their leaders.
Likewise, Bass (1985) conceptualized transformational leadership as being the type of
leadership that is able to raise levels of awareness about the importance and value of
designated outcomes and promotes development and vision in subordinates. According
to Maher (1997), transformational leaders tend to exhibit charisma, use symbols to
focus employee efforts, encourage followers to question their own way of doing things,
and treat followers differently but equitably based on their followers’ needs.
Factor studies have identified a number of characteristics that transformational
leaders share in common. According to Bass (1998), transformational leadership has
four components. For example, Bass (1998) reports that, “Transformational leaders do
more with colleagues and followers than set up simple exchanges or agreements. They
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behave in ways to achieve superior results by employing one or more of the four
components of transformational leadership” (p. 5). A description of the four
transformational leadership characteristics is provided in Table 1 below.
Table 1.
Characteristics of Transformational Leaders.
Characteristic
Description
Charismatic Leadership
Leadership is charismatic such that the follower seeks to
identify
with
the
leaders
and
emulate
them.
Transformational leaders behave in ways that result in
their being role models for their followers. The leaders are
admired, respected, and trusted. Followers identify with
the leaders and want to emulate them; leaders are
endowed by their followers as having extraordinary
capabilities, persistence, and determination. The leaders
are willing to take risks and are consistent rather than
arbitrary. They can be counted on to do the right thing,
demonstrating high standards of ethical and moral
conduct.
Inspirational Motivation
The leadership inspires the follower with challenge and
persuasion providing a meaning and understanding.
Transformational leaders behave in ways that motivate
and inspire those around them by providing meaning and
challenge to their followers' work. Team spirit is aroused.
Enthusiasm and optimism are displayed. Leaders get
followers involved in envisioning attractive future states;
they create clearly communicated expectations that
followers want to meet and also demonstrate commitment
to goals and the shared vision. Charismatic leadership
and inspirational motivation usually form a combined
single factor of charismatic-inspirational leadership.
Intellectual Stimulation
The leadership is intellectually stimulating, expanding the
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Characteristic
Description
follower's use of their abilities. Transformational leaders
stimulate their followers' efforts to be innovative and
creative by questioning assumptions, reframing problems,
and approaching old situations in new ways. Creativity is
encouraged. There is no public criticism of individual
members' mistakes. New ideas and creative problem
solutions are solicited from followers, who are included in
the process of addressing problems and finding solutions.
Followers are encouraged to try new approaches, and
their ideas are not criticized because they differ from the
leaders' ideas.
Individualized
Transformational leadership is individually considerate,
Consideration
providing the follower with support, mentoring, and
coaching. Transformational leaders pay special attention
to each individual follower's needs for achievement and
growth by acting as coach or mentor. Followers and
colleagues are developed to successively higher levels of
potential. Individualized consideration is practiced when
new learning opportunities are created along with a
supportive climate. Individual differences in terms of
needs and desires are recognized. The leader's behavior
demonstrates acceptance of individual differences (e.g.,
some employees receive more encouragement, some
more autonomy, others firmer standards, and still others
more
task
structure).
A
two-way
exchange
in
communication is encouraged, and "management by
walking around" work spaces is practiced. Interactions
with
followers
are
personalized
(e.g.,
the
leader
remembers previous conversations, is aware of individual
concerns, and sees the individual as a whole person
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Characteristic
Description
rather than as just an employee). The individually
considerate
leader
listens
effectively.
The
leader
delegates tasks as a means of developing followers.
Delegated tasks are monitored to see if the followers need
additional direction or support and to assess progress;
ideally, followers do not feel they are being checked on
Source: Bass, 1998, pp. 4-5.
All of these types of behaviors have been identified to some extent in the extant
creativity literature as being essential ingredients to promoting creativity in the
workplace (Sosik, 1998). In fact, this author emphasizes that, “Transformational
leadership also is expected to be positively associated with creativity because of
individualized consideration promoted by a transformational leader. By encouraging
consideration and recognition of each group member's viewpoint and ideas,
individualized consideration leads to an expanded source of knowledge and information
for group members to use in solving problems” (Sosik, 1998, p. 113).
As noted throughout the scholarly literature on leadership, the terms
“charismatic” and “transformational” are usually applied in a synonymous fashion;
however, as Storey (2004) points out, it is possible to differentiate a truly charismatic
leader from a transformational leader by applying six specific elements that concern
charismatic leaders only:
1. Charismatic leaders are heroic figures (usually with attributed past success
stories);
2. Charismatic leaders are mystics in touch with higher truths;
3. Charismatic leaders are value-driven individual rather than being apparently
purely self-serving;
4. Charismatic leaders are people that are perceived to “know the way”;
5. Charismatic leaders are people that have a vision of a more desirable and
achievable future; and,
6. Charismatic leaders are people believed to be capable of caring for and
developing followers (Storey, 2004).
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This author also emphasizes that, “It is evident from all six points that they reflect
attributes of personality and behavior. The construct of the 'transformational leader,’ on
the other hand, although closely related in many ways, is distinct in that it refers to an
approach to leading which aspires to significant organizational change through engaged
and committed followers” (Storey, 2004, p. 27). The leadership component that best
reflects the concepts involved in a transformational leadership setting is that of
“inspirational motivation,” which is a concept that is clearly focused on effecting change
of some sort – even if it is wrong: “It holds forth the idea of ordinary people achieving
extraordinary things through the influence of the leader. This kind of leader reduces
complexity, doubt, cynicism and ambiguity by cutting through to the 'essential' elements,
and these are expressed in simple, readily understandable language. Moreover, these
simple truths are expressed with conviction” (Storey, 2004, p. 28).
Transformational leaders, then, are able to communicate the desirability and
achievability of their goals and visions, and followers “buy in” to such future eventualities
and are willing to invest the time and energy required to get there. In the final analysis,
while there are clear similarities between the concepts of charismatic leaders and
transformational leaders, there are some important distinctions as well. For example, as
Miner (2002) reports, “Charismatic and transformational processes are closely related,
but a person can be charismatic without being transformational in the influence exerted,
as is the case with many celebrities. Thus charisma is necessary for transformational
leadership, although in and of itself it is not sufficient for the process to evolve. This
suggests the operation of other factors within the context of transformational leadership”
(p. 743). Besides charisma (which includes inspirational leadership), these other factors
are: (a) individualized consideration and (b) intellectual stimulation; in addition, there
are two transactional factors: (a) contingent reward and (b) management-by-exception
that have been identified through and emerged from factor-analytic studies (Miner,
2002).
Likewise, as Storey (2004) points out, “Transformational leaders usually require
many of the attributes of charisma; but, conversely, charisma alone is not enough to
enable transformational leadership” (Storey, 2004, p. 28). In fact, some transformational
leaders appear to be effective at what they do simply because their followers like them
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and are willing to go to any lengths to please them: “In other words, transformational
leaders help followers focus on long-term oriented and high-end needs such as selfesteem and self-actualization, instead of short-term oriented and low-end physiological
needs. As a result, the nature of the relationships that transformational leaders establish
with their followers is oftentimes based on emotional engagement and personal liking”
(Jung & Yammarino, 2001, p. 3). Liking one’s boss, though, is not a hallmark of the
American workplace – quite to the contrary. Nevertheless, the fact remains that some
people just appear to be natural-born transformational leaders while others struggle
valiantly to keep pace with the demands of their leadership position, but never succeed
while others excel.
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Research Methodology
According to Zikmund (2000), the case study method is “an exploratory research
technique that intensively investigates one or a few situations similar to the researcher’s
problem situation” (p. 722). The primary advantage of this approach is that a subject
area can be investigated in depth and with great attention to detail (Leedy, 1997). The
study also used a critical review of the peer-reviewed and scholarly literature using
EBSCO,
Questia,
selected
premium
online
services,
known
reliable
online
governmental and organizational sources, as well as university and public libraries; a
variety of organizational online resources were also consulted. This approach is
congruent with Gratton and Jones (2003) who emphasize that a critical review of the
timely and relevant literature is an essential task in all types of scholarly research: “No
matter how original you think the research question may be, it is almost certain that your
work will be building on the work of others. It is here that the review of such existing
work is important. A literature review is the background to the research, where it is
important to demonstrate a clear understanding of the relevant theories and concepts,
the results of past research into the area, the types of methodologies and research
designs employed in such research, and areas where the literature is deficient” (p. 51).
Likewise, Wood and Ellis (2003) cite the following factors as representing important
outcomes of a well-conducted review of the relevant and timely literature:
1. It helps describe a topic of interest and refine either research questions or
directions in which to look;
2. It presents a clear description and evaluation of the theories and concepts that
have informed research into the topic of interest;
3. It clarifies the relationship to previous research and highlights where new
research may contribute by identifying research possibilities which have been
overlooked so far in the literature;
4. It provides insights into the topic of interest that are both methodological and
substantive;
5. It demonstrates powers of critical analysis by, for instance, exposing taken for
granted assumptions underpinning previous research and identifying the
- 13 -
possibilities of replacing them with alternative assumptions;
6. It justifies any new research through a coherent critique of what has gone before
and demonstrates why new research is both timely and important.
Microsoft and Bill Gates.
Company History and Overview. Today, Microsoft Corporation (hereinafter
alternatively “the company” or “Microsoft”) engages in the development, manufacture,
licensing, and support of software products for various computing devices worldwide
and operates in three main divisions:
1. Platforms and Services. This division consists of Client, Server and Tools, and
Online Services Business segments. Client segment offers operating systems for
servers, personal computers (PCs), and intelligent devices. Server and Tools
segment offers Windows Server operating systems. Its Windows Server products
include the server platform, operations, security, applications, and collaboration
software. It also builds software development lifecycle tools for software
architects, developers, testers, and project managers; and provides consulting,
and training and certification services. Online Services Business segment
provides personal communications services, such as email and instant
messaging; and online information offerings, such as MSN Search, MapPoint,
and the MSN portals and channels (Microsoft, 2007).
2. Microsoft Business. According to the company’s most recent Quarterly Report
(2007, January 25), this division is comprised of programs, servers, services, and
solutions designed to increase personal, team, and organization productivity.
This division includes the Microsoft Office system, Microsoft Dynamics, and the
Microsoft Partner Program. MBD also includes the Small and Mid-market
Solutions & Partners organization, which focuses on helping Microsoft, its
customers, and industry partners in the small and mid-market customer
segments. The company’s Office System products account for more than 90
percent of Microsoft Business Division revenues and include Microsoft Office,
Microsoft Exchange Server and CALs, Microsoft Project, Microsoft Visio,
Microsoft Office Communications Server, Sharepoint Portal Server and CALs,
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Microsoft LiveMeeting, and One Note. The company notes that revenue growth
in this division depends on the ability to add value to the core Office product set
and expand its product offerings in other information worker and business
solution areas such as document lifecycle management, collaboration, business
intelligence, customer relationship management, and enterprise resource
planning (Form 10-Q, 2007).
3. Entertainment and Devices. This division of Microsoft offers the Xbox video game
system, such as consoles and accessories, third-party games, and games
published under the Microsoft brand, as well as Xbox Live operations, research,
and sales and support. It provides PC software games, online games, and other
devices; and consumer software and hardware products, such as learning
products and services, application software for Macintosh computers, and PC
peripherals. The division also develops and markets products that extend the
Windows platform to mobile devices and embedded devices.
The company was established in 1975 by William H. Gates III and is currently
headquartered in Redmond, Washington (Microsoft, 2007).
The company got where it is today largely because of the vision of its founder
and leader. In 1997, the media were reported that Gates was “too big for his boots,” and
suggested that Microsoft would falter; however, as Kelly and Kelly (1998) emphasize:
But Bill Gates held onto his vision that Microsoft, the largest
software company, with revenue of $4.65 billion (January 1–
July 31, 1994) for a profit of $1.15 billion, would come
through. And it did; and its value on the NYSE is greater
than General Motors, even though it has only 15,000
employees. Microsoft in 1991 fell into conflict with its old
mentor IBM. But in 1992 IBM was going along with
Microsoft. Now Microsoft and Intel are on one side and
Apple, IBM, and Motorola are on the other” (p. 241).
One of the recurrent themes to emerge from the literature is this emphasis on
leadership vision; in other words, having a concrete concept about where the
organization should go and how it should get there, that effective leaders are able to
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share with their followers. This is also one of the recurrent themes to emerge
concerning Gates, that he did in fact have a very specific vision about the future and
Microsoft’s part in it. According to Witzel (2003), “Bill Gates is no ordinary multibillionaire. He has been at the centre of developments in computer software since the
1970s, and has done more than almost any other single individual to shape the
information revolution in modern business and society. . . . Gates was among those who
believed that computers were the technology of the future” (p. 129).
As noted above, Gates became aligned in one camp while his erstwhile
competitor, Steve Jobs, aligned with another, a trend that continues today in a
pronounced way in Apple’s latest television commercials featuring the staid and
traditional “PC” debating the relative virtues of Microsoft and Apple products with his
highly creative and innovative counterpart in the “Mac.” In this regard, while Gates may
be richer, Jobs is clearly “cooler,” and this leader is discussed further below.
Apple Computer and Steve Jobs.
Company History and Overview
Apple Inc., together with its subsidiaries, engages in the design, manufacture,
and marketing of personal computers and related software, services, peripherals, and
networking solutions worldwide. It also provides a line of portable digital music players,
as well as related accessories and services, including online sale of third-party audio
and video products. The company’s products and services comprise the Macintosh line
of desktop and portable computers; the Mac OS X operating system; the iPod line of
portable digital music players; the iTunes Store, a portfolio of peripherals that support
and enhance the Macintosh and iPod product lines; a portfolio of consumer and
professional software applications; and the Xserve and Xserve RAID server and storage
products. In addition, Apple Inc. offers various third-party Macintosh and iPod
compatible products, such as application software, printers, storage devices, speakers,
headphones, and other accessories and supplies. The company provides an online
service to distribute third-party music, audio books, music videos, short films, television
shows, movies, and iPod games (Apple, 2007).
- 16 -
The company also offers products and services for the educational industry,
which include iMac and the MacBook, video creation and editing solutions, wireless
networking, professional development solutions, and one-to-one learning solutions.
Apple Inc. sells its products to education, consumer, creative professional, business,
and government customers through its online stores and retail stores, as well as
through its direct sales force, third-party wholesalers, resellers, and value-added
resellers. As of March 9, 2007, the company had 173 retail stores in the United States,
Canada, Japan, and the United Kingdom. Apple Inc. was founded in 1976.
The
company was formerly known as Apple Computer, Inc. and changed its name to Apple
Inc. in January 2007; today the company is headquartered in Cupertino, California
(Apple, 2007).
Instead of categorizing a leader's charisma, or lack thereof, as being intrinsically
"good" or "bad," this leadership style could be considered from the perspective of an
organization's ever-changing environmental and situational requirements. In this regard,
Blackwell, Gibson and Hannon (1998) report that, “Charismatic leadership is quite
situationally driven. It can be more or less appropriate depending on an organization's
environmental horizon. For example, take the propensity of a charismatic leader to be a
high risk taker. Companies that face little competition, have a stable client base and find
no need to adopt new technologies may stand to lose more than they could gain by
radically modifying corporate objectives” (p. 11). In the past, both Microsoft and Apple
enjoyed relatively higher shares of their respective markets; however, the personal
computer industry has become fiercely competitive in recent years and even Jobs and
Gates have been compelled to change direction from time to time as circumstances
dictate. In this regard, Blackwell and his colleagues (1998) report that, “There is always
the potential that new visions being chased are wrong and will result in an erosion of the
customer base and ultimate organizational disaster. On the other hand, when faced with
growing competition, little if any customer loyalty, and the need to rapidly adopt new
technologies, the adoption of a higher tolerance for organizational risk may be a
requisite for continued corporate successes” (p. 11).
These authors suggest that Steve Jobs is a good example of a charismatic
leader who inspired wild enthusiasm among his employees when Apple Computer was
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a relatively young company and breakthrough technology was the cornerstone of the
industry. “Jobs dressed like a maverick, worked like a maniac and inspired everyone
with his drive and determination. Years later, this same charismatic "wildness" impeded
Apple from stabilizing as a mature company and Jobs left the organization. The fact that
he is now back at Apple and causing much excitement with the new iMac underlines the
situational nature of charisma” (Blackwell et al., 1998).
In 2003, though, fueled in large part by the increasing popularity of faster CD
burners and advances in Internet connectivity together with the demand for file sharing,
Apple was able to get all major labels and as well as a number of independent
producers to sign on for its iTunes service and create a profitable model for
downloadable music (Drew, 2005). Since that time, a wide range of other players
including Real Networks, Napster, Sony, Musicmatch, WalMart, and Microsoft have also
entered this niche of the marketplace, and each of these individual systems features
songs in catalogs that number in the hundreds of thousands (Drew, 2005).
Contemporaneously, digital music players such as the iPod have made personal
mixing more mobile and seamless, thereby providing users with the opportunity to store
thousands of songs and remix these songs into an infinite number of playlists.
Moreover, Drew emphasizes that, “Apple's iTunes has brought it much further with their
more flexible online distribution, iTunes added its ‘celebrity playlist’ function in October
of 2003 and, as of early 2005, over 150 celebrities had contributed playlists (“each of
which can be purchased with one click”); it is becoming practically essential for aspiring
new musicians and bands to post their mixes on iTunes, while more established
musicians as well as other celebrities put in appearances (Drew, 2005).
- 18 -
Data Presentation and Analysis
A comparison of financial metrics for Apple and Microsoft as well as their major
competitors and the industry in which these companies compete is provided in the
tables and figures below.
Figure 1. Stock performance: Apple and Microsoft versus NASDAQ, historic to date.
Source: Yahoo! Finance, 2007.
- 19 -
Table 1.
Direct competitor comparison.
AAPL
DELL
HPQ
MSFT
Industry
Market Cap:
82.18B
55.68B
112.06B
283.88B
1.78B
Employees:
17,787
65,200
156,000
71,000
1.70K
Qtrly Rev Growth (yoy):
23.80%
-5.10%
10.70%
6.00%
38.60%
Revenue (ttm):
20.68B
57.88B
94.08B
46.06B
3.98B
Gross Margin (ttm):
30.35%
17.56%
24.51%
79.43%
35.95%
EBITDA (ttm):
3.44B
4.43B
10.16B
17.94B
127.13M
Oper Margins (ttm):
14.63%
6.85%
7.62%
36.20%
3.97%
Net Income (ttm):
2.43B
2.95B
6.52B
11.91B
68.20M
EPS (ttm):
2.760
1.284
2.306
1.170
0.65
P/E (ttm):
34.55
19.45
18.16
24.78
32.75
PEG (5 yr expected):
1.36
1.39
1.23
1.42
2.59
P/S (ttm):
3.97
0.96
1.19
6.16
1.14
DELL = Dell Inc.
HPQ = Hewlett-Packard Co.
MSFT = Microsoft Corp.
Industry = Personal Computers
Source: Yahoo! Finance, 2007.
- 20 -
200,000
150,000
100,000
50,000
0
Apple
Dell
HP
Microsoft Industry
Employees
Figure 2. Number of employees: Apple, Dell, Hewlett-Packard and Microsoft versus
industry.
Source: Based on tabular data in Yahoo! Finance, 2007.
12
10
8
6
4
2
0
Apple
Dell
HP
Microsoft Industry
Net Income (Billions)
Figure 3. Net income: Apple, Dell, Hewlett-Packard and Microsoft versus industry.
Source: Based on tabular data in Yahoo! Finance, 2007.
- 21 -
100
80
60
40
20
0
Apple
Dell
HP
Microsoft Industry
Revenue (Billions)
Figure 4. Revenue (billions):
Apple, Dell, Hewlett-Packard and Microsoft versus
industry.
Source: Based on tabular data in Yahoo! Finance, 2007.
40.00%
30.00%
20.00%
10.00%
0.00%
-10.00%
Apple
Dell
HP
Microsoft Industry
Qtrly Rev Growth (yoy):
Figure 5. Quarterly revenue growth (2005-2006): Apple, Dell, Hewlett-Packard and
Microsoft versus industry.
Source: Based on tabular data in Yahoo! Finance, 2007.
- 22 -
35
30
25
20
15
10
5
0
Apple
Dell
HP
Microsoft Industry
P/E (ttm):
Figure 6. Profit/earnings: Apple, Dell, Hewlett-Packard and Microsoft versus industry.
Source: Based on tabular data in Yahoo! Finance, 2007.
3
2.5
2
1.5
1
0.5
0
Apple
Dell
HP
Microsoft Industry
PEG (5 yr expected):
Figure 7. PEG (5 year expected): Apple, Dell, Hewlett-Packard and Microsoft versus
industry.
Source: Based on tabular data in Yahoo! Finance, 2007.
This is a forward-looking measure rather than typical earnings growth measures
that reviews historical data to measure a stock's valuation against its projected 5-year
growth rate (Yahoo! Finance, 2007).
- 23 -
Conclusion
Charismatic, transformational, transactional, situational or otherwise, it is hard to
argue with success, and it is doubtful that anyone even tries to argue with either Bill
Gates or Steve Jobs when it comes to determining how best to lead their respective
organizations into the 21st century. The research clearly showed that both of these
leaders possessed the same qualities that characterize some type of transformational
leadership, if not truly charismatic, at least as this aspect if commonly considered as it
applies to Gates who is not known as a particularly personable individual, but who
possesses the vision and motivational skills that typify transformational leaders. In the
final analysis, it would be foolhardy to try to accomplish the same things that Gates and
Jobs have achieved simply by mimicking their leadership styles; however, it is possible
to discern some of the more salient features of their respective leadership styles that
have enabled them to succeed where others have failed, and the case studies and
literature review were consistent in confirming this aspect of their leadership styles:
These guys won where many others have lost or faltered and they did it “their way.”
- 24 -
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