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Both Bill Gates and Warren Buffet are investors in the business world with celebrated success in terms of the wealth they make. “Bill Gates happens to be the founder and the leader of Microsoft Corporation.” He is a philanthropist, and chairman of the company he mutually founded with Paul Allen. He was the wealthiest man in the world between 1995 and 2008 with the exception of 2008. He is the main shareholder in Microsoft having been the chief software architect and CEO at some point; Wallace (1993). Warren Buffet is a philanthropist, investor and industrialist from America. He is considered among the highest ranking investors around the world. Buffet being the third wealthiest in the world is the CEO, chairman, and main share holder in Berkshire Hathaway; Smith (2005).
Bill Gates was at the top of his class in elementary school and always ahead of others in science and mathematics. His family was doing well in business. At LakesidePrep School he came across computers. Bill Gates and his friend Paul Allen took computing and from there they became very good at writing computer programs. They gathered a lot of knowledge form there that gave them a base for the founding of Microsoft. They started earning money form companies that hired them to fix bugs. Gates moved to HarvardUniversity for further study where he gained more exposure on computers; Wallace (1993).
Bill gates began Microsoft when he was a student at HarvardUniversity. Prior to this he had learnt how to do computer programming together with his old school friend Paul Allen. The beginning of Microsoft Corporation was preceded by Gates dropping out of Harvard. At the start it was a little hard for the company but at last MS-DOS was licensed to IBM. IBM PC grew popular and boosted Microsoft. Microsoft pushed on with the business of writing software for consumers and for businesses. In 1986 Microsoft gained a lot of publicity and Gates turned into a billionaire at only 31 years. The initial windows version came out the following year. Come the year 1993 Microsoft was selling one million copies per month. In 1995 Microsoft moved to start the internet explorer; BBC (2004).
Warren Buffet was born in 1930 by a father who was a stock broker and later a congressman. At a tender age he showed an interest in business and money. At six years of age he bought 6 coca cola packs and sold them making a profit of five cents. He bought shares from cities service when he was only eleven. He sold them later at $40 after having bought them at $38 each. He finished high school in 1947 after having made $5000 form newspaper delivery jobs. He was later compelled to join college something that made him meet Ben Graham who became his mentor. Graham was chairman of an insurance company called GEICO which was little known. Later on he took up the whole insurance company via Berkshire Hathaway; Smith (2005).
All leaders make important decisions in their life times.
The problem is normally expressed in questions addressing the work the leader needs to set a side for himself and which one is to be delegated and the mode of controlling the performance of those to whom roles are assigned. Bill Gates has a style of leadership that has helped him control his delegates’ actions with tough interrogations. This has made them to change their decisions. On the other hand Buffet keeps only two duties for himself. He allocates the capital of Berkshire Hathaway and assist between 15 and 20 senior managers to maintain people at works even though there is no financial need to push them.
They manage fully owned companies with assets two times what Buffet has in his stocks. About 47, 566 people are employed by these companies 60% over what Microsoft has. Buffet makes no difference between investing in the whole of a company or just apart of it. He suggests that one should first find out if the company is simple and easy to understand and if it has been consistent in its history of operations. It should also have predictable and favorable prospects of the long term as well as an honest and competent management. The underlying business must not be undervalued; Smith (2005). Microsoft differs with this because it does not apply understanding and predictability. Warren Buffet does not get to understand and does not want to learn how the technology operates; Miles (2004).
Gates on his side has found the technology easy to control because his success comes form that. His company grew by leaps and bounds because of windows and MS-DOS being universal entries into the computer world. Gates naturally knows nothing apart form controlling. That is his style of management and leadership. He is obsessed with checking up small details. It is said that at some time he was signing expenses for Steve Ballmer who was ‘his right hand man.’ The coming of the internet, the anti trust case and other emerging development have made the predictability of Microsoft to disappear. Its egocentric management system has also gone; Wallace (1993).
In the former systems of management small groups were constituted to perform specific tasks. Strict control on finances was used and everything revolved around Gates and Ballmer. The two had small and major decisions forwarded to them and they formed a bottle neck kind of structure. They also overlooked the ability of the managers under them. However, in the new management system with the theme ‘Vision Version Two’ the company is divided into eight divisions with focus on the customer. Every group is manned by a manager who is given power to control his section. ‘This classic method has been borrowed from the military used as divide and control.’ Gates should focus on broad strategy and leave the management of these divisions’ day to day management to the managers. This system has been designed to try and set the company free of its former bureaucratic problems; Wallace (1993).
However, even with these reforms the management of Gates may not come closer to Buffet’s principles and management practices. Buffet lets the managers of his company reason as the company owners. Some of the CEOs were the owners of those businesses before Buffet purchased them form them they should easily look at it that way. Buffet gives them a good stake of 10 to 20% so that they can practically feel the ownership. They are rewarded according to what they achieve in their individual businesses but not the achievements of Berkshire Hathaway. Buffet dearly holds onto this principle; Smith (2005).
It is not easy to content with the notion that a manager should be judged according to personal influence alone. An issue may a rise where some divisions are closely related. If you a judge managers only by their personal achievement they can as well ignore things like cooperation with other divisions. This is one problem that made it difficult for Microsoft to have people form different divisions working together. A section of the reward must be tied to general performance; Miles (2004).
Buffet is given financial reports on regular basis and CEOs are free to call him. Buffet just expects them to obey simple rules like ‘if there is any significant bad news let me know early.’ He leaves the managers to do their job in their own way. Another advice he gives is ‘Look at the business you run as if it were the only asset of your family, one that must be operated for the next 50 years and can never be sold.’ He also says that “We can afford to lose money - even a lot of money. We cannot afford to lose reputation - even a shred of reputation.” Buffet has developed a confidence in other people since he tells them; “You can talk to me about what is going on as little or as much as you wish.” Elsewhere and may be in Microsoft the attitude could be totally different. Managers are given pressure and are expected to conduct affairs the way the owner wants. The owner demands full and frequent information from them and he intervenes with force if he does not like what he is told. A CEO carrying bad news risks being fired. The managers are expected to run the businesses for a limited time after which they are gauged depending on their performance; Miles (2004).
Buffet’s style of freedom and confidence brings better returns compared to that of control and suspicion. However Microsoft has been running on suspicion and control and it has produced wonderful results. The answer may be that both Gates and Buffet give financial incentives to help their managers grow richer. Buffet does not use stock options but he offers purchase prices with a similar effect. For example the person from whom Buffet purchased Dexter Shoe Company is now the owner of $1.5 billion of Berkshire shares. He gives huge bonuses that can even be five times more than the salary; Miles (2004).
Microsoft cannot match this because one third of its staff is in the millionaires’ category. Just a small percentage of that has $100 million. Bureaucracy and grueling deadlines coupled with insufficient pay made some leaders leave Microsoft. The company responded by cutting Gate’s field of control and giving division managers more freedom. The rich able people in Microsoft desire this freedom and making a reality will help the company overcome management problems. The greatest difference in Gates and Buffet styles of management is trust. Buffet treats his subordinates as his equals while Gates treats them as what they really are; Wallace (1993).
In conclusion Gates and Buffet are two very influential people in the world. They are different in terms of their business backgrounds, structures and leadership styles. Gates prefers more control on his juniors with 100% accountability in his management. On the other hand Buffet is more liberal with a lot of autonomy being given to his managers. He is able to trust them and has confidence enough to leave everything to them as long as a problem has not a risen. However both men are very successful in the business world and they remain a good example to emulate for those who want to venture into the business field.