Bill Gates' New Rules

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From Business @ The Speed of Thought: Using a Digital Nervous System, by Bill Gates. Copyright 1999 by William H. Gates, III. Published by Warner Books, USA.

If the 1980s were about quality and the 1990s were about re-engineering, then the 2000s will be about velocity. About how quickly business itself will be transacted. About how information access will alter the life-style of consumers and their expectations of business. Quality improvements and business-process improvements will occur far faster. When the increase in velocity is great enough, the very nature of business changes.

To function in the digital age, we have developed a new digital infrastructure. It's like the human nervous system. Companies need to have that same kind of nervous system--the ability to run smoothly and efficiently, to respond quickly to emergencies and opportunities, to quickly get valuable information to the people in the company who need it, the ability to quickly make decisions and interact with customers.

The successful companies of the next decade will be the ones that use digital tools to reinvent the way they work. To make digital information flow an intrinsic part of your company, here are 12 key steps.


For a large company to be able to maneuver as well as or better than a smaller competitor is a testament to both the energy of the employees and the use of digital systems. Personal initiative and responsibility are enhanced in an environment that fosters discussion. E-mail, a key component of our digital nervous system, does just that. It helps turn middle managers from information filleters into "doers." There's no doubt that e-mail flattens the hierarchical structure of an organization. It encourages people to speak up. It encourages managers to listen. That's why, when customers ask what's the first thing they can do to get more value out of their information systems and foster collaboration in their companies, I always answer, "E-mail."

I read all the e-mail that employees send me, and I pass items on to people for action. I find unsolicited mail an incredibly good way to stay aware of the attitudes and issues affecting the many people who work at Microsoft. The old saying "Knowledge is power" sometimes makes people hoard knowledge. They believe that knowledge hoarding makes them indispensable. Power comes not from knowledge kept but from knowledge shared. A company's values and reward system should reflect that idea.

I like good news as much as the next person, but it also puts me in a skeptical frame of mind. I wonder what bad news I'm not hearing. When somebody sends me an e-mail about an account we've won, I always think, "There are a lot of accounts nobody has sent mail about. Does that mean we've lost all of those?" A good e-mail system ensures that bad news can travel fast, but your people have to be willing to send you the news. You have to be consistently receptive to bad news, and then you have to act on it. Sometimes I think my most important job as CEO is to listen for bad news. If you don't act on it, your people will eventually stop bringing bad news to your attention. And that's the beginning of the end.


"Know your numbers" is a fundamental precept of business. You need to gather your business' data at every step of the way and in every interaction with your customers. With your partners too. Then you need to understand what the data means.

Making data digital from the start can trigger a whole range of positive events. The Coca-Cola Co. is collecting data directly from smart vending machines via cellular phones or infrared signals. A PC-based restocking program at the local bottler office analyzes the data and produces a delivery slip that tells drivers which products and locations need to get stocked the next day.

Taking advantage of digital data at the source can even create new business opportunities. A pilot program in Texas lets customers use a credit or debit card to pay for Coke drinks while fueling at a gas station. Since most people who pay at the pump don't go into the building, the digital sales system at the pump creates a whole segment of new customers for Coke.

When figures are in electronic form, knowledge workers can study them, annotate them, look at them in any amount of detail or in any view they want and pass them around for collaboration. Going digital changes your business.


A company's middle managers and line employees, not just its high-level executives, need to see business data. They're the people who need precise, actionable data because they're the ones who need to act. They need an immediate, constant flow and rich views of the right information. Companies should spend less time protecting financial data from employees and more time teaching them to analyze and act on it.

At McDonald's, until recently, sales data had to be manually "touched" several times before making its way to the people who needed it. Today McDonald's is well on the way to installing a new information system that uses PCs and Web technologies to tally sales at all its restaurants in real time. As soon as you order two Happy Meals, a McDonald's marketing manager will know. Rather than superficial or anecdotal data, the marketer will have hard, factual data for tracking trends.

What I'm describing here is a new level of information analysis that enables knowledge workers to turn passive data into active information--what M.I.T.'s Michael Dertouzos calls information-as-a-verb.


A collaborative culture, reinforced by information flow, makes it possible for smart people all over a company to be in touch with each other. When you get a critical mass of high-IQ people working in concert, the energy level shoots way up. Knowledge management is a fancy term for a simple idea. You're managing data, documents and people's efforts. Your aim should be to enhance the way people work together, share ideas, sometimes wrangle and build on one another's ideas--and then act in concert for a common purpose.

Jacques (Jac) Nasser, president and CEO of Ford, sends e-mail to Ford employees worldwide, sharing news--the good and the bad--with everybody. No one screens the e-mail. He talks straight to the employees. He also reads hundreds of responses he gets each month and assigns a member of his team to reply to any that need follow-up.

Getting people motivated to take on responsibility is not a question of organizational structure so much as organizational attitude. Digital tools are the best way to open the door and add flexibility. If the right people can be working on the issues within hours instead of days, a business obtains a huge advantage.


In 1996 I decided to look into the ways that Microsoft, a big advocate of replacing paper with electronic forms, was still using paper. To my surprise, we had printed 350,000 paper copies of sales reports that year. I asked for a copy of every paper form we used. The thick binder that landed on my desk contained hundreds and hundreds of forms.

Paper consumption was only a symptom of a bigger problem, though: administrative processes that were too complicated and time-intensive. Using our intranet to replace paper forms has produced striking results for us. We have reduced the number of paper forms from more than 1,000 to a company-wide total of 60 forms.

Companies talk about rewarding initiative and keeping workers focused on business. When employees see a company eliminate bottlenecks and time-draining routine administrative chores from their workdays, they know the company values their time--and wants them to use it profitably.

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