The importance of sequencing and self-reinforcing processes to understand success of Bill Gates with Microsoft

By Dieneke de Weerd

Chapter two of Pierson's book explains the importance of sequencing to understand today’s outcomes. This blog post argues that Bill Gates’ success with the development of Microsoft depended largely upon the particular event sequence prior to 1975 and is thus an example of the first-mover advantage.

Gladwell demonstrates that opportunities presented to Gates at an early age drastically impacted his ability consolidate his position within computer software industry. The three most important events resulting in this particular outcome are: early access to computer, opportunity to have learning hours, and the introduction of personal computers in 1975. Mahoney's event sequence applies here as alterations in temporal ordering of these three events could have produced drastically different outcomes. Especially differences in timing of personal computers could have made Gates too inexperienced or already caught up with another job to utilize competitive advantages of first mover.

Gates’ ability to become successful is related the self-reinforcing character of his first mover advantage. The first mover in a new market has advantage over its actual or potential rivals to capture market shares. Self-reinforcing processes indicate the growing benefits of this specific advantage. As first mover Microsoft could easily capture large market shares and stay ahead of rivals. By 1975, Gates had been programming for seven years, which gave him extraordinary experience and knowledge. This made set-up costs for rivals entering the market extremely high, as rivals could not easily catch up with Gates’ amount of learning hours. After the consolidation of Microsoft other self-reinforcing processes, such as learning effect and coordination effect, stimulated enduring superiority of Microsoft.

In conclusion, the exact event sequence prior to 1975 enabled Gates to be flexible and experienced enough to utilize his first-mover advantage. Gates could become the pioneer and remain successful because of the self-reinforcing processes linked to his first mover advantage.