His business card may say “President,” but if you ask Nintendo’s Satoru Iwata where his loyalties lie, he will tell you this: In his mind, he’s a game developer—and in his heart, he’s still a gamer.

Iwata taught himself how to program while in high school, designing games and playing them with his friends. In college, he landed a part-time job designing games at HAL Laboratory, a firm that developed computer peripherals. (The company was named after the mythic “HAL” in the film 2001.) After graduation, Iwata joined HAL full time and rose through the ranks.

However, HAL filed for bankruptcy in 1992, only to be rescued by a client for whom it had designed many video games—Nintendo. As part of the restructuring plan, the 33-year-old Iwata became HAL’s president. In the next seven years, Iwata turned his company around.

Iwata joined Nintendo in 2000 and became president in 2002. Rather than compete directly with companies like Sony and Microsoft, Iwata made the decision to broaden the video game market to attract people who did not already play video games. Iwata implemented that strategy with the introduction of the Wii console, a product with broad-based family appeal and dozens of applications. Not only did Wii create new opportunities for Nintendo and generate unprecedented growth, but it also sold a record 7.8 million units in year one. Another Nintendo product, the DS handheld game machine, contributed to the company’s revenues.

Even then, however, Iwata was concerned. It would be easy, he realized, for complacency to set in. He wanted to keep the company hungry and humble.

Iwata’s concerns may have been prophetic. With declining sales of the DS and a price cut on the Wii, in 2009 Nintendo posted a 41 percent decline in profits—its first decline in four years. Despite its worsening performance, however, BusinessWeek named Nintendo the world’s best company for 2009, calling the Wii “the true disrupter of the entertainment industry” and citing Nintendo’s commitment to innovation even in the face of declining sales and consumer confidence.

Some industry observers say Nintendo was unable to keep pace with its revenue growth, leading to overworked developers. Since then, rather than hire additional employees, Nintendo has addressed the staffing issues by outsourcing some of its less important software projects.

Its latest innovation, the 3-DS handheld game, delivers 3-D imagery without the need for special glasses. The 3-DS competes with Sony’s PlayStation Portable and Apple’s iPad in the portable game player market.¹

As a leader, Iwata has faced many different issues over the years—turning around an organization, moving from one company to another, sparking innovation, handling company growth, creating humility within a corporate culture, and handling declining profits. Iwata made dealing with these issues look easy. It was not.