A recent NYT article by former Microsoft VP Dick Brass has caused quite a stir, as he expressed the opinion that Microsoft is on a declining path, describing the company as a “clumsy, uncompetitive innovator”. With the iPad, the kindle, the Blackberry, iPhone, Google, iPod iTunes, Facebook and Twitter taking over the tech industry, Dick Brass wonders where this leaves Microsoft and how long it can continue being considered “America’s most famous and prosperous technology company”. He argues that while the company’s earnings are still huge (totaling over $100 billion over the last 10 years), these are mostly derived from software programs (ie Windows and Office) that were developed many years ago and cannot sustain the company in the future if it doesn’t catch up.
To support his position, Dick Brass elaborates on how the introduction of middle management and bureaucracy has killed innovation at Microsoft, and gives examples from the development of the Tablet PC and the ClearType technology. To quote his exact words, “Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence… As a result, while the company has had a truly amazing past and an enviably prosperous present, unless it regains its creative spark, it's an open question whether it has much of a future.”
Microsoft’s official response to this through the Microsoft Blog was that “at the highest level, we think about innovation in relation to its ability to have a positive impact in the world. For Microsoft, it is not sufficient to simply have a good idea, or a great idea, or even a cool idea. We measure our work by its broad impact… Now, you could argue that this should have happened faster. And sometimes it does. But for a company whose products touch vast numbers of people, what matters is innovation at scale, not just innovation at speed.”
This however is only part of the picture. According to other critics (one of them being technology strategist and author Michael Gartenberg), Microsoft’s main problem is poor alignment of vision and execution. The company seems to have adopted a pattern of releasing technology and products that are too far ahead of their time. For example ClearType technology worked well only on LCD displays, but was released at a time when CRT monitors were the norm. The vision was there, but the technology to make it work in the marketplace was simply not mature and could not match the vision. Other such examples are products like Portable Media Center, Origami / UMPC, Media Center and Tablet PC and SPOT devices.
Another part of the problem is a historic preference to develop (highly profitable) software without undertaking (highly risky) hardware. While this however made economic sense when the company was founded in 1975, it caused the company to be viewed as “a successful company whose success stems from monopolistic anti-competitive practices”, and lead to the notorious antitrust prosecution and settlement from which the image of the company has still not recovered. An understandable caution from the part of the company could therefore be another factor that is slowing them down.
Whatever the case and whatever the reasons behind this lack of innovation on the part of Microsoft, the question that remains is whether it can continue being “America’s most famous and prosperous technology company”. Innovation does not automatically equal success in the market, nor customer satisfaction; the contrary, a company doing a better job at conventional ideas could even kick the innovator out of the market. But can this continue to be the case with technology moving so fast? Dick Brass seems to be of the view that without high risk innovative hardware products, it becomes more and more difficult to not only create but also participate in a technology market which is increasingly dominated by tightly integrated and beautifully designed products.
While the former VP may have a point, it is notable that during last year’s TechFest, Stephen Elop, Microsoft's Business Division President, presented the company’s vision of the future, a glimpse of which can be found in the following video:
http://www.youtube.com/watch?v=1haMQxyhjwk
What overall may look like a computing utopia to some of us, according to Elop represents the company’s currently active projects. Is this a step towards innovation? And if yes, can they get it right this time or will the company for once more repeat the pattern of being ahead of its time? And will Dick Brass be proven right claiming that the company’s bureaucracy is a dead end towards creative destruction?
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