Microsoft Must Optimize, Reinvent to Reclaim Industry Leadership

By TC Doyle Comments
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To reclaim industry leadership lost to Google, Apple and others, Microsoft’s new CEO, Satya Nadella, must optimize the Redmond, Wash., software giant’s existing businesses while simultaneously reinventing the company to make it more relevant in cloud and mobile-centric markets.

So says Merv Adrian, research vice president at Gartner. In a blog published on Feb. 18, Adrian raises the specter that Nadella’s lack of experience in mobile computing, in particular, might make him “overly respectful of existing businesses” and thus prone to “[hang] back from tough decisions that potentially threaten them but are critical to generating innovation.”

To anyone who has ever worked in a competitive, corporate environment, tuning and transforming a business, culture or set of processes is an immense challenge, especially at a company like Microsoft, which has protected not one but two of the most successful revenue streams in the history of information technology. In his 2010 bestseller, “Doing Both,” which made the bestseller lists of both The New York Times and Amazon.com, Cisco Senior Vice President and author Inder Sidhu devoted an entire chapter on how difficult this can be. Optimizing requires one set of skills, metrics and best practices while reinventing requires an altogether different set, he says. (Full disclosure: T.C. Doyle, author of this posting, was a contributor who worked with Sidhu on his book.)

Does Microsoft’s culture have the capacity to do both? History suggests it hasn’t always. And Adrian would agree.

“[Nadella] will also need to shake up what is widely viewed as a culturally dysfunctional management structure,” Adrian says. As other have noted, Microsoft pioneered several disruptive innovations including tablet devices only to fumble away a leadership position to protect existing operations and product lines.

“Nadella must quickly demonstrate that he is not backing a ‘business as usual’ strategy, and that he recognizes that design is front and center in client computing for both consumers and enterprise users and that a mobilized environment has replaced the desktop,” Adrian writes. He expects Microsoft’s vision to be clear by the end of the year but cautions company watchers not to expect radical changes in its devices and services strategy.

“Instead watch for organizational shifts, product design changes and updated product road maps to address a mobile- and cloud-dominant world,” he says.

Specifically, Adrian said the company must achieve the following to reclaim the leadership it once took for granted:

  • “Establish a vision of itself as an innovative, disruptive force in IT. Concentrating on mobile technology and leveraging lessons learned from gaming can help Microsoft appeal to the next generation.”
  • “Emphasize design to enhance ease of use for consumers, and apply these lessons to its considerable assets in IT infrastructure to change its image of a legacy enterprise vendor competing in a consumerized market.”
  • “Enable entrepreneurs and developers to develop new business value atop a common Windows client environment with unified, cross-platform services. Microsoft must enable a complete, compelling set of apps that attracts developers and can compete with and within iOS and Android environments."
  • “Acknowledge its customers’ heterogeneity by supporting Google and Apple client environments, the Linux/Java environment on servers, and cloud-based services in general.”
  • “Deliver compelling experiences and solutions to both IT and to non-IT buyers.”
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