How could Microsoft become innovative (again?)
In her blog entry Microsoft’s challenge: innovation, innovation, innovation, Mary-Jo Foley invites “Other thoughts about how — and if — Microsoft can become more innovative?”.
Let’s do with the if first and fast: if they don’t innovate with a sense of urgency, they’ll die. It may be a long, slow death given how they currently dominate their sector, but sure enough they’ll run out of steam in an industry where the pace of change and innovation continues continues to accelerate. Other giants such as Google are lurking in the shadows, and who could say that a small, unknown David will not emerge to deliver a killing blow to the Goliath of OS?
Then the more difficult question: how should they go about innovating? Here are two suggestions.
Stop considering that customers are happy to fix bugs
Launching products that are not sufficiently proven, robust and stable, and relying on the mass of users to get the products up to an acceptable standard strikes me as a perverse form of open innovation. It is urgent that Microsoft gets its house in order and recognises that customers are not crying for more frequent Windows developments, but for a step change in Windows reliability. Whether you call it innovation or mindset-shift does not really matter: thoroughly testing the quality of products before they reach the market is a revolution that needs to happen at Microsoft mainstream.
Redefine values and build fit-for-purpose organisations around projects
In an HBR article that dates back to 2000, Christensen and Overdorf argue that an organisation capabilities to innovate are a function of its resources, its processes, and its values. While there is no doubt that Microsoft can muster a great amount of resources, little doubt that they could design adequate processes, the key to its apparent lack of innovation lies with the third factor: values. The term “values” in this context is not just about ethical principles, but more broadly about the whole set of criteria that enables managers at all levels to make decisions about what is or isn’t worth pursuing.
In a large multinational, the weight of corporate overheads will often mean that any new project is implicitly or explicitly required to deliver much higher gross margins than in a smaller and leaner organisation. In the case of Microsoft, it may well be that truly innovative projects get killed instantly because they get assessed against criteria that have been implicitly defined by the two cash cows of the companies: Windows and Office.
In the context of antitrust and possible abuse of dominant position, there has been much talk over the years about a possible break-up of Microsoft. I’m not sure this would deliver anything from an antitrust perspective, and I’m sure it would deliver nothing with regard to Microsoft’s ability to innovate. The two halves of a split-up Microsoft would remain giant corporations with pretty much the same values. What may actually be more appropriate to foster innovation would be to make more systematic use of spin-offs to shield new ideas from values that are no longer fit to assess innovation, and let these ideas grow into commercial successes in small start-ups, away from the burden of the corporation.
Mary-Jo Foley’s article can be found on ZDNet.