Microsoft = IBM

When I started in the industry, sitting at my cubicle, reading email and trying to learn as much about the industry as possible there was a common joke that floated around: IBM. They were viewed as grey beards and very old school.  Where as Microsoft was defining the future with “A PC on every desktop and every home”, IBM were the guys who said, “Why would you want a computer in your home?”.  We were young, brash, cocky and arrogant.  We were the definition of your not worn down by life’s experiences and thing anything is possible, even the impossible.  The IBM guys, well frankly they needed a diaper change, in the old guy sense.  We seem to have come full circle since those days back in the late 80’s and early 90’s. In this down economy IBM just announced blow away earnings.  IBM seemingly over the past decade has rediscovered itself while Microsoft has become eerily kind of like IBM, going in a variety of disjointed directions.

For starters IBM back in the mid to late 90’s made a series of smart decisions under the direction of CEO  Lou Gerstner. There is a saying in the industry “No one was ever fired for hiring big blue”.  Lou understood this.  At the time IBM was involved in the emerging PC business and being looked at as the company to drive the industry vision forward.  the problem was that a lot of this “vision” involved consumers.  Consumers are not part of the IBM DNA.  IBM was an enterprise company.  It was after Lou did a speech on “The Network is the Computer” that Lou returned IBM to its roots.  Let IBM use technology to focus on where it can make in impact, the consulting business.  When Open Source  came along it was not a threat to IBM but an opportunity.  When Off shoring came along it was not a threat but an opportunity.  Anything that would require some type of consulting with cost savings, IBM could play.  For such a large company they have done a truly magnificent job.  Not getting caught up in technologies holy wars, just watching from the sidelines and seizing the opportunity.  Lou has since retired many moons ago but IBM keeps on moving forward.  In a complicated industry they have kept it simple and simply asked questions like, “Who are we” and “what do we do well”.

Microsoft, on the other hand, had pursued a path of complication.  A large part of that is Microsoft’s DNA is rather complex.  When Bill Gates was at the helm it was simple.  If there was a large opportunity that required a graphical user interface, that implied software and Microsoft had to play.  That is how they got into the phone business, the game business, television, the internet etc..  The challenge today is that the user interface has become rather pervasive.  It is everywhere and on all  the time.  It is in people’s home, at our schools, at work, where we shop, would be more difficult to name where it is not.  Microsoft has attempted to be everything to everyone, from Joe Blow on the street to the high-powered CEO in every Fortune 100 company on the globe.  It has led to a company stretched thin across the board.  When you look across the competitive landscape you have companies very well entrenched and defined as to who and what they want to be.  IBM is an enterprise company.  Oracle a enterprise software company.  Google wants to make information available anywhere at any time.  Nintendo does games.  Apple wants a soup to nuts consumer experience.  VMWare is about the enterprise and the cloud. Try making such an easy definition with Microsoft.

I believe Microsoft has entered its IBM moment and needs to rediscover itself so here is my list of what needs to be done:

  1. Kill the GE model:   SteveB really went into this hardcore phase of creating the Jack Welch GE model – which is essentially creating a bunch of silos where each division operates as its own entity and generates the next billion industry.  At the same time BillG was talking about integrated innovation.  This requires cross group collaboration. In the end it has created confusion  GE is not Microsoft and Microsoft is not GE.  Steve needs to find the Microsoft way.
  2. Unified Vision: Microsoft employees I talk with (and I talk to many) all have the same concern.  They can talk about their individual metrics but as to where the company is headed, in a meaningful way, they are being pulled by every new event.
  3. Create your own Events:  People get tired of one week it is Search, because search is hot, next week Cloud, because Cloud is hot, following week it’s Smartphones because Smartphones are hot – all the time following, all the time being late.  I rarely hear the discussion of the future  – it would be nice for Microsoft employees for a change to have Google or Apple chasing Microsoft.
  4. Think Big: The iPhone did not alter technology it altered our culture, that is simply how big the phenomena is.  the good news is it will happen again.  Windows 95 really ushered in the PC to the mainstream of day-to-day life, so Microsoft has a legacy of life changing technology.  People might say, the internet was the game changer.  they would be right.  But remember 90% of the world did it with Windows.
  5. Get Young and Focus:  Sorry Steve but if you want to compete leadership needs to change – starting at the top.  You know the industry but depending on what is decided it maybe time to have someone closer to the end customer.  It is time for a different viewpoint in et company.  That gets to my second point which is focus – Microsoft needs direction on what it wants to be and where is it going.  Can it be a consumer company?  An enterprise?  There are many more questions, and they all need answers.
These are tough issues to address because despite the problems and challenges you are still talking about a company that earned $62 billion in 2010.  My fear is with Apple seemingly on a straight line north and upward, will we have the quarter where revenues come in under and market share slips into the 80 percent range?  Microsoft’s IBM moment is upon them, is there a Lou Gerstner to ride in on his white horse and reinvent the company?  I believe we will see this sooner than anyone thinks.  I can only hope.
Good Night and Good Luck
Hans Henrik Hoffmann July 21, 2011