In 20 years in the technology sector I have seen a lot of both good and bad strategic decisions. At Microsoft I was with a company that was on the good side and then was on the bad side. I saw many competitors make what were poor strategic decisions. Decisions that in the end would either sink them or put them in a place of constant struggle for success or viability. I thought it would be good to look back on some of my favorite “stupid” decisions made by companies in the industry.
Lets head to Utah for bad decision number one: WordPerfect. This was a company that when the personal computer first came onto the scene quickly became the number one player in Word Processing. Competing against other notable companies like Wordstar, Wang, and Microsoft Word. If one thing killed them off quickly it can be summed up in the acronym GUI (Graphical User Interface). When Apple launched the Mac, Microsoft used it as an opportunity to learn about creating software for the GUI. WordPerfect on the other hand dipped their toes in the water and when they did not see the sales they wanted on the Mac, killed it. As Microsoft became more enamored with something called Windows, WordPerfect dug their heels in and supported DOS, where they were a leader. The problem being Microsoft owned both DOS and Windows and had more or less stated Windows was the future. Towards the end the only thing WordPerfect had going for it was free technical support. Sounds nice from a customer perspective, but if you looked at the costs, not sustainable. WordPerfect over time just seemed to disappear.
Apple actually makes the list. During the period where there was no Steve Jobs. Early learning here is Steve Jobs killed himself off when he hired Pepsi executive, John Sculley. Steve’s pitch to John was, “Do you want to change the world or sell sugared water”. As Steve learned people who sell sugared water don’t change the world. However they are master politicians which led to Steve’s ouster. Apple would go through several CEO’s before Steve returned. Some like, Micheal Spindler would start to pursue a OEM model where they license the software, like Microsoft. A nice form of flattery, but not in the Apple DNA. Steve would come back, kill this plan, and we know the rest.
Next up we return to Utah and Novell Netware. When the computer network first became popular, Novell was the dominant player for our file and print services. However one stupid decision killed the company. Why just a file and print server and not a app server to? I remember I was in a meeting with Bill Gates and he went off about why Novell did not do this. He was stunned that they did not have the foresight to see what was coming in the industry. In his view had they just added application services, Windows Server would never have garnered the market share it did. A second more technical item was Novell had a proprietary protocol called IPX/SPX. They did not support the dominant internet standard called TCP/IP. Eric Schmidt, when he was at Novell worked on fixing this, but then this startup called Google came knocking and he left for greener pastures (much greener as it turned out). As I am sure you all know this internet thing became rather large and Novell played themselves out of the market. Oops.
As we entered a new millennium things would change. My old company, Microsoft, which seemed to do no wrong would make plenty of mistakes in the new century’s beginning. They might say search was a big mistake, but as I have said they never would have figured it out. Google developed a new software business model. They did a classic Sun Tzu, when faced with greater numbers change the playing field. Probably the first blunder was the mobile phone space. Though they might say they were successful prior to the iPhone I never saw it that way. THe Microsoft strategy was a smartphone was a business phone and they went head on after RIM. I never saw it that way. I saw smartphone’s just a natural evolution of mobile phones and as more intelligence was put in the phone, the smartphone would be a consumer phone. Then the iPhone launched and that was the end of the Microsoft mobile story. I know they have this Nokia thing going on, but as good as the phone is, everything I am reading is it is too late.
Going back to search the big loser was Yahoo. Jerry Yang had a dotcom success story, but was really just pushed aside by a competitor with a better search engine and a better business model. Google ate everybody up in this space. They proved the age-old business adage, revenue is king. It was not long before Yahoo was on the defensive in everything they did. Google was the tech darling and Yahoo had fallen into the worst place in the industry: Yesterdays News. Even when they got a get out of jail free card in the form of a massive Microsoft takeover offer they blew it. Jerry Yang managed to convince everyone they had a future. With the recent news of a massive layoff and reorganization, all is but lost. Jerry Yang will be a case study in graduate school, and it will not be flattering. It will be along the lines on increasing shareholder value. But then Mr. Yang is an engineer not a finance guy.
Amazon was not a likely candidate to be the early leader in cloud computing. Next thing you know everyone was left standing with their pants of the ground. Some rode the wave very well, companies like VMWare. But across the lake the from Amazon’s Seattle headquarters a Redmond based power was scrambling. Google was also behind in this space. When I look at Cloud based posting these days I see many references for people with experience in Amazon Web Services. I am not sure I have seen one for Azure (Microsoft’s cloud service). VMWare is always in the conversation with its virtualization software, it is always a good place to be, “in the conversation”. Most companies building out cloud services usually have either Amazon or VMWare, if not both, as part of their cloud offering
Finally there was the tablet phenom. When Apple founder Steve Jobs announced Apples plans to make and sell the iPad, Microsoft CEO Steve Ballmer was quoted as saying, “They will never sell those things”. As it turns out they can sell those tablets. In the last quarter they sold over 15 million of these items Steve said they could not sell. In the meantime a slew of Android based tablets have hit the market and as for Microsoft, we wait for Windows 8. Why do I feel like this will be the Windows Phone all over again? When the new tablets hit the market will it be revolutionary or just another Tablet? The market is already 3 years down the road and the company that changed people’s lives sitting on the couch and watching TV was Apple. That is what technology has always been about, changing people’s lives.
In all the examples I have given one thing is clear. To create these industry and societal changes it takes a leader who see’s beyond today and looks to tomorrow. When we look at what I provided in each case we have visionaries that we all know Gates, Jobs, Bezos, Maritz, to name but a few. In the also ran category you see companies always flat-footed and never embracing the future, but reacting to a race that has already began. If you are racing Usain Bolt and you are slow off the starting blocks do you think you will win? Even if you were that fast and physically fit you cannot make up a half a second in a sprint. That is how today’s tech sector works. Even if you were to catch up the industry has moved on to a new race. To win you need to jump the gun otherwise you will be but a distant reflection in the rear view mirror.
Good Night and Good Luck
Hans Henrik Hoffmann April 9, 2012