One of the most meaningful moments of Steve Ballmer's talk at the Heroes Happen Here presentation was when he asked the folks Microsoft had identified as heroes to stand.
You got the sense you were watching people standing up for a firing squad. One person stood up right away, then two more eased up, and then a small group stood that seemed to be thinking, "Gee, if I stand up with a group they can't shoot all of us at once, can they?" These were folks who were being identified for their heroics, yet they were acting as if they were scared half to death of standing up in support of Microsoft.
Believe me when I say I can empathize.
Success Is Not Building the Most Feature-Rich Product
One of the things that seem particularly hard for executives to grasp, regardless of the marketing training they have had, is that people don't buy products. What they think they are purchasing are benefits. You don't buy a Big Mac because it is two all-beef patties on a sesame seed bun; you buy it because the damn thing is so good you are willing to sacrifice your life expectancy to eat it.
If you were to ask a lot of folks what the key benefit is to using Linux, they would probably say one of the biggest is not having to do business with Microsoft.
In one of Ballmer's charts, he showcased how much more secure his products are than Oracle's. But Oracle's big advantage isn't security; it is how well it takes care of its customers. Oracle is the only company where I've seen a government IT shop intentionally bias the criteria of an analyst report just so Oracle could not lose. Think about that. These are folks who are putting their jobs, and maybe even their freedom, at risk, just to use Oracle. They clearly knew the product wasn't better; they were going with Oracle because they wanted to work with Oracle -- largely because they knew Oracle would take care of them.
That goes to the core issue: trust. Microsoft's biggest problem is earning and maintaining that trust.
Heroes Happen Here and Intellectual Property Licensing: Reflecting Change
Back before I was even in my teens, my grandfather, himself a CEO of a multi-national petrochemical company, told the following joke. Guy has a mule that he can't train, so he goes to a "humane mule trainer." First thing the mule trainer does is break a 2x4 over the head of the mule. Owner of the mule asks, appalled, why the trainer did that?
The trainer replies, "Well first I have to get his attention."
For large companies, it takes a lot to get their attention. And Microsoft has had its share. The DOJ and related litigation, the emergence of Linux as a customer-driven alternative to Microsoft, the resurgence of Apple, the rejection of Vista, the failure of Zune/Tablet PC/Origami/Portable Media Players/Media Extenders, and the recent $1.3+ billion EU fine seem more like a nuclear bomb than a 2x4, but Microsoft has clearly shifted attention.
Some executives at Microsoft clearly are getting that the world has changed. The first indication of this was last month when Microsoft broadly licensed its technology and aggressively moved closer to an open source model. This was followed by the Heroes Happen Here effort, which shifted focus from products to the people who make them work, with an emphasis on those who overcome all odds to create amazing results. This is a brilliant idea that could have a significant impact on the world if other companies emulate Microsoft's move. In theory, that goes beyond what Oracle does to help supporters and turns the very folks who drive success in their own companies into powerful Microsoft advocates.
But this broke down when Ballmer got up and pitched the product but didn't focus on endeavors of those that were adopting it successfully. Instead of these "heroes" being a strong counter-example to existing impressions, their fear of standing up stood out in my mind and actually pointed me back to the originating problem.
Apple's advantage is that it clearly knows who its customer is and that customer, in return, has no fear of standing up and cheering for Apple at almost every opportunity. This singular focus helps Apple avoid the kinds of problems that are now being identified in Microsoft's "Vista Ready" litigation. Apple, and particularly Steve Jobs, knows that doing what Microsoft did would be stupid. This isn't to say that a lot of Microsoft folks didn't know this. Clearly the dissenting e-mails show that, but the right folks didn't get the deciding vote.
What was particularly interesting was that Jim Allchin, one of the most powerful guys then at Microsoft, was bypassed on this decision. It got me wondering what would happen were Steve Jobs or Larry Ellison to be bypassed in the same way in Apple or Oracle. In Apple, you'd be picking up body parts all the way to the interstate. In Oracle, there would be a large hole where the guy's office used to be, with no evidence he ever existed.
It is this focus (coupled with solid command and control) that allows companies like Oracle, Apple and even HP to do well in their respective markets.
Change Comes Hard
For Microsoft to gain the same kind of benefits with future versions of Windows, it needs to focus solidly on the OEMs who own the solution and emulate what happens in Apple, where hardware typically leads. Windows is a keystone product and if it doesn't move, it will create a drag not only inside Microsoft but across the PC ecosystem. Apple knows that and keeps its products inexpensive and easy to implement, and it will always be designed to be better on new hardware.
For those of you who question whether Microsoft has changed, think of this. A decade ago, Microsoft's server platform was a joke and we were in the midst of the biggest desktop platform change in history. This year, folks are lining up for Windows Server 2008 and Microsoft is having trouble getting IT to deploy Vista, a product many of the biggest companies have effectively already paid for.
In the end, and this is a good lesson for all of us, it is the customer who is the final judge of whether we are successful. Microsoft's server group is providing a good example of this focus, but they have a different customer from most of the rest of the company. It will be interesting to see if the rest of Microsoft's divisions learn this lesson. If they do, the pain of change will likely be worth it for most of us. I don't want to think of the outcome if they don't.