Microsoft Pulls from IBM’s Playbook and Focuses on Unique Factor

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    An interesting story in USA Today mentions Microsoft’s new CEO focusing on what makes Microsoft unique. As the opening strategic move, this isn’t a bad one. Had the firm maintained this kind of focus during the last decade, things likely would have turned out better for Steve Ballmer. This actually comes out of Thomas Watson Jr.’s strategy book; this core policy has served IBM well — when that company remembers it. Let’s talk about that this week.

    Thomas Watson Jr.’s Message

    I recall hearing about Watson Jr.’s message in a talk by outgoing IBM President Sam Palmisano on the IBM centennial anniversary. You can still count the U.S. technology companies that have been around for 100 years on one hand and have a few fingers left over. IBM was designed to be immortal; one of the core design elements was the directive to change everything as needed, except what made the company unique. I’m paraphrasing, but his concept was that as long as you stayed true to whatever made IBM successful, you could change every other part of the company and the firm would not only survive, but it would remain IBM.

    IBM actually started with lines of kitchen utensils long before we even conceived of the mainframe, let alone the personal computer. When IBM nearly went out of business in the 1990s, it was because it started chasing other companies. It forgot, for a time, what made IBM different. The restoration of IBM’s core by Louis Gerstner and Sam Palmisano returned the firm to health and prosperity.

    Microsoft Successes and Failures

    Windows 95 was likely Microsoft’s greatest success. It showcased the core values of the company and people lined up to buy it. It represented a time when Microsoft was nearly pure. But the fight with IBM had the firm’s management thinking it could become another IBM, the fight with Apple had the firm thinking it could be a better Apple, and the fight with Google had it thinking it could be a better Google. Microsoft lost its core values. While it actually did well in enterprise services, the effort weakened its focus on developers and users. Microsoft’s attempt to become another Apple with Zune failed spectacularly, and its chase of Google and search, while more successful, has become an even larger money hole than Zune was.

    The firm had become schizophrenic. It had lost its core. It had forgotten what made the company uniquely successful. By focusing so much on competitors, it had lost itself. Microsoft’s new CEO, much like Louis Gerstner at IBM, and Steve Jobs at Apple, recognized that the firm couldn’t be successful unless and until it could bring back the core values that made it unbeatable in the Windows 95 timeframe.

    A Microsoft Zune, pulling from Microsoft’s core, would have had a developer network and apps before Apple did. It would have imported iPod playlists like Excel imported Lotus 1-2-3 macros, and it would have had video content to make the screen look better. It would have sorted music sharing with iPods, and the hardware would have come from a partner, not Microsoft itself. That’s not what Microsoft delivered, but that would have sold rather well.

    A focused Microsoft concentrates on developers, OEMs and users, in that order, and it would never bypass the first two to go directly after the third for anything but updates. It is a leveraged company and every time it forgets this, bad things happen.

    Wrapping Up: Back to Basics

    If Satya Nadella can get the company focused back on what it does best, the model that first turned Microsoft into a superpower comes back into play and the firm becomes more than relevant again. Apple focuses first on users, competes with OEMs, and tolerates developers. Google can’t spell focus and it is unclear what its priorities are, other than setting a record for starting the largest number of strange businesses. This gives Microsoft a huge opportunity to do what these firms cannot and once again become the Microsoft that is a firm to be reckoned with, rather than a pale shadow of what it once was.

    Nadella still seems to be saying and doing the right things, suggesting that he may be the perfect CEO for this difficult job.

    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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