6 rules big corps can learn from Microsoft to spice up their digital transformation recipe.
Over the last 2 years the Redmond giant has worked hard to achieve what may be one of the most successful digital transformations in history. Microsoft’s come back brings new hope to industrial incumbents that aim to reinvent themselves in the new economy, proving them the war against GAFA and other unicorns is not lost.
Here are 6 rules we think big corps can learn from Microsoft to spice up their digital transformation recipe.
Rule 1: Don’t be afraid to kill what used to work
Over the last decade, Microsoft has been perceived as a laggard in comparison with its Silicon Valley competitors.
After reaching market dominance during the 1990s (Microsoft’s operating systems had reached 97 percent of all computing devices in 2000 according to Goldman Sachs), the old pioneer developed all the symptoms of a candidate for disruption:
- More focused on generating as much money as possible on its declining core business than pushing into riskier business: It means a lot of money — sales revenue jumped almost 12 percent to $86 billion last year
- Attempting to lock users into its products by refusing to work with competitors. As Ballmer put it: ‘if you want to use Microsoft you have to buy everything from us.’
- Launching a series of me-too hardware products, figuring loyalists would embrace them
What was supposed to happen… happened.
Late 1990s, first knock: Windows ceased to be the dominant development platform with the rise of the web and Google.
Late 2000’s, on the floor: As users migrated to mobile globally, Google and Apple quickly overtook Microsoft. The company missed the mobile opportunity, it now accounts for an estimated 4 percent of the global market share for smartphone operating systems.
As a symbol, Microsoft decided to kill its windows phone. Is it the epitome of Microsoft’s weakness? At FABERNOVEL, we rather think it’s the most promising sign of a rebirth.
Rule 2: Define a new, radical and transformative vision
Steve Ballmer used to describe Microsoft as a devices and services company. His successor, Satya Nadella, considered Microsoft capable of working across any platform — even those controlled by competitors — to help people be more productive.
Microsoft has spent the better part of the last two years establishing itself on mobile as a maker of apps for competitors’ platforms. The goal is to build a user base of Windows and Office software on every device out there — including iPhones, iPads, and Android phones — as a way to drive subscriptions to its cloud-based products and rope more people into Microsoft’s ecosystem.(link)
In February 2016, Microsoft acquired the mobile app development start-up Xamarin, a tool for building mobile apps that can work across iOS, Android, and Windows phones. Xamarin allows developers to code in a single programming language while designing an app to look native to each platform.
Rule 3: Keep your friends close and your competitors closer
Nadella forged new partnerships with companies Microsoft once considered enemies and spent time with startups to learn how innovative business models work.
The recent Salesforce and Microsoft partnership is particularly surprising. For a long time, Microsoft had considered the cloud-computing company an enemy, even launching Dynamics CRM, a direct Salesforce competitor. But Nadella realized that many of Salesforce’s customers also used Office 365, and he began wondering if the two products could be combined. In the first half of 2015, Salesforce was integrated with Office, SharePoint, and OneDrive for Business on Android and iOS. A Salesforce app for Outlook will also become available, and Salesforce apps for Windows phones and Excel will follow.
Rule 4: Break silos and shift to a new collaborative culture.
Nadella has placed Culture at the core of its transformation. It is the fuel that powers its engine creating new capabilities (design, engineering) and new concepts.
“You need a culture that is fundamentally not opposed to new concepts and new capabilities” — Satya Nadella, CEO Microsoft
Symbol: Nadella transformed its company organization, empowering his executives to work across once-siloed divisions. It also pushed researchers to collaborate much more closely with engineers in other departments to help them get products out faster. The release of Microsoft’s Skype Translator, which translates multilingual conversations in real time, is an early success.
Rule 5: Open up your assets and grow an ecosystem.
Microsoft has admitted something that used to be unthinkable: using Linux to run some of its own operations. Today Microsoft is continuing its march toward a more open future.
In November 2014, Microsoft opened up its entire .NET framework, its programming infrastructure for building and running applications and services.
In June 2015, Microsoft and a bunch of its biggest competitors, including Google and Amazon, have joined forces for the Open Container Project, a non-profit organization housed under the Linux Foundation.
In March 2016, Microsoft plans to bring SQL Server to Linux as well. This will enable SQL Server to deliver a consistent data platform across Windows Server and Linux, as well as on-premises and cloud.
Rule 6: Innovate out of your comfort zone
When Microsoft was founded, its ambition was to power a personal computer on every desk in every home. For people at this time, the first time using Excel on a PC with a mouse and a keyboard was a radically disruptive experience.
Today, Microsoft is once again making bold moves to build the future.
Hololens:
“Project HoloLens is extremely ambitious, and it’s the first major test of whether Microsoft’s new CEO, Satya Nadella, can restore the company’s long-dormant reputation for innovation and creativity. But Project HoloLens is by far the boldest — and riskiest — move of the Nadella era. It’s not another me-too product but a truly unique experience. It’s also the kind of project that few besides Microsoft would undertake — a lavish, multiyear effort that builds on lots of in-house research, all in service of extending the reach of Windows. Nadella believes that Project HoloLens is nothing less than the emergence of the next computing interface.”
Microsoft wants build the future with Chat bots, conversation and AI as an interface.
CEO Satya Nadella bets big on an artificial intelligence that will be fast, smart, friendly, helpful. At his developer Conference on March 30th 2016, Microsoft showed off several different bots and programs that manage tasks via discussion.
Microsoft finally resolved Christensen’s innovators dilemma, changing focus from its two cash cows “Windows” and “Office” to a bolder strategy: disrupting itself.
Ben Evans’ gives us the perfect take away:
« Big companies have entire strategy teams devoted to working out what to do next and how to do it, and budgets to hire strategy consulting firms for millions of dollars to produce hundred-page decks with more strategies and ways to achieve them. Such people have little interest in saying ‘give up — it won’t work’ (perhaps because that might mean you don’t need a strategy team anymore). Microsoft today, I think, is a case study in knowing when you should indeed give up, and what you should do after that. » — Benedict Evans
