Microsoft’s Lost Decade Essay Example for Free

Microsoft’s Lost Decade Essay Introduction Microsoft’s story serves as a prime example of the pitfalls of success. In this case we can analyze, critique, and make recommendations to avoid a similar disaster in the future. While they were really the sole company to open the window into computer technology for the everyday user, but over the last decade appears to have been a victim of its own success. Once so dominant in the industry which is basically created on its own, today cannot be described as â€Å"cutting edge†. The name no longer resonates with younger generations. Evidence of this struggling success can be seen in its stock prices which have completely plateaued and even began to drop recently. What happened? Why are they no longer creating wonderful technological advances for its consumers? In order to compete in the technology industry, a company needs to continuously be innovation for its customers; Microsoft was not doing that. Despite facing a challenge in IBM in the beginning when Microsoft first entered the industry, who was also getting overly confident and comfortable with its position in the industry. It actually appears as though Microsoft has reenacted the problems of their former nemesis. Clearly not focused on development or bringing out a new product, and their new philosophy as expressed by the most recent CEO Steve Balmer about a decade ago was we won’t be first to cool but we will be first to profit. In other words, they don’t care about coming out with some cool new technology, they will wait for somebody else to do that, and then buy their way into that market. Obviously the major problem with that is if somebody else is coming into that product first, that company will most likely lock up the market. It is possible that Microsoft has its hands in too many things. There is no focus. Microsoft doesn’t know what kind of company it wants to be. This is evident by the competition microsft is facing. One division is competing with SONY, while another group is battling apple, while even other teams are competing with Google for example. It’s possibl e that what the company really needs is a fresh start; New atmosphere, new leadership, new goals. Microsoft has great products in Xbox and connect, but inside the massive† machine† that it has become they are just small underdeveloped projects. So again, it is obvious that there are issues to be looked at here, but somebody in charge missed the signals and let this happen. The most telling story from the case is that Microsoft in fact had ideas about the first e-reader, the very technology that is today very popular in the Kindle and iPad, as early as the late 1990s. Unfortunately for the company, the story tells of a meeting in which Bill Gates gave this new technology the â€Å"thumbs down† because the screen didn’t look like windows. Do the customers care about that? No. So that was a huge missed opportunity. The leadership was blind to that element, which dictates that for the customers’ needs to be addressed first and foremost. As a technology company the goal should be to â€Å"create† what is needed. Microsoft started doing things th e other way around. Windows started getting so complicated because they overloaded the engineering aspect to create things that will look good, not perform well. What it has come to at this point it seem is there is no way for Microsoft to compete at this stage. Everything within the company, including the employees appear to be almost â€Å"weighed down† by what can almost be describes as a massive bureaucracy with far too many meetings and memos. Microsoft’s â€Å"law of large numbers† is failing. In order to fix the causes of their problems, we must follow the symptoms back to the root causes and make changes there. On the surface, it appears their issues are due to bad management style, poor organizational structure and a generally counter-productive culture that strained relationships between the â€Å"old guard† and the â€Å"new blood† of the company. To get a better look at the cause of these symptoms, I will follow the eight operations management principals. Part 1: Critique Unity of Purpose Unity of purpose within an organization is definitely not something that a manager can ignore when running a business with goals. It is imperative to remember that to function as a goal oriented team, all parts of the various positions must be working together as one. This is where I will begin our observation of the Microsoft empire and the decade of struggle that diverted it from the success that it once enjoyed. When looking at how Microsoft was handled by Bill Gates, there are undoubtedly some moments that suggest that the unity of purpose was not clearly defined and never adequately addressed to the degree that it needed. We can start at the root of the problem to learn the origins of what Microsoft ultimately faced: namely discord and disharmony in the work place. Looking at the early success of the business, we notice that Microsoft created an innovative and personalized approach to the computer that made it significantly more user-friendly. The initial public reactions were almost unanimously positive due to the fact that the product was revolutionary and had changed the personal technology landscape for the better. Interestingly, Microsoft began this venture in the shadow of IBM, who was also getting overly confident and comfortable with its position in the industry at the time. It actually appears as though Microsoft has reenacted the problems of their former nemesis over the past decade. As time progressed for Microsoft, however, there came to be a noticeable drop off in success of the company. Steve Jobs and his exciting, strong and, most importantly, new Apple brand seemingly booted Microsoft to the curb, out of the public’s eye. It is easy to assume that Microsoft was simply outmanned by Apple, that the latter company came into the picture and took the market share away from Gates and his supposed dynasty. This, however, does not describe the true cause of the downfall suffered by Microsoft. The real cause that sent this company on the track to irrelevance was due in large part to the lack of unity in the business purpose. Microsoft was clearly not focused on development or bringing out a new product, and their new philosophy, as expressed by the most recent CEO Steve Balmer about a decade ago, was â€Å"we won’t be first to cool but we will be first to profit†. In other words, they don’t care about coming out with some cool new technology, they will wait for somebody else to do that, and then buy their way into that market. Obviously the first problem with that is if somebody else is coming into that product first, those companies will most likely lock up the market. Additionally this completely throws off the company’s purpose of unity! What is a technology company if it isn’t researching, developing, and creating for its customers a new technology? The answer is very simple: Microsoft was not united around a general value or principal. As I mentioned earlier, it is possible that Microsoft has its hands in too many things. There is no focus. Microsoft doesn’t know what kind of company it wants to be. This is evident by the competition microsoft is facing. One division is competing with SONY, while another group is battling apple, while even other teams are competing with Google for example. It’s possible that what the company really needs is a fresh start; New atmosphere, new leadership, new goals. Microsoft has great products in Xbox and connect, but inside the massive† machine† that it has become they are just small underdeveloped projects. Once upon a time, Bill gates had a vision. Gates wrote an operating program using the computer language called BASIC which proved to be a wonderful innovation. Driven by his new product, and with that his new purpose, his company took off and left everybody else in the dust. Gates was relentless and demanded the same intense commitment from everyone he hired. Back then they were united each member of the group was invest for the right rea son, which was creating a new product that people wanted before anybody else created it. Neither Gates nor Allen had management skills and business savvy that were needed to help the booming company in its infant days. Once the company started doubling and tripling in size year after year, the company could not keep focus on one particular goal or direction. Unity happens when leaders are committed to and engaged in the process of building a united, winning team. It requires focus, time, and energy. Unfortunately as we’ll discuss a little later on, focus may have been another contributing factor that hindered Microsoft from being the company Gates idealized in his head. Unity occurs when team members care more about the vision, purpose and health of the organization than they do their own personal agenda. Changing the mindset is essential. Unity happens when each person in the company can clearly see how their personal vision and effort contributes to the overall vision and success of the team. This involves meaningful conversations between the levels of management as well as between engineers and sales people. Unity of Purpose results when you weed out the negativity that sabotages far too many organizations. All of these things were issues at Microsoft that hindered it from having one united goal as a company. Having the right people in charge of making decisions can make a world of difference when trying to unite the group behind a cause, which will lead me to the next principle of Operations Management, Human Resources. Invest in Human Resources Microsoft needed to invest in human resources to implement and maintain plans and policies. Strategically placed investments in human resources will develop a more skilled, innovative, productive and loyal workforce thus providing an organization with a competitive advantage over a less progressive competitor. Investment in human capital offers both short and long term gains that help produce not only skilled, productive employees, but those that are both loyal and ethical. Microsoft’s goal should have been to increase the ownership of employees work by providing the right incentives. Already we see evidence that the company will fall prey to the same arrogance that dethroned IBM. There were signs but Microsoft didn’t see them until it was too late. When it comes to your employees, long-term thinking guides an organization. That’s where Microsoft missed the mark by a long shot. Microsoft was focused on too many short term goals. Employees at Microsoft had an obsession with revenue and growth, and it’s no surprise why! Almost every employee received a stake in the company through stock options. When the share price went up, everyone got richer. When it went down, everyone suffered. Everyone ran full speed in hopes of pushing up the stock price a little bit more. Internal competition became a huge issue with Microsoft’s employees as well. The perception of stability within the workforce is especially beneficial during periods of economic decline and or organizational restructuring. The perceptions of stability as offered by organizational culture will often help retain employees during recessionary periods and motivate everyone during stable times as well. This was potentially the biggest issue in house for Microsoft. The days of shoulder to should teams innovating and thriving within the company were gone. A â€Å"financial fissure† penetrated the already strained relationships between th e â€Å"old guard† and the â€Å"new blood†. People were becoming destructively competitive. Its was a sink or swim environment and drowning someone else in order to survive was the name of the game at Microsoft. Something had to be done. Companies can obtain a competitive advantage if they utilize strategic human resources investment practices. If the operation is a primary manufacturing facility investments such as group bonus pay-outs based on overall group performance or attendance for example, could provide an initial increase in output. Furthermore, empowerment of the team by allowing aspects of total quality management to take place will help build confidence and a feeling of responsibility within the group. If the operation is research and development oriented then the culture should be based on rewards focused on those who develop and produce. In either case whether the culture is based on group or individual performance, the overall goals must be focused on the retention, growth of, and maximum utilization of talent. Microsolf is a company with all departments and people with both typed of jobs. The organizations that are best able to manipulate the corporate culture into one of maximum benefit will become significantly more competitive than those who do not, and Microsoft did not. At Microsoft it got so bad that one employee was quoted saying â€Å"We couldn’t be focused anymore on developing technology that was effective for consumers†. It had become all about, â€Å"how am I going to make money†. HR should have used training and development to invest in their employees. Make them feel valued, offer appropriate promotions as incentives for great work and loyalty, and place a greater emphasis on teamwork. The cut-throat atmosphere does not generate positive results, and Microsoft’s organizational structure was such that executives and engineers were from a different generation with cutthroat mentalities. This only results in self immolating chaos. The real villain here was the wrongly implemented Stack ranking system. Managers had a rest and vest mentality which bread ill feelings and jealousy all around. These factors were naturally at variance with team work and innovation. A better reward systems should focus on facilitating cooperation, enhancing long term thinking, tolerating mistakes because they are learning tools, and not letting egos get involved. Whatever Microsoft determines it’s goals and purpose is going to be, it is important for the companies directors to remember that investing in the appropriate human resources is much more than making sure the new employees don’t impact your current paychecks and health insurance. It is the definition of the company, its culture, and its employees performance. With the right culture instilled in the company, employees might have a chance to work on focus for an-unmotivated Microsoft. Focus Microsoft was lacking, and desperately needed focus. Sustainable growth is important. Such a pattern emerges in organizations that are superior in executing their business plan and can maintain a compounding positive trajectory in their revenue development. Organizations that are so oriented build success patterns that breed a culture of confidence and a competitive advantage. This is how growth becomes sustainable. Such a pattern is of primary importance to any focus-oriented company. Sustained growth in a business comes about primarily because key employees are focused on performance factors they can impact and they feel motivated to do so. That focus leads to execution. When sustained, that pattern brings about the results and success the business plan calls for. This being said, Microsoft was committing all the wrong crimes against successful business focus. Vague accountability on the part of higher management made it impossible for the rest of the employees to envision goals a nd work with a purpose. A major contributor to this at Microsoft was the fact that they held too many meetings. Meetings in turn slows new product development and staggers innovation. Just as with e-books, opportunities for major product developments slipped away from Microsoft. Windows CE, an operating system distinct from Windows that was originally used for pocket devices like personal digital assistants, would ultimately be the foundation of the mobile operating system that would power Microsoft’s first smartphones. But despite the fact that Microsoft had the jump on its competitors with Windows CE, it still lost the race for the wildly successful smartphones. In addition to too many meetings, Microsoft had too many managers. Current and former executives said, each year the intensity and destructiveness of the game playing grew worse as employees struggled to beat out their co-workers for promotions, bonuses, or just survival. Microsoft’s managers pumped up the volume on the viciousness around each other and to their subordinates. What resulted, when combined with the bitterness about financial disparities among employees that already existed, the slow pace of development, and the power of the Windows and Office divisions to kill innovation. All in all, it was a toxic stew of internal antagonism and warfare fueled by the generation gap between the old, established managers and the young, aspiring engineers. That â€Å"warfare atmosphere† was only the beginning of the distraction. At Microsoft every employee had a smiley face icon to monitor stock prices at every moment of the day. When shares increased, the face smiled, but when they fell it frowned. This placed way too much focus on shareholders, profits, and employees job security. There was simply not enough emphasis on the customer, and nothing was focused on the company’s future. Futher issues at Microsoft included obsession to capitalize on every opportunity to gather new revenue, teams of people fighting shoulder-to-shoulder had been replaced with backstabbing and selfish goals. Microsoft even went as far to save money, the company no longer helped with towels in showers at work. Why is that a focus at all!? That’s such a pathetic problem to have at an industry-leading technology company. To achieve quality, you have to define it. Focus is a definition and you have to make sure that definition is disseminated throughout the rank and file. Its the job of any company to be clear about the nonnegotiable core values. A lack of focus creates estuaries and cloudy waters that are confusing to navigate and surely hinder innovation. Visibility Management The lack of focus we attribute to the poor leadership transitions us to our next issue with Microsoft, that there is not a fair, balanced model in the company with solid visibility management. Natural self-promoters, like many of the managers and executives at Microsoft, instinctively exploit opportunities to make themselves visible. In today’s competitive corporate environment, being good at what you do isn’t enough to earn your keep or what you’re worth. You have to practice â€Å"visibility management,† letting people know who you are and what you do well. Managing visibility is an integral component of modern success and career management. Microsoft had extremely poor visibility management for a number of key reasons. For starters Microsoft did not recognize or enforce fairness throughout its organizational structure of employees. The organizational structure followed a stack ranking system, like a forced bell curve model, that puts individual goals at complete variance with teamwork. The managers who were supposed to be making decisions and conveying them to their sales and engineer teams were in constant meetings instead of making information available regarding any management decisions. Microsoft was lacking â€Å"new blood† in its management. The divisions between the old timers and the young innovators had grown wildly out of control. Corporate culture is built from the combined experiences of the members of the organization working in harmony with clear visibility. This effects the results of the organization’s efforts, and helps the psychological tone set by top management and every level of management beneath it. All of these factors are expressed in, and some are caused by, visibility management, and poor management behavior will always affect the culture negatively. Organizational culture is built on the behaviors of the members of the culture, and poor management visibility and behavior at any level naturally affects the levels subordinate to it. An abusive or clueless top or middle manager can create a culture of negativism and poor performance that extends beneath them all the way to the bottom of the organizational pyramid, and even to supplier organizations. Anyone who has worked in more than a couple of bureaucracies has most likely experienced or witnessed this syndrome. At Microsoft one employee was quoted saying â€Å"If you just add up the time people spent sending angry e-mails about the towels disappearing †¦ I expect they lost a lot more money than the cost savings from the towels.† Even once the towels returned, the bitterness about cost-cutting didn’t end. What was management’s plan? Nobody seemed to know; there was no communication or visibility within the company. Even after that Microsoft abandoned its gold-plated health-insurance plan. That was the enticement that had brought some employees there in the first place. Whiteboards grew scarcer. It even became harder to find office supplies. Many of the problems from bureaucracy came down to a simple reality: The young hotshots from the 1980s, techies who had joined the company in their 20s and 30s, had become middle-aged managers in their 40s and 50s. And, some younger engineers said a good number of the bosses just didn’t understand the burgeoning class of computer users who had been children when Microsoft opened its doors. When younger employees tried to point out emerging trends among their friends, supervisors sometimes just waved them away. None of management’s procedures or systems seemed to make any sense to the rest of the subordinate company. Corporate policy at Microsoft gave some select few millions, while others got bare minimum pay. Too many employees were seeking management spots for the wrong reasons. Management should have been more humble, transparent, and outward gazing. Visibility management works with facts, not ego and corporate politics. Fix Causes Corporate politics lead to nothing else if not fear and prejudice within the organization. Current and former executives said that each year the intensity and destructiveness of the game playing grew worse as employees struggled to beat out their co-workers for promotions, bonuses, or just survival. Microsoft had, in an effort to motivate by competition, created a back-stabbing environment of brutal proportions in the corporate world. Management is supposed to be courageous and inspiring, â€Å"not pumped up the volume on the viciousness† as was the case at Microsoft. It is usually the leader with the most power who provokes the most fear. With leaders worried about outbursts and other nasty behavior from those with even more power than they have, imagine the toll the fear factor must take on the people who wield substantially less authority. At a place like Microsoft, those people make up the vast majority. Although Ballamer would espouse that they challenge their people, man y employees would argue those challenges feel threatening. The truth is most likely employees blossom when challenged and wither when threatened. There is no data showing that anxious, fearful employees are more creative and productive, but there is data proving that employees in a threatening environment are less engaged, less loyal and for the most part miserable. Civility is not a term we typically associate with corporate life or use to describe the everyday world in workplaces around the globe. But consider the potential impact on corporate culture, and society as a whole, if civility were not just expected, but championed by senior leadership. Microsoft had a forced bell curve of talent that doesn’t actually represent the production and innovation capabilities of the company. This creates achingly slow progress and in an atmosphere that has every unit declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor, employees were focusing on competing with each other rather than competing with other companies. Management needs to listen to the ideas of the young generation and implement a better system. An example of when this would have done Microsoft well was in 1997, when AOL introduced its instant-messenger program, called AIM, a precursor to the texting functions on cell phones. Two years later, Microsoft followed with a similar program, called MSN Messenger. In 2003, a young developer noticed that friends in college signed up for AIM exclusively and left it running most of the time. The developer concluded that no young person would switch from AIM to MSN Messenger, which did not have the short-message feature. He spoke about the problem to his boss, a middle-aged man. The supervisor dismissed the developer’s concerns as silly. Why would young people care about putting up a few words? Anyone who wanted to tell friends what they were doing could write it on their profile page, he said. Meaning users would have to open the profile pages, one friend at a time, and search for a status message, if it was there at all. Unfortunately because his manager didn’t know or didn’t believe how young people were using messenger programs, nothing was done. Management was instilling fear instead of developing for the long term and listing to employees about what customers really want. Know Your Customers As we have discussed, the culture at Microsoft was complacent. Managers were closed to criticism, arrogant about their roles of leadership, and obsessed with stock prices and short term goals. The very purpose for Microsoft’s existence was to provide new and wonderful technology to people; those people being the customers. Those people dictate the needs, not managers, and Microsoft lost touch with who they were serving. It’s something critical to ANY and EVERY business: knowing your customers and the products they want. You can learn a great deal about your customers by talking to them. Asking them why theyre buying or not buying, what they may want to buy in the future and asking what other needs they have can give a valuable picture of whats important to them. Despite a multi-year head start, the big profits on innovative new technologies would eventually go to Amazon and Apple. Why? Because they gave the customers the next new thing in technology. For example, Bill G ates gave the E-reader the thumbs down because he was focused on what the product did and looked like, not how his consumers would love it. Apparently â€Å"he didn’t like the interface because it didn’t look like windows.† The point on this invention was to have the book, alone, appear on the full screen. Putting it into an electronic book, Gates suggested, would do nothing but undermine the customers experience. Unfortunately what gates didn’t understand is that it’s not undermining them if that’s what they want! The death of the e-book effort was not simply the consequence of a desire for immediate profits, but also all kinds of personal prejudices at work. Management missed the beat repeatedly while â€Å"meeting† to pursue the next thing it would release. Microsoft was only hurting itself. As discussed earlier they were far too obsessed with revenues and stock prices of old products. Steve Stone, a founder of the technology group, said about Microsoft’s attention to customer wants: â€Å"We couldn’t be focused anymore on developing technology that was effective for consumers. Instead, all of a sudden we had to look at this and say, ‘How are we going to use this to make money?’ And it was impossible.† Indeed, executives said, Microsoft failed repeatedly to jump on emerging technologies because of the company’s fealty to Windows and Office. â€Å"Windows was the god—everything had to work with Windows,† said Stone. â€Å"Ideas about mobile computing with a user experience that was cleaner than with a P.C. were deemed unimportant by a few powerful people in that division, and they managed to kill the effort.† Indeed, executives said, Microsoft failed repeatedly to jump on emerging technologies because of the company’s fealty to Windows and Office. There was a feeling that â€Å"Windows was the god—everything had to work with Windows,† despite what the customer wanted. While Apple continues to gain market share in many products, Microsoft has lost share in Web browsers, high-end laptops and smartphones. Despite billions in investment, its Xbox line is still at best an equal contender in the game console business. It first ignored and then stumbled in personal music players until that business was locked up by Apple. Another problem with Microsoft delivering to the customer’s needs is whenever Microsoft spies yet another potential market which it thinks is ripe for taking over it generally announces its intention to move aggressively into that market. Microsoft frequently announces new products for these markets that they will ship soon regardless of whether or not they have any genuine interest in actually shipping said products. What this frequently leads to is that people stop buying software in this market because they want to wait for the Microsoft version. Unfortunately if Microsoft sees the market drying up they usually just walk away and never deliver their promised products. The end result is that the small software companies in these markets take a very big hit and frequently go under while consumers end up without their promised product. In the past, Microsoft has fueled amazing growth by leveraging its way into new markets in order to acquire new customers. The problem that Microsoft has been facing recently is that they tried to dominate so many different markets that there are not enough markets left that can be captured for the purpose of sustaining the growth that their shareholders require. Microsoft has turned its sights back on its existing customers. Microsoft is finding creative ways to draw more money out of its existing customers, often times with hostile results. One example of Microsofts hostility to its existing customers came in September, 2000. Microsoft demanded that the Virginia Beach government account for all copies of Microsoft software that were in use within the government and provide proof of purchase for each product. The reason? Nick Psyhogeos, a Washington, D.C.-based attorney for Microsoft, said the firm has found that government agencies sometimes inadvertently acquire counterfeit software. There was no mention of a reason why this particular city government was singled out they were not investigated because of something which they did to arouse suspicion, but simply because they were a large organization that Microsoft hoped they could frighten more money out of. The city was presumed guilty until proven innocent and this cost the tax payers a great deal of money as the city reassigned 25 percent of its technical work force to work specifically on the task of generating the information demanded by Microsoft. Microsoft is hunting down it’s customers, not providing for them. Know Your Competition In the competitive corporate world it is imperative that a company knows it’s competition so that you don’t get blindsided. It is crucial to know who they are and what their strengths/weaknesses are. It would also be smart to know what their primary products are that compete with yours and how they access talent that you might want as well. Recently Microsoft’s strategy has just been killing off competitors by either buying them or their technologies. Once again, a good example of this is shown with Microsofts jump into the web browser market. Microsoft was late to catch on to the fact that the web was going to revolutionize the way people used computers and once they finally woke up they were dangerously close to having their Windows monopoly destroyed by the greatly reduced importance of operating systems that a web based paradigm would produce. They needed to do something fast. They allegedly tried to carve up the market with Netscape by getting Netscape to ag ree to stop making Windows web browsers while Microsoft would only make Windows web browsers. Fortunately for consumers, Netscape did not agree to the deal and the web was saved from becoming a Microsoft only technology as surely would have happened. This made it even more urgent for Microsoft to lock up this new market right away while it was still time. Lacking any decent technology of their own, Microsoft licensed the Mosaic web browser from Spyglass which they turned into Internet Explorer. The weapon that Microsoft fashioned in their attempt to defeat Netscape wasnt even their own, but technology they bought from someone else. This was not a one time thing either. What this meant for Microsoft was that they got to keep their monopoly for a little bit longer, but it had much more dire consequences for consumers. It meant that consumers were now stuck with a very buggy browser and file system viewer because Internet Explorer wasn’t prepared to compete with competition. Who are Microsoft’s main competitors right now? According to CEO Steve Ballmer Google, Apple, and Oracle and the front runners. Google is a serious threat because not only does it have its hand in multiple markets, it has the ability to jump in and quickly grab significant market share. Gmail went public only about three years ago, but already it’s the third-largest webmail service behind Hotmail and Yahoo. Google Apps is up-and-coming, having won a few key contracts in the enterprise market. Microsoft’s release of Office Web Apps shows the company is worried about Google, which is touting apps as an easy-to-use-from-anywhere service with an easier and less expensive business model. Android has accomplished a heckuva feat, jumping from nearly no market share a year ago to being the platform of choice for about 10 percent of new smart phones sold. Chrome has been consistently eating away at Internet Explorer since its launch nearly two years ago. And with App Engine, Google has been making a push in the cloud-platform space to which Microsoft, with Windows Azure, just showed up this winter. And then there’s Chrome OS, the browser-based operating system that Google is expected to launch by late autumn. It’s unknown how successful the novel idea will be, especially with the incoming tablet market, but considering Google’s success in other sectors it could very well grab netbooks away from Windows. Apple was nearly dead 10 years ago and has surged back to pass up Microsoft in market capitalization, and Apple did it with consumers. When you’re talking competition between Microsoft and Apple, you’re mainly talking about hand-held devices. Windows is still on more than 90 percent of computers and Safari, Apple’s Web browser, essentially has the same market share as Macintosh computers. Apple is leading the charge for mobile computing. And as Google can attest, there’s plenty of room in the market to capitalize. Microsoft, for its part, has not been able to do that lately. As Apple and Android surge in popularity, Windows Mobile hemorrhages market share. Microsoft must deliver a knock-out hit with Windows Phone 7 this holiday season. Then there’s the iPad. Apple has succeeded where others, namely Microsoft, failed to recognize the need 10 years ago. Apple has opened the door for a potentially huge new market. What really agitates Microsoft is that PCs are no longer the only incarnation of personal computing. In the MicroNokia deal, Microsoft sees an opportunity to be a player in the new personal computing incarnation, a willful answer to its competition. Microsoft tried to ignore tablets and a â€Å"fad† but will soon need to recognize the potential and get on top of that if it wishes to once again dominate the industry. Total Quality Management It is absolutely necessary for Microsoft to base quality decisions on facts, not the ego’s and ideas of executives. The outputs that they wish to hold important must be measurable. Microsoft would also do well to empower its employees on the customer interaction level. These are the employees closest to the customer and will provide the most effective feedback for future innovation. These future innovations must also be of the highest quality as that is one of the key component to total quality control. The reason quality has gained such prominence is that organizations have gained an understanding of the high cost of poor quality. Quality affects all aspects of the organization and has dramatic cost implications. The most obvious consequence occurs when poor quality creates dissatisï ¬ ed customers and eventually leads to loss of business. However, quality has many other costs, which can be divided into two categories. The ï ¬ rst category consists of costs necessary for achieving high quality, which are called quality control costs. These are of two types: prevention costs and appraisal costs. The second category consists of the cost consequences of poor quality, which are called quality failure costs. Companies that consider quality important invest heavily in prevention and appraisal costs in order to prevent internal and external failure costs. The earlier defects are found, the less costly they are to correct. Another massively important factor of Total Quality Control is the quality and happiness of the employees. A good way to ensure that is to be encouraging to your employees and offer praise when appropriate. Thank employees for doing a good job and let them know that you value them. Should something go wrong or someone makes a mistake, don’t â€Å"punish† the person. That was a big fear at Microsoft that went on too long. Punishing people only makes things worse in that the employee may become angry and bitter and may want to sabotage their work to get back at the company, or leave to work for the competition. Too many meetings at Microsoft and the fear of a declining stock price did not create an atmosphere that created â€Å"quality†. Management needed to tolerate mistakes and be more outward gazing for innovations, customer needs, and new business models. Part 2: Recommendations Bad corporate culture happens, but it can be corrected. While it is natural for bad organizational culture to develop, this tendency can be countered and a more positive and productive organizational culture can be produced, though it requires savvy and introspective management. It is within the power of each of us to do the introspective work and be more savvy, as managers or regular employees. In doing so you will improve everyone, and give each individual increased capacity to influence the organizational culture in a more positive direction. The greatest threat to an organization’s success is not always the competition. Often, it is what a company does to itself. Because of fear, companies become plagued with barriers and bureaucracy that limit success, crush employees, and infuse frustration and a sense of futility across the enterprise. It starts with a narrowing of focus, which leads to the first level of bureaucracy: parochialism. Parochialism exists when managers and departments begin to view the world through the filter of their own little silo, and build walls make of rules and policies to protect their turf. This was definitely the case at Microsoft with the Stack ranking system. When looking at how Microsoft was handled by Bill Gates, there are undoubtedly some moments that suggest that the unity of purpose was not clearly defined and never adequately addressed to the degree that it needed. As I mentioned earlier, it is possible that Microsoft has its hands in too many things. There is no focus. Microsoft doesn’t know what kind of company it wants to be. This is evident by the competition Microsoft is facing. Unity happens when leaders are committed to and engaged in the process of building a united, winning team. It requires focus, time, and energy. Unfortunately as we’ll discuss a little later on, focus may have been another contributing factor that hindered Microsoft from being the company Gates idealized in his head. Unity occurs when team members care more about the vision, purpose and health of the organization than they do their own personal agenda. Changing the mindset is essential. Unity happens when each person in the company can clearly see how their personal vision and effort contributes to the overall vision and success of the team. This involves meaningful conversations between the levels of management as well as between engineers and sales people. Unity of Purpose results when you weed out the negativity that sabotages far too many organizations. All of these things were issues at Microsoft that hindered it from having one united goal as a company. Having the right people in charge of making decisions can make a world of difference when trying to unite the group behind a cause, especially a business cause. Microsoft needs to invest in human resources to implement and maintain plans and policies. Strategically placed investments in human resources will develop a more skilled, innovative, productive and loyal workforce thus providing an organization with a competitive advantage over a less progressive competitor. Investmen t in human capital will offer Microsoft both short and long term gains to help produce not only skilled, productive employees, but also loyal and ethical employees for the long-term. Microsoft’s goal must now be to increase the ownership of employees work by providing the right incentives through HR. Especially when it comes to your employees, long-term thinking guides an organization. That’s where Microsoft missed the mark in the past and needs to focus now. Microsoft was focused on too many short term goals in the past. The vicious internal competitions need to be eliminated from Microsoft if they want to create a productive work environment. This was potentially the biggest issue in house for Microsoft. Companies can obtain a competitive advantage if they utilize strategic human resources investment practices. The real villain here was the wrongly implemented stack ranking system. Managers had a rest and vest mentality which bread ill feelings and jealousy all around. These factors were naturally at variance with team work and innovation. I recommend a better reward system that will focus on facilitating cooperation, enhancing long term thinking, tolerating mistakes because they are learning tools, and not let egos get involved. Whatever Microsoft determines it’s goals and purpose is going to be, it is important for the companies directors to remember that investing in the appropriate human resources is much more than making sure the new employees don’t impact your current paychecks and health insurance. Microsoft needs a better focus on what they are about and their position in the technology industry. These will come with a well taken care of their employee base first. I recommend they invest into a few basic human needs to help their organization stay productive, engaged and, happy during times of angst and uncertainty which inevitably come in the corporate world of today. The first focus with is to make a connection with the employees. Talking about emotions in the workplace can cause executives to get uneasy. Have you ever noticed that you never hear managers saying, Please dont get so excited or Please quit being so happy? The reality is that emotions are at the center of everything we do. The leadership challenge is not to avoid them, but instead to ignite the positive ones. The secret of getting people more engaged in their work is for their leaders to become more engaged with them. That means being willing to show up emotionally as well as intellectually. Human connection isnt a nice thing to have; its a must-have. Meaningful connections provide people with the internal fortitude they need to stay productive during tough times. Microsoft needs to be more connected to its people, and they also want them to be connected to one another. The way to do that is by talking, with real spoken words, not e-mail edicts, asking people how theyre doing and actually listening to their answers, and by providing them with opportunities to interact with one another. Corporate parties, public promotions etc will go a long was for the morale at Microsoft. Providing context and meaning to the tasks at hand will do a lot for the employees at Microsoft as well. Everyone wants to know that they make a difference in the world. When you put someones work into a meaningful context, you tap into the deepest yearning of his or her soul. The challenge for Microsoft is that most peoples days are so hectic and their jobs so compartmentalized that they often miss the larger story of how their work touches the work of others in the company, and the customers around the world. Leaders who reframe daily tasks by providing personal context quell the angst of uncertainty by giving their employees something more meaningful to think about. The best thing for Microsoft to do is to offer professional employees an incentive package that includes a bonus based on the firms gross revenue. When you bring in more, everyone gets rewarded. But dont make the mistake of tying bonus comp to practice profitability. Profit sharing seems like a good idea but it often c reates resentment by employees who dont have any control over profits. Every time an executive takes a vacation as a business trip or buys a new computer they dont really need, Microsoft employees will resent it. Bonuses based on revenues create a team environment where everyone gets rewarded for their contributions to growth. This is the ultimate motivator for many professional planner, young and old, regardless of business level. As businesses grow and become more complex, a second level of bureaucracy is reached: territorialism. While parochialism is about protecting a department from outsiders, territorialism is about controlling those inside the silo. The third and final level of bureaucracy is empire building, which is a response to perceived threats to a department’s ability to be self-sufficient. These barriers cost organizations a fortune in inefficiency, turnover, waste, and demoralization, and Microsoft is guilty of these on the highest level! Tearing down these barriers is difficult, but it can be done. I recommend resetting rules and policies, and refocusing on the ultimate mission of the organization. Territorialism can be eliminated by creating true empowerment, along with appropriate levels of accountability. Microsoft must also create a culture of courage, to enable employees to take advantage of these new freedoms and accountabilities. In the past managers definitely took advantage of their powers, and didn’t communicate to their employees appropriately. Leadership must refocus on mission success rather than just checking off their part of the process, manage reference points, and engage employees. I am confident that by doing all of these things, Microsoft can begin to become fearless, and unstoppable. Microsoft messed up internally, but also missed a number of opportunities. While Microsoft dreams of Apple-style successes with consumers, the truth is, with only one exception, consumers dont care about Microsoft in the slightest. Microsoft does, of course, make one successful consumer product, at least from a perception standpoint, and thats the Xbox 360. Today, Microsoft is being chipped away by competitors from all sides, like a mighty shark being taken down by a pack of hungry piranhas. Microsoft is just letting this happen because the company simply moves too slowly, whether its entering new markets, updating existing products, or something internal. I have read a number of recommendations in articles and online about Microsoft, and I happen to agree that Microsoft is so big that the very notion of there being a Microsoft is absurdly simplistic. This is instead a collection of often massive warring fiefdoms that dont just ignore each other but in some notable cases actually actively work against each other. Even more problematic, perhaps, Microsofts businesses are so diverse that many have nothing to do with each other. So my advice is to split up this company into two or three baby Microsofts, perhaps al ong consumer, business, and developer lines. None of these brands should have any influence from Steve Ballmer as well. Replacing Ballmer is no easy task, and while its not the epic problem that the software giant confronted when Bill Gates left, Microsofts need for new leadership will require a team, not an individual. It’s possible Microsoft doesnt need a business guy at the top, and I would recommend it needs another guy who understands technology. That way Microsoft’s managers will stop smothering good ideas. Microsoft needs to say â€Å"Yes† to good ideas more frequently. This can only happen within an organization that actually listens and rewards the forward thinkers, places like Apple and Google, who happen to be doing very well in the market right now. â€Å"Microsoft is now in the ironic position to brand itself as David to Apples Goliath, the counterculture to Apples mainstream†. I want Microsoft to turn the tables on the very upstart company that used to think different,† and I recommend Microsoft turn the page and begin this decade anew, learning from its own mistakes. Bibliography and Reference Links * Greer, Charles S. An Investment Perspective of Human Resources, Strategic Human Resources Management, (2001): 1. * Greer, Charles S. An Investment Perspective of Human Resources, Strategic HumanResources Management, (2001): 5 * http://news.cnet.com/8301-10805_3-57471170-75/microsofts-ballmer-challenges-vanity-fairs-lost-decade-claim/ * http://oneffectivemanagement.wordpress.com/2008/08/19/where-does-bad-corporate-culture-come-from-and-can-it-be-corrected/ * Civility: http://www.huffingtonpost.com/mary-prefontaine/corporate-leaders-must-re_1_b_1437445.html * Not shipping said product: http://www.kmfms.com/whatsbad.html * Competiton: http://blog.seattlepi.com/microsoft/2010/06/03/ballmer-and-microsofts-main-competitors-are/ * David to Apple Goliath: http://www.cnn.com/2012/09/24/tech/innovation/fixing-microsoft/index.html