Microsoft’s Lost Decade

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As Microsoft announces Satya Nadella as the new CEO to right the ship, the fox can’t help but think of this original post from August 23, 2012 that outlines all the history and missed opportunities that the new CEO will be inheriting. It’s not just Steve Ballmer’s most recent organization changes that Nadella is inheriting, but decades of political jockeying, short-term goals, and lack of vision. Best of luck!

 

From Kurt Eichenwald’s expose on Microsoft’s ‘lost decade’.

For what began as a lean competition machine led by young visionaries of unparalleled talent has mutated into something bloated and bureaucracy-laden, with an internal culture that unintentionally rewards managers who strangle innovative ideas that might threaten the established order of things.

Doing something unintentionally often produces the same consequences as doing it on purpose.

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.

A few powerful people have successfully derailed Microsoft for over a decade.

One Apple product, something that didn’t exist five years ago, has higher sales than everything Microsoft has to offer. More than Windows, Office, Xbox, Bing, Windows Phone, and every other product that Microsoft has created since 1975. In the quarter ended March 31, 2012, iPhone had sales of $22.7 billion; Microsoft Corporation, $17.4 billion.

This does paint an interesting picture, but is comparing any company with Apple really fair anymore? I mean it’s fun, but is it fair?

My favorite insight in the article…

[when the dotcom bubble burst in 1998] the strategy for success at Microsoft was turned on its head. Where once creating innovations was both the thrill of the job and the path to riches through stock options, guaranteed financial success could now be achieved only the way it was at stodgy old General Motors or IBM—through promotions.

“People realized they weren’t going to get wealthy,” one former senior executive said. “They turned into people trying to move up the ladder, rather than people trying to make a big contribution to the firm.”

And this started the precipitous increase in middle management positions and rampant infighting to get ahead at all costs. Microsoft’s decline in this decade can be tied to hiring people (a lot of people) in the early 90’s whose most important goal was to get rich, not create an amazing product, not caring about the customers, not making the world a better place through technology, but getting rich.

By contrast, the fox feels compelled to unleash one last unfair comparison with Apple:

When I got started I was 20 or 21, and my role models were semiconductor guys like Robert Noyce and Andy Grove of Intel, and of course Bill Hewlett and David Packard. They were out not so much to make money as to change the world and to build companies that could keep growing and changing. They left incredible legacies. […] the rewarding thing isn’t merely to start a company or to take it public.”
– Steve Jobs, Fortune January 24, 2000

In December 2000, Microsoft had a market cap of $510 billion to Apple’s $4.8 billion.
As of June 2012, Microsoft is down to $249 billion and Apple is up 11,000% to $541 billion.

A decade lost indeed.

Fox Tip: If my only reason for crawling out of my den every morning is to make money, I’m not going to succeed.

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