Microsoft and the lack of Disruption Management

Very interesting discussion going on about a NYT article on Microsoft's inability to innovate vs Apple:

But the much more important question is why Microsoft, America’s most famous and prosperous technology company, no longer brings us the future, whether it’s tablet computers like the iPad, e-books like Amazon’s Kindle, smartphones like the BlackBerry and iPhone, search engines like Google, digital music systems like iPod and iTunes or popular Web services like Facebook and Twitter.

The NYT offer up:

Good old silo sieges....

When we were building the tablet PC in 2001, the vice president in charge of Office at the time decided he didn’t like the concept. The tablet required a stylus, and he much preferred keyboards to pens and thought our efforts doomed. To guarantee they were, he refused to modify the popular Office applications to work properly with the tablet. So if you wanted to enter a number into a spreadsheet or correct a word in an e-mail message, you had to write it in a special pop-up box, which then transferred the information to Office. Annoying, clumsy and slow.

...but you get those in every company, thats a given. What you need is something in the knitting that stops the legacy business silos (which have the big budgets) from squashing the New Things.

Unlike other companies, Microsoft never developed a true system for innovation. Some of my former colleagues argue that it actually developed a system to thwart innovation. Despite having one of the largest and best corporate laboratories in the world, and the luxury of not one but three chief technology officers, the company routinely manages to frustrate the efforts of its visionary thinkers.

But even then its not a Microsoft thing only, and its not enough just to squish the Barons - Apple was in the Doldrums after Jobs left, and perked up when he came back. Ballmer is no Jobs (nor a Gates, for that matter), he's an excellent Operator of What Is, but not a Visionary of What Is Not. Ozzie has not had enough impact (Vista, anyone?). Excellently executing the Status Quo makes not much issue over 2 years but makes a big difference over 10 years (to paraphrase Bill Gates), which is why share price has been falling for years. Take the endgame of that tablet story:

...even though our tablet had the enthusiastic support of top management and had cost hundreds of millions to develop, it was essentially allowed to be sabotaged. To this day, you still can’t use Office directly on a Tablet PC. And despite the certainty that an Apple tablet was coming this year, the tablet group at Microsoft was eliminated.

Thats not the fault of silos, thats an inability of top management to get the big battalion barons off the pot. That can only be solved by the absolutely resolute Top Management - ie the CEO.

I think this one is also a key point:

Part of the problem is a historic preference to develop (highly profitable) software without undertaking (highly risky) hardware. This made economic sense when the company was founded in 1975, but now makes it far more difficult to create tightly integrated, beautifully designed products like an iPhone or TiVo. And, yes, part of the problem has been an understandable caution in the wake of the antitrust settlement. Timing has also been poor — too soon on Web TV, too late on iPods.

The value chain is now far more integrated. Its not clear to me that Microsoft needs to own the hardware (like Gates, I agree its very risky) but what they do need to do is be able to do is build great software as a fast follower.

Why is it Android, not a Microsoft OS in the competing smartphones to the iPhone? Where are they in lightweight e-Readers and tablets? As Stowe Boyd points out, they should (and could) have done a lot better in the Social Media tools arena.

No, I think this is Microsoft's top management being too keen on keeping the fat profits of the existing products but forgetting to watch the disruptive stuff closely enough. The irony is that Microsoft (and Sun et al) profited from the last generation of IT companies falling into the same trap. IBM and the BUNCH (Burroughs, Univac, NCR, etc), DEC et al were so wedded to the margins of their existing mini and mainframes they just couldn't bring themselves to invest (and cannibalise) their own revenues with DOS and UNIX boxes and got nailed. IBM had a cathartic shift - a Creative Destruction Moment if ever there was one- and the rest went to the wall. Microsoft now faces that challenge, and doesn't have a Jobs it can recall. Who will play Gerstner for Microsoft then?

And before anyone praises Google too much, that's them in 10 years or so - we are already seeing their inability to make money and great products outside of their core competence of search Ads.

(Incidentally, re Disruption Management, I spent some time last year working with Adriana Lukas (one of the other contributors to the Social Media in Enterprises event this week) trying to piece together how companies might manage themselves through all this. More Later, as they say.