Last week, Microsoft started a new chapter in their history. The company’s CEO Steve Ballmer launched an aggressive plan to reshuffle the business, which Microsoft hopes will help them regain the market presence they have lost to external forces such as Apple’s highly-successful iOS product line and Android’s new-found domination of the mobile market. As such, Microsoft is using this opportunity to change their approach from being a product-orientated business into a full device and services company.
To do this, they have split the company into a variety of groups. The groups segregate the company into different disciplines, but the intention is that there will be more communication between the groups of core services (such as Operating Systems Engineering) in order to create a “One Microsoft”. For example, the Operating Systems Engineering group is responsible for operating systems across all of Microsoft, regardless of the platform: consoles, mobile devices, PC and back end systems will have their OS’ developed by the same team for the first time.
That’s not the only interesting move. Another group to look out for is the Devices and Studios Engineering group, which incorporates all of the company’s hardware development opportunities and the supply chain requirements which go alongside them. The other groups will target applications and services, cloud and enterprise and advanced strategy and research amongst teams that will carry out more traditional tasks such as marketing, HR, finance, legal and business development.
In theory, this business unification plan could lead to better products and services. Having key staff working together in the same environment means there is the potential to offer more consistency across core areas. Microsoft has had a long history of internal division, with different departments seemingly at war with each other (from an outside perspective). That old-school approach to business just doesn’t work in this new market, with slick start-ups proving they have the traction to keep their flat structures rolling into the mainstream.
Companies are realising that communication and shared resources should be valued above all else when creating products. For example, in Microsoft’s case there was no point having one team developing all of the Xbox One (from OS to hardware) when they already have one of the most successful OS development teams in-house. Microsoft realised that their internal OS team could create something that compliments the product and all of the other OS offerings they deliver.
Whilst the benefits of this approach are readily apparent, there are also some potential drawbacks. The main one is that this could lead to groups taking on projects that they’re not familiar with, creating products that aren’t really for the market they should be targeting. We saw this in action with Windows 8, where Microsoft arguably alienated their desktop audience in order to cash-in on the recent tablet craze. As a result, the OS received low sales as well as bad press. Moreover, the main issues with the software still haven’t been fixed. Even the unveiling of Windows 8.1 couldn’t alleviate some of the grievances from the tech community.
The key to making a business structure like this work is through market research. History has proved that businesses need to find the correct balance between listening to their customers and telling them what they want before they realise it themselves. Apple are perfect at this, with the iPod, iPhone and iPad all creating hysteria despite their simplistic nature. They create products that feel completely obvious as soon as they’re announced, yet defeat the conventional thinking of their competitors. Their template may not work for all companies, but it is so successful at this point that it definitely should be applied to as many situations as possible. At SBE, we try to dream up services and solutions before we’re even asked to by our customers. This is a business practice that has delivered excellent results for us and everyone we work with.
Whether this new Microsoft can take on the challenges of the modern technology landscape remains to be seen, but they seemingly have the talent to make substantial progress. If they use this talent in the correct way and listen to the needs of their customers, they will be successful. However, if they continue with the same old Microsoft way of thinking, they may find themselves in a difficult situation. Their competitors are taking huge market shares out of every industry Microsoft has positioned themselves in, and it’s only a matter of time until someone comes along that will try to challenge for an even bigger piece of the pie. Apple and Google are already winning in some of these battlefields and once they push on, Microsoft will be in trouble.