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Dinosaurs can dance – the Microsoft story

As I approach 10 years at Microsoft (disclosure), I can honestly say that when I started here, I didn’t think I would be here that long. Granted it was not an uninterrupted 10 years. I left in 2016 for two years. But the fact I returned is a testament to Microsoft’s transformation. And that is what this story is about, chunked up as follows (headings are deep linked):

Before going into a little background on my history with Microsoft and innovation (another main theme of this story), here are two posts that prompted mine. Effectively they are a study in contrasts. I share these not to denigrate one company over the other. It’s more to do with the arc of time and about the art of reinvention.

Background

My history with Microsoft is useful to understand where I’m coming from when I say I’m surprised to still be here.

I’m an innovation junkie. I’ve sought it out all my life, personally and professionally. I left corporate life to run a start-up and after that joined another start-up. I did so in the belief that corporates could not innovate and start-ups were a better outlet for it (I’ve written an eBook about this). I then joined Microsoft in 2012 as part of the acquisition of the start-up I had joined (Yammer). It was not because I wanted to.

That was when Steve Ballmer was running Microsoft. Love him or hate him (he has had mixed reviews in his tenure as CEO), it was at a time when Microsoft’s star was dimming, i.e. no innovation.

I remember, when Steve Ballmer came up on the big screen playing in the Yammer offices, to announce the acquisition to employees from both companies, a feeling of dread descended – I was joining a dinosaur.

I stuck around giving things a chance and then Satya Nadella became CEO in 2014. He started doing the right thing, Nokia was abandoned. At the same time, Customer Success Managers (a hot new profession deemed critical to the success of SaaS start-ups) were thought unnecessary. Myself and a global team that had been brought over from Yammer were jettisoned.

There were some positive signs when I left to join another start-up, but it did seem the writing was on the wall and that Microsoft was doomed to continue its slide into oblivion.

Two years can make a big difference when you have the right intentions and in 2018, I was headhunted back into a newly formed Customer Success organisation. In the two years since leaving, Satya had also shown he was serious about changing the company. I’m so glad I re-joined, its been a wild ride and I expect it to get wilder still.

So enough with background. My view on Microsoft and it’s history with innovation, as I view it.

The operating system era

This is the era when Bill Gates presided. It was the founding era and clearly it was a success. Some say that the real innovator was Steve Jobs with his GUI for Macs which Microsoft supposedly copied, but Xerox were really the inventors of that. And Microsoft just co-opted it better than Apple and this is innovation after all.

And yes Microsoft made software applications but it was Gates’ vision of a computer on every desk that led to the focus on the operating system I believe, i.e. Windows. It was the gateway to everything at the time, before the internet became a thing.

The innovation was making it easier for consumers to use PC’s in their homes, effectively democratising computing. Before this, clunky MS-DOS was the domain of computer geeks in business.

The web era

Microsoft very nearly missed the boat on the web or internet boom. If it was represented by the browser, in the mid to late 90’s, then the king was Netscape and Microsoft nowhere to be seen. It had been very successful with personal computing but the next stage of evolution was going to be online and connected.

What was Web 1.0 then become Web 2.0 and the heart of the later was social media and networking. Microsoft did not dominate in this latter era so much as enable it through the browser (for consumers and the enterprise, a gig in which I partook).

Internet Explorer, love or hate it as many now do, was at the time an innovation. It beat Netscape in market share and again democratised access to web based services.

The innovation was not so much a great browser but that Bill Gates recognised it was the next big thing and pivoted Microsoft on a dime to dominate in the next era (not so easy for the behemoth it had become). It was also the beginning of a downfall when Microsoft was accused of being a monopoly, in part because it forced manufactures to load Internet Explorer on PC’s.

Microsoft’s stock price – a proxy for how the market rates its innovation success.

The cloud era

A long period of time would have to pass before Microsoft regained its former glory. This was roughly the time after Satya Nadella became the CEO and I re-joined (coincidence, I think not šŸ˜).

Again Microsoft was by no means first in developing cloud based services on the infrastructure and application side. But fast follower, just like in the browser wars, can be a very successful innovation strategy.

I think undisputedly, Microsoft’s two main product lines, Azure on the cloud infrastructure side and Microsoft 365 on the productivity application side, plus several others (Windows in the main), can now be deemed to be a huge success.

The stock price chart I pasted above provides some indication of this, as per the caption point.

The innovation was again how fast Satya Nadella was able to pivot the company and shift its existing business applications and workloads into cloud services. A lot of Microsoft business was historically on premise and/or packaged software and shifting to become a SaaS company in a very short period of time was nothing less than remarkable.

Looking ahead – The AI era

The AI era is upon us, in earnest. I say that because its been with us for a while already. But now with the recent announcements and releases by OpenAI (which I am writing about here) and others, it has truly arrived.

And Microsoft has again shown its innovation chops by stealing a march on Google through its early investments in OpenAI and recent announcements.

Just yesterday came another announcement in among a recent slew – watch the video below.

I believe this is going to be truly transformative and Microsoft is on the verge of another great big leap forward. This shows that you can still be an incumbent and innovate and it’s not just the domain of nimble start-ups.

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