Is There Value in Being “Handcuffed by History”?

Being “handcuffed by history” can have negative connotations. It evokes images of not being able to change with the times. It can be associated with the failure to change that destroys once prominent companies like Kodak, whose demise has become a classic reminder of the damage done by not changing.

In this context, an analyst at Stifel Nicolaus & Company recently spoke favorably about changes taking place at Microsoft under its CEO Satya Nadella. “He’s clearly not handcuffed by history,” said the analyst, Brad Reback, referring to how Nadella is making changes at Microsoft. Reback said this in the March 30, 2018 Wall Street Journal article “Microsoft Looks Beyond Windows” by Jay Greene.

The article reports that Microsoft is reorganizing its business. “The move is designed to focus Microsoft on its biggest areas of growth,” the article said. The article explained that Microsoft’s Azure cloud computing operations had revenue growth of 98% in the latest quarter, that “Nadella is willing to shift the company’s focus away from Windows,” though “for most of its 43 years Microsoft and Windows have been nearly synonymous.”

As I see it, Microsoft’s pursuit of cloud computing is a positive move. Here I’ll say what I’ve said many times before: as my 25+ years of researching business success repeatedly finds, companies succeed by building on strengths. And, Microsoft has strengths that can apply in cloud computing.

However, it’s a company’s history that produces the building blocks for strengths. So, in that context, being “handcuffed by history” actually has a positive impact. Being “handcuffed by history” allows the company to build on the strengths it has developed throughout its history. Getting too far away from that can severely weaken a company.

So, consistent with analyst Brad Reback’s Wall Street Journal comment, in some ways Microsoft is not “handcuffed by history” in that changes are being made and the company is moving beyond Windows. On the other hand, in terms of building on its strengths, Microsoft is “handcuffed by history” in the changes it is making, and that enables Microsoft to succeed with those changes.

This is consistent with what Microsoft CEO Nadella said in the book he wrote not long ago. The book was titled “Hit Refresh”. As the book explains, its title describes the way Microsoft is changing its business. According to the book, Microsoft is changing much like what happens when someone hits refresh to update a computer screen. Hitting refresh does not erase the screen and replace it with something entirely new. Hitting refresh merely updates the screen with whatever changes have been made, leaving everything else on the screen intact.

As I see it, since hitting refresh ties the changes to what was there before, hitting refresh is essentially a form of being “handcuffed by history”. In that context, being “handcuffed by history” is positive and can pave the way to success. And, that appears to be what Microsoft is doing. For example, in the article, it says, “Mr. Nadella called the future of Windows ‘bright’ as the company pushes to develop features that take advantage of new types of devices and emerging technologies such as artificial intelligence.” In my view, being “handcuffed by history” in the right way with Windows can be positive for Microsoft. Successfully being “handcuffed by history” has a meaning much like hit refresh, rather than a meaning associated with being stuck in the past, failing to change, and ending up like Kodak.

So, the answer to whether there’s value in being “handcuffed by history” depends upon which meaning is used. If it keeps a company stuck in the past and unable to pursue truly promising new opportunities, then being “handcuffed by history” is detrimental. But, if it moves a company forward in ways that build on past strengths, then being “handcuffed by history” leads to greater success.

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