The departure of Microsoft CEO Steve Ballmer has fueled much discussion about what Microsoft must do to compete successfully when changing technology may threaten its strongest products.
It is often said that bigger bets and greater risks are needed when giant corporations show signs of losing their luster. And, Microsoft is being encouraged to do just that. For example, in the August 26, 2013 Wall Street Journal article “Next CEOs Job: Fix Microsoft’s Culture” there are various statements about how Microsoft is not taking enough risk. The article tells of a former Microsoft executive who expressed concern that the company’s employees worried about losing their jobs and who “said such fear has made people stop trying to take risk.” Additionally, someone who led projects at Microsoft is quoted in the article saying “he couldn’t persuade Mr. Ballmer to roll the dice. ‘The company can’t afford another big bet right now’ … Mr. Ballmer told him nearly a decade ago.”
Statements like these give the impression that much greater risk is what Microsoft needs if it is to compete successfully as technology changes. Generally, however, when challenged by changing markets, huge corporations no longer at the pinnacle of success do not need greater risk. Ballmer is right about avoiding big bets. Microsoft should not be throwing the dice. But, they should be highly selective about what they choose to pursue. And, that’s where Microsoft should focus on improving.
One area where Microsoft especially needs to be more strategic is when to lead with something new versus when to follow as a late entrant. In the past, Microsoft often entered markets late, yet was still soon very successful. Today, that is much less likely. Microsoft needs to recognize that it may be facing similar circumstances to what IBM experienced years before. Just as desktop computers weakened the dominance of a mainframe oriented IBM, the advent of mobile devices can weaken the position of a desktop oriented Microsoft. And, once technological change weakens a company’s dominant position, it can be much more difficult to succeed as a late entrant to the market.
Microsoft needs to pay attention to this as it continues with late entries now that its position of dominance is weakening. Those late entries have much less success potential than they did when Microsoft had far greater technological and market dominance.
Yet, this does not mean Microsoft needs to take big risks and become highly innovative. But, it does mean Microsoft must determine how it can build on its strengths to evolve its business in ways with good success potential while mitigating risks. Microsoft needs to find ways to do this without primarily being a late-to-market follower, which once worked quite well, but is now far more difficult to accomplish. Essentially, Microsoft must learn to integrate its previous strengths with the direction for its future.
