Last week a remarkable op ed appeared in the New York Times, authored by a former Microsoft executive (Microsoft's Creative Desstruction), that indicted his former company, as only an insider can, for its suppression of innovation through internecine infighting. You can imagine the splash this made in Redmond.
"Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence. It’s not an accident that almost all the executives in charge of Microsoft’s music, e-books, phone, online, search and tablet efforts over the past decade have left."
Adding insult to injury, the Brandamentalist, David Ansett, posted this scathing indictment of the Microsoft brand this week on his blog based on consumer associations as reflected by BrandTags.
I forwarded the New York Times article to our speaker, Kate Mulcahy. Here's what Kate had to say.
There are some painful lessons for all large companies and the challenges that comes with success. I agree that change has to start with the top leaders attitude and actions. And at times, it means having the courage to replace the CEO, as with McDonald's from 7-8 years ago. In 2003 MCD stock was just above $12 per share and McD's was no longer relevant to consumers. McD's learned a lot from performance problems and it clearly taught many of us humility. It also taught senior leadership to never take success for granted. As Carol knows, the simplest analysis of what went wrong is the lack of focus on 3 brand-building basics: 1) Renovation,
2) Innovation and 3) Marketing. Creativity was not a supply issue, it was a demand issue. By the way, MCD stock is currently around $60 a share.
My question for the class is whether the Microsoft brand is irretrievably tarnished or whether, like McDonald's, it's possible to recover greatness? What do you think? What would it take?
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12 comments:
I do not think that the Microsoft brand is irrevocably tarnished. Companies often go through periods of turmoil. One really relevant internal company conflict that I remember was the struggle between John Sculley and Steve Jobs in the 80s, which resulted in Jobs leaving the organization for a period.
With Microsoft, it is clear that internal problems exist, and those problems have served to stifle the technological innovation that the company needs to keep up with a fast-paced market. However, the company is still very powerful and profitable, and it would take a great deal of misfortune to cause a drastic decline in the organization.
Maybe this op-ed piece will be the catalyst for change at the company, but the real change will most likely come, as it often does, when earnings projections are lowered and the market reacts accordingly.
Regardless of when it happens, the company will have to make some significant changes in how it is perceived, as well as the way it operates. Microsoft has the capital and talent to do it. The question is not "Will they be able to change?", but rather "When will they do it?"
I absolutely agree that Microsoft is NOT irrevocably tarnished.
Let's look at Apple for example. When I was young, we had an Apple computer in the house. This must have been right around the time Apple was crashing and burning and software developers were abandoning them left and right. My father had purchased an Apple computer the year before and after about 9 months, it had become obsolete. I vividly remember him saying several not so plesant things about Apple.
Of course we all know where Apple is now. This story proves that no company, especially a company with the cash and stature that Microsoft has, should be counted out before its time. The accusations made against the Microsoft culture are serious. In a tech company that requires innovation to survive, Microsoft must somehow reestablish the culture of innovation that bred the success they have seen in the past. However, I think they absolutely can accomplish this if they address the core issues. Apple did it. My father has an ipod =)
Irretrievably may be a little harsh. Would the question be better phrased, can it recover its mojo? (urbandictionary.com definition: http://www.urbandictionary.com/define.php?term=mojo - talent, sex appeal, charm, magic, ability to bounce back).
Carol
I firmly believe that Microsoft can recover it's "mojo."
The process will take a great deal of work, but it can most certainly be done.
First and foremost, Microsoft must part with associations with it's "old ways." The easiest, but most costly, way of accomplishing this feat is to do away with key Microsoft branding elements. This includes, but is not limited to: The red, yellow, blue, and green flower graphic scheme, the window logo, and even the branding of its software suites (i.e. Microsoft Office, anything with the "Windows" tag) etc.
McDonald's was able to reinvent itself only through a complete visual rebranding of its image and all associated elements (product packaging, menu display, etc).
In my opinion, Microsoft can spend a great deal of effort in rebranding itself to shed off it's negative light, but unless the rebranding is done in a very visual way, customers will not buy in to the improved image.
Microsoft can definitely get its mojo back, although I think it will demand a major cultural shift within the organization. On Microsoft’s website, its mission is to “help people and businesses throughout the world realize their full potential.” However, I think most would agree that a culture “in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence,” does not seem to be focused on this mission. If the culture at Microsoft can shift its focus back onto what made them great in the first place, they can recover greatness.
The brand can definitely recover its mojo. I think Microsoft has built too strong of a following and brand name to quickly allow negative publicity to irretrievably detriment their image. However, not responding to this could ultimately lead to that just. I think Microsoft needs to be cognizant of the culture they have developed, both good and bad, and develop ways to fix the negative feelings amongst employees around the issue. This can be done through several mediums, both internally and externally – building awareness around their customers and letting their communities and potential employees know that they realize where they can improve and make an effort to create change in these areas.
Another point to consider is whether this OpEd was written by someone who witnessed a destructive company culture, or whether they and their groups inability to navigate the political waters led to them describing the culture as destructive.
That being said, the examples they listed as MS not being a current innovator does paint a consistent narrative. Coming from the software industry I can say that diplomacy and basic abilities to work with other departments for the company's benefit are often in short supply. Techies have a rep for being territorial, but can be some of the most helpful folks you'd ever meet. The problem is too often tech management doesn't know enough about their team's responsibilities to know when to lobby other groups, when to compromise, and when to defend their team. Too often they then just take a constant defensive posture rather than making their groups see the outsider's idea's value. Hopefully that is not what's really happening in Redmond because it stifles innovation, and slowly kills morale.
While Microsoft may not have the positive brand associations that Apple boasts of, I do not agree with the idea that Microsoft's brand is in dire need of recovering its greatness. Even as it stands today, Microsoft has a great brand which commands significant respect and an even larger following. That said, Microsoft has never had the 'mojo' to compete with Apple's innovative streak to begin with. In the early days of microcomputers, Apple's Macintosh line boasted a graphical user interface almost a decade before Microsoft moved away from DOS and came up with a rudimentary copy that was Windows. The only reason Microsoft achieved the success it did over Apple was because of its strategic partnership with 'IBM Compatible' machines which owing to their modular design and open specifications proved much cheaper than the more technically advanced Apples. In this sense, Microsoft and Apple are and have been two entirely different animals from day one - Apple relies on innovation to improve customer experience, whereas Microsoft relies on its historically high market share and historically acquired fame (brand equity?).
Even today, any new improvements that Microsoft makes to its software offerings are more or less aimed at playing catch-up with Apple and other competitors. However, even this is more than enough to keep the company alive and kicking. Microsoft is a behemoth. If it continues the way it is currently operating, it will continue to live comfortably. If it is able to establish a more innovative culture, it may well start gaining on Apple.
I'm going to play devil's advocate here. While I don't think Microsoft's brand has been ruined, I think that if the accusations are true, it will be impossible for them to recover under the current management and certainly much easier with a new brand.
My proof for this comes from Xbox. Its association with Microsoft is almost an afterthought, and in 2 generations of hardware became a major player in the video game world.
The need for a separate brand is driven by two factors. First, looking both forwards and backwards, it's all over the place. It needs to support every computer component and yet also tries to give a fantastic user experience regardless of what it's being built around. This is why Steve Jobs is known as such a control freak - he wants to create the absolute best user experience and to do that, you have to control every aspect of it. Microsoft's business model only grants them moderate control over the internal hardware, and thus they're hamstrung when trying to compete with Apple.
The second factor is that there is too much negative equity built into the Windows brand, as evidenced by the Brand Tags post. That said, Windows got them where they are. It's familiar to if not welcomed by most computer users. That is a massive advantage for average companies and one they should continue to develop.
Where I would devote the extra energy is to taking what Windows does well and creating an entirely new OS dedicated to the user experience developed in a new department. This would let a new creative team develop that they could emulate elsewhere while proving they can compete head to head with Apple under a new brand. This would also spur innovation that could be integrated into Windows and vice-versa.
I'm going to play devil's advocate here. While I don't think Microsoft's brand has been ruined, I think that if the accusations are true, it will be impossible for them to recover under the current management and certainly much easier with a new brand.
My proof for this comes from Xbox. Its association with Microsoft is almost an afterthought, and in 2 generations of hardware became a major player in the video game world.
The need for a separate brand is driven by two factors. First, looking both forwards and backwards, it's all over the place. It needs to support every computer component and yet also tries to give a fantastic user experience regardless of what it's being built around. This is why Steve Jobs is known as such a control freak - he wants to create the absolute best user experience and to do that, you have to control every aspect of it. Microsoft's business model only grants them moderate control over the internal hardware, and thus they're hamstrung when trying to compete with Apple.
The second factor is that there is too much negative equity built into the Windows brand, as evidenced by the Brand Tags post. That said, Windows got them where they are. It's familiar to if not welcomed by most computer users. That is a massive advantage for average companies and one they should continue to develop.
Where I would devote the extra energy is to taking what Windows does well and creating an entirely new OS dedicated to the user experience developed in a new department. This would let a new creative team develop that they could emulate elsewhere while proving they can compete head to head with Apple under a new brand. This would also spur innovation that could be integrated into Windows and vice-versa.
Microsoft is not irrevocably tarnished. Even The Simpsons poked fun at the cut-throat reputation of Microsoft. Though these accusations are grave, the general consumer will pay little attention. As long the company monopolizes the computer software industry, it will continue to be a major player. After all, no one expects Microsoft to be a feel good company. Do these accusations really surprise anyone? In fact, I can imagine Microsoft taking pride in the op-ed piece because 'only the strong survive' at this company.
This information is related to brand strategies and very important for newcomers in business.
It's always useful in business.
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