Microsoft has crowned their next CEO.
On February 4, 2014, Microsoft named Satya Nadella as the successor to Steve Ballmer’s Chief Executive Officer position and changed Bill Gates’ title from “Chairman of the Board” to “Technology Advisor.” Nadella has been around Microsoft since 1992 and his 22 years with the tech giant saw some formidable success within his cloud and enterprise division.
But Microsoft’s announcement comes with the reminder that these are shaky days – competition is raging, consumer success is lagging and important decisions must be made that will have a rippling effect on Microsoft’s future.
So, it shouldn’t surprise you that everyone has an opinion on what Nadella should do to get the $78 billion dollar behemoth back on track as a technology leader. And since my professional world revolves around Microsoft, I’m ready to weigh in with mine from the perspective of a consumer, business vendor, partner and student of business.
Microsoft and the Consumer
The strategy is to keep Windows in front of you at home and mobile so you’ll be more comfortable with it at work and demand the Microsoft stack instead of Google or others. Meanwhile back at the office, folks typically BYOD (Bring Your Own Device), so we now have tablet OS by Apple, Google and Microsoft throughout the workplace.
Nokia and the Windows phone have a very small market share and are not gaining enough ground to compete. Think Bing compared to Google search. Yes, it’s a decent product but Android is eating both Microsoft and Apple up in market share. Although Apple has smartly remained a premium placement and highly profitable, my guess is Apple will innovate around the wearables and explode into a new product line. To date, the only real success for Microsoft with the consumer has been the Xbox. Good job, but this certainly doesn’t leave Microsoft top of mind.
RECOMMENDATION: Punt and refocus elsewhere – buy a competitor or create a strategic partnership. You are too late to the game. Why not Partner with Apple to take on Google Android? You would blend Apple UI/device mastery with enterprise channel. Disrupt and change the game.
Microsoft as Business Vendor
There are many viable options other than Microsoft now. Google and Salesforce are creeping into the Enterprise. And while change is expensive, so is Microsoft. EAs vary drastically from negotiation to negotiation. Volume, Open, OEM, SPLA… Too many options and too confusing. Many argue they are purpose built to be cryptic to maximize revenue. I can’t disagree here.
Licensing motivation by Microsoft does not seem to be based on what is best for the business customer. Aaron Levie’s company, Box is built entirely upside down from Microsoft. They built a product 100% around what the business customer could not get from IT expeditiously. Box made it simple to use. And it is growing from the inside out in the Enterprise. Licensing is dead simple also.
Salesforce is starting to lose some steam with folks because of function bloat. Too much of anything is bad. KISS folks. Training shouldn’t be needed every time a new release comes out. Otherwise there is diminished ROI for the business. Making things simple to use is really, really hard. Spend your time there, Microsoft. Delight the Enterprise at every touch point. Listen and truly care about the CIO’s success as they fight for their lives in the next five years.
RECOMMENDATION: Simplify everything. Rework licensing from ground up. Get closer to your top 100 customers and listen to what they really need. Innovate around what they want. Create a game changer and if your players can’t do it, you have the wrong team.
Microsoft as Partner
IDC reported recently that Microsoft’s revenue is 95% based on partners. PC and server manufacturers, ISVs, SIs, developers, consultants, hosters, etc… There is a massive $2 trillion ecosystem revolving around Microsoft.
In the Ballmer era, it seems that Microsoft has forgotten that Microsoft grew dramatically from the partners. Yes, the relationship is symbiotic; one cannot survive without the other. Recent moves like cutting the Office 365 sales incentives are leaving some partners stunned and looking at other product lines like Google and Salesforce.
Changing partner competencies on a whim and cutting channel funding are deeply affecting the lives of long time Microsoft fans. Conservative estimates of channel in any industry are 20-30% of total revenue growth in a year. How does another $20 billion next year sound Microsoft shareholders? If the partners are successful so is Microsoft. Same theme here. Get close to the partners. If Office 365 and Azure are your themes, great. Have a transparent conversation around how to enable the partners for success, and they will drive those businesses to the moon. Ignore the partners and go it alone and you will fail.
RECOMMENDATION: Increase spend on channel and enable partners for success. Get closer to them. Build your roadmap around partner success. Partners are close to your customers and will tell you what to build.
Microsoft the Business
Each business varies only in headcount and revenue. Everyone has the same problems. I won’t pretend to imagine trying to change the culture of a 100,000 employee company, but one thing is clear, it will require a reboot.
I still stand by to say that, for the quickest turn, Microsoft needed the Ford CEO to hit ctrl alt del. But apparently Gates wasn’t willing to stop looking over the shoulder. Be that as it may, Microsoft needs to focus on the customer, not revenue. And remember who accounts for 95% of their revenue. Yes, the partner. Not the enterprise or consumer. Embrace Net Promoter Score (NPS) or similar measures of satisfaction and kill things that aren’t working and invest in programs that help the partner succeed.
Stop looking at the competitors. Put your head down, listen to the partners (who are listening to users) and make something truly special. Change the game and you will change the future of Microsoft.
RECOMMENDATION: Simplify and get back to what you do best, making software. Change the culture and make partner success your #1 priority and measurement. Innovate to create game changers that are outside of Windows and Office. No more “business as usual.” Change the way we all do business for the better.