Reference no: EM133092378
Strategic Shift at Microsoft
AACSB Standards: Global
Microsoft, a company known well for its operating systems and productivity software, is currently one of the world's most valuable companies, valued at around $1 trillion, as of 2019. The value stems from a strategic shift by Microsoft from their obsessive focus on the Windows operating system to a focus on delivering cloud services and embracing open source. This turnaround is not only affecting the planning and strategy of Microsoft, but also caused a major change in their employees and the company culture.
There has been a tremendous growth in cloud services, as more and more companies store their data in the cloud rather than on-premise. Microsoft's Azure cloud division has grown rapidly and is strongly competing with Amazon's cloud services. Judson Althoff, EVP Worldwide Commercial Business at Microsoft says, "It's not about selling product anymore," he said. "It's using cloud services to transform their business. This new wave of compute - the intelligent cloud and the intelligent edge - will shape everything we do for decades to come. This is your opportunity. This will create more opportunities for the Microsoft ecosystem than we have seen in our history. It's not some science future story. It's here and it's now."(channel buzz)
Interest in the cloud has not only changed the way companies save data, but it's also changed the way the providers make their money. The method that Microsoft accounts for their sales has completely changed with the new strategy. Before, money was earned by customers buying licenses for the software operating systems. Now, money is only earned with the time that the customer uses the cloud service.
Since the market-focus has been turned to a completely different model, the company culture has changed dramatically. 40,000 Employees had to be trained to understand how their customers used the cloud, so they could encourage more usage. Sales personnel no longer prepared sales forecasts but concentrated more on retaining and obtaining customers. In addition, salespeople were given different incentives for sales, since the revenue generated is so different with cloud services. Microsoft also used technology to make meetings less frequent but more productive, enable salespeople to spend more time with their customers and change manager's behavior through technology to spend more time with employees. Meeting technology allows participants to gauge how useful meetings are by measuring how much the participants were on their smartphones. "The shift has been successful so far because it has not just strategic insight but change in focus across the workforce." (Bartleby 2019)
Microsoft is also working with regulators to ensure compliance. The design of Azure ensure that any data-protection laws can be easily adhered to. Azure's top officer, Brad Smith, proposed policies, "such as a 'Digital Geneva Convention' to protect people from cyber-attacks by nation-states. He is also behind Microsoft's comparatively cautious use of artificial intelligence and calls for oversight of facial recognition. The firm has been relatively untouched by the current backlash against tech firms and is less vulnerable to new regulation." (Economist 7/25/2019)
In conclusion, the technology disruption that Microsoft faced could have brought down the company, since they were so focused on their operating system. But they were able to not only make a strategic planning shift, but also change the employees and their culture to greatly succeed.
Critical Thinking Questions
- Trace the history of Microsoft's financials. Use Excel to graph its stock value to see when the turnaround discussed in this case began to have an effect.
- Microsoft was able to make meetings less frequent but more productive. Research the Internet for software that enables productive meetings. Choose one that looks the best and write a one-page paper on its features.