Strategic Management: An Evaluation of Microsoft’s Practical Strategic Plan

Strategic Management: An Evaluation of Microsoft’s Practical Strategic Plan

An Evaluation of Microsoft’s Practical Strategic Plan

Laying out a desired future, a strategic plan translates an organization’s mission and vision into stipulated goal, objectives and actions. Hence the strategic plan is a document that communicates an organization’s strategy, core competencies as well as the industry dynamics. The document also stipulates the company’s sourcing, innovation and its protection as well as product development strategy. This strategic plan will map out Microsoft’s strategic direction. 
Founded in 1975 by Bill Gates to sell a version of BASIC programming language, Microsoft is one of the pioneers in the technology industry and has been one of the leading technological companies for a few decades; being number one in the software market.

1.                  Strategy

Microsoft’s strategy is “to build best-in-class platforms and productivity services for a mobile-first, cloud-first world. Our platforms will harmonize the interests of end users, developers and IT better than any competing ecosystem or platform” said Satya Nadella, the CEO of Microsoft during launch of the company’s new mission, vision and strategy in 2015 (Bishop, 2015).

By building “best-in-class platforms and productivity services”, Microsoft aims to maintain its position as a leader in the technology industry. But unlike when it was a market leader because of Windows operating system (hereafter referred to as Windows) which was ubiquitous, the new strategy looks to identify certain niches in which it will be the “best-in-class” (Liqouri, 2011).
The niches the company is targeting thus far in terms of platforms are tablets, mobile phones, play consoles, and fitness bands. Notably, all these products are “mobile-first”, meaning that they are easy to carry around. They are also “cloud-first” in that they can easily be connected to the internet.

In so doing, Microsoft has consolidated its strengths which are productivity services. It has also taken advantage of opportunities emerging in the industry, namely mobile and cloud. Windows has faced stiff competition from such operating systems as Linux, Android and iOS; increasingly becoming a weak area for Microsoft. Hence its decision to offer Windows free is timely. On the other hand, Microsoft has not been making the traditional office platforms such as mainframes, desktops and even laptops (Mitt et al., 2012). Venturing here would see it face huge threats from the entrenched players such as HP, Lenovo and Dell.

Apart from Windows, Microsoft offers other “productivity services” such as the ever-popular Microsoft Office suite (Office) and server services. Built into these services are various products such as databases, web hosting and applications. These are all available in Microsoft’s cloud service Microsoft Azure (Liqouri, 2011).

The company integrates the platforms and services to “harmonize the interests of end users, developers and IT better than any competing ecosystem or platform”. This is in line with its stated mission “to empower every person and every organization on the planet to achieve more”.

Apart from enabling it to compete effectively by utilizing on its strengths and opportunities, Microsoft stops being in direct conflict with its competitors, and in fact collaborates with them. Windows continues to be the preferred operating system for traditional platforms and Microsoft allows Android and other OS’s on its platforms. So the company’s “productivity services” are able to get onto other platforms, while other services are also available on its platforms; while still maintaining a market leadership position by offering an experience that is “better than any competing ecosystem or platform”.
2.                  Core Competencies

Core competencies are a combination of knowledge, skills and resources that enable an organization to compete effectively as well as grow. They ease market access, add value to a product so as to benefit the customer and are difficult for competitors to imitate (Srivastava, 2005).

One of Microsoft’s core competencies is having good innovators. The company revolutionized computing when it developed Windows, an operating system that still continues to have a huge market share due to continuous innovation (Liqouri, 2011). Its Office suite has also seen the company set and maintain the pace in word processing, spreadsheets and databases. The launch and consequent dominance of the market by the popular Windows, Office and SQL solutions shows the company is a continuous innovator, updating and upgrading these products to be in line with new developments in the industry (Fai, 2011).
The innovation has been aided by strong research and development at Microsoft. Microsoft’s applications, operations and infrastructure are well-researched, consistent and are trusted to support business goals for other companies. Research and development enables Microsoft to innovatively apply technology, developing products that are efficient and easy to use (Fai, 2011). This technological innovation enables the company to come up with unique platforms and services. As Nadella notes, “We will be insatiable in our desire to learn from the outside and bring that knowledge into Microsoft, while still innovating to surprise and delight our users.”

Microsoft’s customer reach has made it get unparalleled feedback from a variety of customers, from IT novices to professionals, enabling it to develop brands that resonate with users. Its Beta versions are mainly installed by IT professionals who find solutions to bugs through Microsoft’s online communities. The company also constantly carries out surveys among its users, especially those who use its platforms and services as well as those visiting its website.

This culture to learn and develop its brands is espoused by Nadella, “We need to be always learning and insatiably curious. We need to be willing to lean in to uncertainty, take risks and move quickly when we make mistakes, recognizing failure happens along the way to mastery. And we need to be open to the ideas of others, where the success of others does not diminish our own.” Consequently, Microsoft’s Windows, Office, server and cloud services are among the most researched, trusted and popular in their categories (Liqouri, 2011)..

Microsoft certificates that are awarded to individuals who excel in various Microsoft technologies are recognized in many IT industries across the world. They are requirements for career progression in certain countries. Microsoft also has a partner network where businesses that excel in offering products made from Microsoft technology showcase. The companies are awarded Microsoft competencies, which can be gold or silver, setting them apart as trusted experts in their field (Liqouri, 2011). It recently launched OneWeek, an industry festival that involves a one-week hackathon where computer programmers and software engineers develop apps and solutions using Microsoft products. Overall, Microsoft’s education competency is unmatched in the industry.

Microsoft’s conviction and persistence has also stood it in good stead insofar as surviving and thriving in the market is concerned. Notably, Windows 95 took about eleven years to develop before it was rolled out into the marketplace. The company has persistently upgraded and updated this product, despite various hurdles, such that Windows 10 is widely accepted by the end users. And despite early negative reviews for the Surface tablet and Windows phones, the company is convinced about these products and is persistently improving them to meet customer demands.   

Looking at the culture and core competencies of Microsoft, Nadella notes “when we come together as a team, with our exceptional talent and the mindset of a learner, we will grow as individuals, we will grow as a team, we will grow with our customers and partners, we will grow our opportunity, and we will grow our business going forward. And, ultimately, we will grow the impact we have in the world.”
Core competencies should be managed in response to prevailing and future industry dynamics if a company is to survive and thrive (Fai, 2011).
3.                  Industry Dynamics

The technology industry has witnessed a lot of unprecedented, disruptive change in the recent past.  Some notable changes are improvements in the processing power of computers and in chip design. While their processing power is increasing, chips are getting smaller. So whereas modern chips are able to process many commands quickly, they are small enough to fit in small, mobile platforms (Mitt et al., 2012). This fits well with Microsoft’s strategic direction towards “best-in-class mobile platforms.” Coupled with modern-day ubiquitous, fast broadband, the company has the ability to deliver “best-in-class…productivity services” via the cloud.

Today’s world is flat. This means that individuals and organizations can be able to deliver quality work regardless of where they are. This continued breaking down of digital barriers has encouraged enterprise mobility with many businesspeople and companies starting businesses or opening up branches in different parts of the world (Srivastava, 2005). Moreover some businesses are simply just online, shunning brick and mortar. Hence, Microsoft’s stated strategy that has a “mobile-first, cloud-first” approach augurs well in a world where individuals and businesses are always on the move. Company staff and companies are able to collaborate better regardless of space and time using Microsoft’s productivity services located on the cloud that “harmonize the interests of end users, developers and IT”.
This is further enhanced by Microsoft’s increased cooperation with its competitors, unlike in the earlier days when it usually engaged in patent and monopoly cases with such rivals as Google and Apple. The increased cooperation sees Microsoft offering its productivity services on non-Microsoft platforms and also it offering other services (e.g. Android and related apps) on its platforms.

Big data analytics and Internet of Things (IoT) are transforming businesses worldwide. Big data analytics involves examining large data to find useful business information for improved business processes (production, marketing, distribution, etc.) in an organization. By offering Microsoft Dynamic CRM on the cloud, the company is strategically positioned to offer a timely business solution that increases sales by enhancing productivity, intelligence and collaboration (Liqouri, 2011).

IoT involves network connectivity of everyday objects such that the objects are able to send and receive data. The objects are controlled remotely leading to more accuracy, efficiency and economic benefit. IoT is the basis of such cyber-physical systems as smart homes and smart cities. It is estimated that IoT will encompass about 50 billion objects by 2020.

Through Microsoft Azure, its cloud infrastructure, Microsoft is well-placed to offer IoT. The company already offers Microsoft Band, a health and fitness band. It is a stakeholder in SAM Labs, having provided resources, connections and expertise to help the company build and scale via the Microsoft Accelerator program. SAM Labs helps novices and experts alike build connected devices. Microsoft’s venturing into IoT is in line with its strategy of harmonizing various interests in a “mobile-first, cloud-first” world.

Microsoft further “harmonizes the interests of end users, developers, and IT” via cognitive computing which is an industry dynamic that is increasingly gaining traction. Towards this, Microsoft has a Chinese AI chatterbot named Xiaoice launched in 2014 and that has been a huge success. However its venture into an English equivalent, Tay, proved a disaster with the chatterbot being turned racist and sexual by social media users.

Microsoft’s Cognitive Services offers other businesses a solution to “build powerful intelligence into your applications to enable natural and contextual interactions” (Microsoft, 2016). The service offers tools that employ machine-based intelligence to enhance user’s experiences. These are powerful artificial intelligence algorithms that harmonize sharing of knowledge, language, speech and vision between human and machines via the cloud. Its Cortana Search service embedded in Windows 10 OS exemplifies this service.

This harmonization of end-user, developer and IT interests is further evident through Microsoft Hololens. These enable development of holograms via mixed reality, a mix of virtual and augmented reality. This machine design in in tune with 3D printing, another industry dynamic. Microsoft Hololens are envisaged to contribute to space exploration in the future, further cementing Microsoft’s strategy of “mobile-first, cloud-first”; mobile here referring to mobility of experiences.
Another industry dynamic is fluid consumption business models, with customers paying for products and services they need and use. Microsoft Azure, the company’s cloud platform, offers many different productivity services enabling customers to select and pay for services that they actually need. This is good value for both the customer and the company.

Another technology industry trend is divestiture, with big companies becoming focused on specific areas of the industry with a view to become the dominant company in the chosen area. Microsoft’s strategy sees it focus on platforms and services with a mobile and cloud slant; focusing on its strengths and arising opportunities. On completing this divestiture, it is envisaged that Microsoft will acquire some complementary and supplementary companies to become more entrenched in its chosen area stated in its strategy (Liqouri, 2011).
4.                  Technology Sourcing and Internal Innovation

As mentioned earlier, one of Microsoft’s core competencies is innovation. Its innovativeness has seen it being a market leader in the software sector for several decades, with such flagship products as Windows and Office dominating market share in their categories. Microsoft’s current position aims at maintaining this market leadership by being the “best-in-class”.
This can be achieved by constant internal innovation in the company. The Windows 10 platform is a statement of intent since, unlike earlier versions of Windows, the operating system can seamlessly cut across various devices. This innovation offers a platform for the company to consolidate development of solutions for various devices.

Most solutions from the company are now available on the cloud, apart from being available on other media such as downloads or on CDs. Most are on free or paid subscription, following on from Microsoft’s strategy of “mobile-first, cloud-first”. Microsoft Azure utilizes the company’s servers as storage spaces, saving the user the need for much space on their device. Through use of different databases, Azure enables the user to access their documents, apps and favorites while on the move, part of the “mobile-first” strategy (Value Growth Investor, 2014).

Most of its productivity services on Azure, including Microsoft Office and SQL Server, are available on most platforms including Windows, Android and iOS. Hence no matter where one is and what device they are using, they are able to access their individual and corporate documents.
To enable smooth transition between Microsoft servers and user devices, Microsoft introduced Microsoft Wireless Display Adapter. This is an area that needs more development worldwide for more access to Microsoft’s platforms and services.

Microsoft has ventured into developing various mobile platforms. These include tablets, phones and bands. It also develops various accessories including keyboards, mice and lens. In line with IoT trends in the technology industry, it is recommended Microsoft invents and innovates more IoT objects (Liqouri, 2011). Possible areas of expansion include clothing, furniture, car accessories, etc.

Microsoft can also engage in acquisition, buying innovative IoT startups and developing them to be “better than any competing ecosystem or platform”, as stated in its strategy. Moreover, Microsoft has a history of partnering with companies that use its products innovatively. It can do this with other companies that develop IoT objects.

The revamped Windows 10 can be a suitable platform for connecting servers and devices, consequently being a basis for developing smart infrastructure that “harmonizes the interests of end users, developers and IT”.
5.                  Product Development Strategy

Microsoft releases monthly updates for Windows and other Microsoft products. It eventually will phase out all other versions of Windows to remain with Windows 10, without development of new versions. This move will enable the company to focus on development of one strong platform that can compete effectively with other ecosystems.
Open platforms hasten innovation by involving developers and companies. Microsoft’s OpenWeek and Hackathon offer opportunities for innovation in various technologies: big data, IoT, cloud, cognitive computing and additive manufacturing. By offering Windows for free, Microsoft encourages innovations on this ecosystem; the same way having its apps and solutions on other platforms does.

Microsoft Office is the undisputed market leader in business solutions. This receives updates monthly at the same time as Windows. This trend of innovating to improve Office will ensure the product maintains a healthy market share for a long time. Moving the product to the cloud via Office365 and Microsoft Azure will make it attract new platforms including Android and iOS as well as Internet of Things. Switching it to a subscription will ensure a constant income and quick updates for the various versions.

Microsoft Cortina uses cognitive computing to anticipate the needs of a user or device. This AI is one of the building blocks to smart cities. Cortina gives Microsoft a chance to be a major player in development of smart infrastructure. 

Microsoft Dynamics CRM is the company’s big data analytics system. It offers individuals and companies marketing opportunities. One is able to gain profitable demographics about their various markets. Microsoft offers this to businesses throughout the world and is available on the cloud. The company needs to streamline to be the “best-in-class” (Liqouri, 2011).
Microsoft Hololens offers the company a chance to venture into space exploration. It can offer space accessories that use the mobile, cloud platform. This is in line with Nadella’s projected culture that “When we come together as a team, with our exceptional talent and the mindset of a learner, we will grow as individuals, we will grow as a team, we will grow with our customers and partners, we will grow our opportunity, and we will grow our business going forward. And, ultimately, we will grow the impact we have in the world.”

With the envisaged exponential growth, Microsoft would do well to plan to invest in more space. The server capacity needs to be analyzed vis-à-vis trend in space demand. If Microsoft got a sizeable chunk of the projected 50 billion IoT objects, its mobile, cloud service (Microsoft Azure) would be in great demand. There would be new databases and apps to create and store.

Microsoft intensively and extensively engages users in development of its products. This is through surveys, communities and devices sending bug feedback. This has served Microsoft well by making it develop and improve products to the extent that the end-user likes the product. The constant communication during product development makes the user identify with it.
6.                  Strategy to protect innovations

Globally, it is unclear what direction the regulatory environment will take. Many countries and other regulators are looking at increasing revenues from technological companies and the hitherto hardly understood digital economy (Value Growth Investor, 2014). At the same time, countries are offering various incentives to technological companies, seeing expansion overseas for some big companies. Microsoft already has 646 office sites worldwide. These mostly serve business customers in these markets and help solve complex problems.
Regulatory uncertainty does not impede expansion of companies, especially technology companies. But companies have to manage these uncertainties in their strategies. Companies that want to set up offices may have to revise their budgets and timelines (O’Sullivan. (2008). For companies that have already set up base, e.g. Microsoft, it may be an opportunity to entrench itself in the marketplace.

This is further enabled by the fact that Microsoft is one of the few companies that have comprehensive regulations regarding use of its products. Copyright laws, trademarks and or international laws apply to all Microsoft platforms and services (Bishop, 2015).

Indeed, Microsoft is indeed in a position to lead development of standards and regulations in many technology industries across the world.
Conclusion

Microsoft is well set to meet its strategy “to build best-in-class platforms and productivity services for a mobile-first, cloud-first world. Our platforms will harmonize the interests of end users, developers and IT better than any competing ecosystem or platform” Nadella (2015).

The industry dynamics are aligned in the company’s favor. The company has the competencies to develop platforms and productivity services suitable for the seeable future. Technology is progressing rapidly and Microsoft has the opportunity to be a market leader as observed by Nadella, “Today, we live in a mobile-first, cloud-first world, and the transformation we are driving across our businesses is designed to enable Microsoft and our customers to thrive in this world. It’s important to note that our worldview for mobile-first is not just about the mobility of devices; it’s centered on the mobility of experiences that, in turn, are orchestrated by the cloud” (O’Sullivan, 2008)
Hastening integration and communication between its platforms and other platforms will ensure its productivity services are available to as many users as possible.

Falling barriers for the technology market has led to innovation and investment in this industry, nationally and internationally. These privately-funded companies will increase to develop new platforms, services and apps. Microsoft is well-placed to acquire some of these and also develop profitable partnerships (Mitt et al., 2012).

Standardization of goods needs to be looked into by regulatory bodies to ensure various technologies observe regulations in a market. This especially applies to IoT objects that must observe health and safety rules. It also applies to privacy and security e.g. hospital and financial details. Microsoft must lobby for standardization of regulations nationally and internationally to offer a fair playing field for all.


References

Bishop, T. (2015). Exclusive: Satya Nadella Reveals Microsoft’s New Mission Statement, Sees ‘Tough Choices’ Ahead. http://www.geekwire.com/2015/exclusive-satya-nadella-reveals-microsofts-new-mission-statement-sees-more-tough-choices-ahead/ Accessed 18 June 2016.

Fai, F (2011), Technological Core Competencies: Reality or Myth?, University of Bath, Uk,  Fai DIMETIC April 2011, Retrieved from, http://dimetic.dime-eu.org/dimetic_files/Technological%20core%20competencies.pdf, , Accessed 18 June 2016.

Liqouri, T (2011), Microsoft Corporation, Strategic Management Term Paper, Retrieved from < http://www.thomasliquori.me/Word%20Files/Microsoft_Corporation.htm#_Toc295758207, Accessed 18 June 2016.

O’Sullivan (2008). Strategic Knowledge Management in Multinational Organizations, New York. IGI Global. 

Srivastava, S. (2005), Managing Core Competence of the Organization, Vikalpa, Vol. 30. No. 4, Retrieved from http://vikalpa.com/pdf/articles/2005/2005_oct_dec_49_63.pdf, Accessed 18 June 2016.

Value Growth Investor. (2014). Why Microsoft Is Becoming A Great Company Again. http://seekingalpha.com/article/2126963-why-microsoft-is-becoming-a-great-company-again?page=2

Mitt, M. A; Ireland, R. D; & Hoskisson, R. E (2012), Strategic Management Cases: Competitiveness and Globalization, Cengage Learning, 1 Jan 2012 - Business & Economics

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