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
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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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