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Business Management

Three Ways to Reboot Microsoft (With a Nod to IBM)

In a fine piece today, the always incisive Jean-Louis Gassée takes aim at what he sees as Satya Nadella’s rather insipid memo to Microsoft employees. It’s worth reading Nadella and Gassée side by side but my one-sentence comment would be to endorse the latter: Nadella uses lots of words but doesn’t say enough and he has more platitudes than a politician.

Reading Nadella reminded me of another CEO of a market-leading technology company in trouble: John Akers when he led IBM in the early 1990s. At the time, IBM was attempting to recalibrate for a world in which mainframe revenues were no longer enough to lead in the new world of client/server computing. It had also missed a few boats, including even the PC market it invented. Akers was moved to say that Big Blue had “too many people standing around the water cooler waiting to be told what to do”. Nadella might profitably have said the same and left it there.

But, reading Gassée, I was also struck by an absence of suggested ways forward. This may be to Gassée’s credit as there are few advertisements in the recruitment pages of the business media seeking back-seat drivers. But IBM was fixed by some broad strokes from the hands of Akers’ successor, Lou Gerstner, who oversaw staff reductions, a major shift into cross-platform software and doubling down on services. Microsoft could surely do with some of the same attitude to rebuilding the structural foundations of the company.

To be fair, Microsoft is in much better shape than IBM was back then and, again like IBM in mainframes, its core business is healthier than some revisionists see it. Also, even if some of its most ambitious moves must be accounted failures so far (Windows on smartphones, the move into devices like the Surface tablet) then others are highly promising (the Azure cloud, for example).

But there are also a few puzzling omissions.

First, Microsoft’s merger-and-acquisitions strategy remains a porridge. Almost every other big software company sees M&A as crucial while Microsoft is a wallflower, watching the dance rather than seeking suitors. IBM and Oracle have shown the way in recent years and it’s no longer plausible to argue that financial arbitrage in the technology sector can’t be effective. Microsoft is sitting on mountains of cash and stock value that could be more profitably used elsewhere.

Second, it needs to decide whether it’s a Windows company or a multiplatform company. The port to iOS of Microsoft Office and the fact that its Nokia unit will release an Android device suggests the latter but, again like IBM in the 1990s, it needs to be more decisive in its strategy and execution.

Third, services could be a way forward. Microsoft is wary of upsetting its channel but cloud computing will already drive a wedge there. In the past it has been tentative with steps such as the Avanade business that started as a joint-venture with Accenture before Microsoft took a more minor role. But Microsoft already calls on pretty well every business in the world of note and could become a company that points the way forward for technology business change just as it pointed the way forward in software for the PC generation.

IBM might not be as fashionable a marque as Google or Apple but it should be Microsoft’s beacon today. And, two decades on from IBM’s remarkable turnaround, there are worse examples to emulate.

 

Martin Veitch is Editorial Director at IDG Connect

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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