Introduction
Microsoft Corporation, a company formed in 1975, initially envisioned facilitating the acquisition of technology devices in homes and workplaces. A research conducted in 2013 by the International Data Corporation indicated that there was an overall decline in consumerism for the traditional personal computers market segment. This revelation came in the wake of Microsoft's struggle to stay afloat in a dwindling niche and informed the company's re-evaluation of its core priorities associated with its software domain. There was an urgent need to diversify its products and services and transition from dependence on its conventional business of software sales by studying current consumer trends and developing appealing products and services that have a competitive edge.
The new CEO, Satya Nadella who took over from Steve Ballmer embarked on a mission to achieve two things; the reinvention of the products and services portfolio and staff transformation. These two fronts were measured to realizing positive business outcomes for profitability for its shareholders and value for its customers. Renowned for over 40 years as a technology giant, Microsoft has the financial capacity and research and development ability attributes that make it stand out among its competitors. These attributes are critical in driving innovation and the company is always eager to explore new opportunities that derive profit and growth. Through R&D, the corporation is able to recognize new business channels and emerging trends and capitalize on its capacity to drive change to be a market leader. R&D also informs decision making that enables the company to select options that create a great potential for profits.
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The company develops operating system software, software licenses and other consumer applications including Windows platform operating systems, Xbox gaming console, Office applications, Bing search engine among other products and services. However, market dynamics, new experiences and innovations in the technology industry, have forced the company to continually metamorphose in its adaptability to change from a ‘devices and services’ approach to a ‘mobile first, cloud first’ focused company.
The envisioned transformation was designed to realign the company to innovate faster, increase efficiency and improve capability by reorganizing its organizational culture on various spheres including collaboration, allocation of resources, staff empowerment, and marketing. This new paradigm shift came with its own share of challenges like staff re-training, role-swapping which are necessary for transitioning people from conventional approaches to the ideal state that aligns with the organization’s objectives.
Analysis
The organization’s culture and structure, which traditionally constituted four areas, namely; system software, application software, cloud solutions and devices would be reorganized to reflect a new strategic alignment (Cava, 2017). The new structure sought to trim down the workforce in some sectors while creating more jobs in strategic areas. This, he explained would achieve two objectives, first by simplifying work and then enable integration of Nokia devices to achieve greater accountability, agility and speed.
Part of the new plan was to reduce management levels to enhance information flow and decision making. The idea was to have lean people management (Bort, 2014), business processes and support models, yielding in greater efficiency and productivity across all teams. Integrating Nokia devices and services would optimize digital life experiences by offering affordable smartphone solutions to the mid-tier market segment.
Satya Nadella’s restructuring program also split the company into three segments named, Experiences & Devices, Cloud and Artificial Intelligent(AI), and Research, a measure which he explained would increase consistency in applications and hardware designed for AI and cloud computing. Microsoft has carefully examined and focused on their areas of specialization and this has borne fruits by an ever-growing market.
New partnerships and acquisitions are meant to supplement innovation, which is an investment for the future. New audiences are now accessible on office 365, collaboration is managed by Ms Teams, gaming and mixed reality can be accessed through Xbox and Mixer, volumes of Azure services and many more Microsoft technologies are now available for transformation. Examples of companies which have adopted Microsoft technologies include Boeing, TetraPak, ThyssenKrupp, Land O' Lakes, Schneider Electric, Cleveland Clinic among many others.
The company recognizes the presence of a technology paradigm shift towards artificial intelligence for both cloud and edge (Patel, 2017). The factors that favour this shift allude to an environment characterized by multi-device and multi-sense, which makes AI all-encompassing in all aspects including interaction with devices, apps and infrastructure. Another characteristic is the distributed nature of computing and consumers want innovative ways of enhancing their digital presence by adopting intelligent systems aimed at driving growth. Skills gaps in the workplace are an impediment to productivity and Microsoft's LinkedIn acquisition delivers a diverse pool of global teams to improve productivity. Microsoft 365 is a business incubator which is tailored to digitize critical business functions. Azure offers cloud infrastructure integration that supports global requirements for enterprise and business customers as well as developers for application support.
Emerging technologies must integrate artificial intelligence to spur competitive advantage. The company invests heavily in research and development of AI technologies which fuse with Microsoft products such as LinkedIn, Bing, Cortana, Hololens, Skype et cetera. Applications developers should be able to add AI capabilities to their programs, especially in multi-billion industries such as gaming.
By the corporation diversifying its portfolio, it aims to maintain a competitive edge and dictate market trends through leveraging on its financial muzzle and new leadership. The new CEO's style of management changed the institutional culture from the short-sighted focus on their niche products to a new outlook adapting to the changing consumer preferences with a mission to empower masses through mobile cloud in his ‘mobile first, cloud first' slogan, which spurs innovation and growth through customer connectedness and assure investor confidence and value.
This transition strategy has worked well for Microsoft because it has reinforced its corporate culture, improved trust among stakeholders and investors as well as providing a platform to explore new growth opportunities. The company has also significantly increased its range of products and services, improved its financial books indicating considerable growth in revenues. This profitability is an indication of positive business strategies which are working for the company in line with its corporate objectives. The investor environment is assured and prices for products and services have consistently become better than previously. The new paradigm is beneficial because all the three segments reported a strong balance sheet in the second quarter of 2017 (Patel, 2017), in which market capitalization was a record $530 billion, an unseen phenomenon for the past 21 years. The sharp increase in prices is a clear indicator of profitability and good news for shareholders regarding their attractive return on investments.
Overall Evaluation
Satya Nadella as a change agent brought speed in a business whose drive was slow and eventually influenced organization-wide culture change. The transition of Azure and other enterprise software division including SQL Server and operating systems into software as a service were among his achievements within a short period of time. However, there were barriers like resistance from the internal staff especially the SQL Server team, but this did not deter him from moving forward with his shifting to the cloud. He forged new alliances within the engineering ranks with Scott Guthrie's support which helped him implement the cloud transition. The sales compensation model at Microsoft was restructured to accommodate commission accelerators for both Azure and Office 365 sales. In a nutshell, the CEO's outlook has redefined Microsoft's new vision premised on growth and brand appeal focused on maintaining profitability from its business channels.
The adoption of the ‘mobile first, cloud first’ culture in Microsoft strengthened the brand globally and increased both consumer and shareholder confidence and unlike the previous reliance on residual income, the company now focuses on new growth areas where its technological innovation is a game changer in the industry. The corporate culture has become dynamic and employee motivation is on the rise and ready to measure up to new challenges ( Govindarajan, 2016) . Overall Nadella has managed to increase the company’s market share by USD 250 billion, a phenomenon which seemed impossible when he took office.
Recommendations
The appointment of Satya Nadella is a good thing because he has insider knowledge of the corporation and is keen on embracing innovative approaches that will drive technology to the next generation. In order to increase the flexibility of schedules customers and partners need to be given responsive subscription packages which will enable them to adapt to the rapid metamorphosis. Targeting emerging markets will increase the company’s revenues as is knowledge and competencies acquisition for new innovations. Further diversification of its product portfolio with leverage on emerging opportunities will drive future growth.
Employee innovation should be encouraged and rewarded. These are the people with expertise in the products range within the company and motivating them will encourage the generation of innovative ideas for the future. Encouraging collaboration, risk and even failure will keep the staff glued to achieving their targets and integrate a culture of hard work ( Dhillon & Gupta, 2015) . Leadership within the organization should be aligned with the overall objectives of the company and the traditional big man syndrome within the corporate world rejected in order to achieve the desired approaches. Using brand ambassadors is always a good strategy to gain inroads to new territory and gain more market access. The corporation should capitalize on the goodwill of its loyal customers to drive expansion and push new products into emerging markets.
Conclusion
Organizations must always strive to adopt innovative strategies that can contribute positively towards their growth and enhance their competitive advantage. Leaders who are innovative and creative are drivers of business performance and significantly increase their institutions' revenues and often have lead roles in influencing an organization's corporate culture. Microsoft's brand positioning is strategic and provides a futuristic competitive edge as both customers' and shareholders' confidence has improved. At the end of the day, Nadella has managed to bring a fresh outlook into the internal organization of the corporation by destroying the bottlenecks that have for over 20 years stifled futuristic innovation.
References
Bort, J. (2014, August 03). Source: Despite Massive Layoffs, Most Microsoft Employees Still Like Satya Nadella. Retrieved March 16, 2017, from http://www.businessinsider.com/microsoft-employees-still-like-nadella-2014-7
Cava, M. D. (2017, February 20). Microsoft's Satya Nadella is counting on culture shock to drive growth. Retrieved May 07, 2017, from https://www.usatoday.com/story/tech/news/2017/02/20/microsofts-satya-nadella-counting-ulture-shock-drive-growth/98011388/
Dhillon, I., & Gupta, S. (2015). Organizational Restructuring and Collaborative Creativity: The Case of Microsoft and Sony. IUP Journal of Business Strategy , 12 (1).
Govindarajan, V. (2016). Adaptive leadership 101. Leader to Leader , 2016 (81), 42-46.
Patel, S. R. (2017). Microsoft''s Paradigm Shift: Strategically Reinventing the Brand, Supporting its Vision for Growth, and Strengthening Its Competitive Position.
