Microsoft Corporation
The constant, fast-paced pace of today’s world is made possible by technology. Microsoft Corporation is among the most prominent companies in this industry. The company, which was founded in 1975 by Isaacson 337 (Isaacson), has become one of the most prominent players in its field. Despite its fame and success, Microsoft has faced a range of challenges, including lack of innovation in products, poor communication between departments and power struggle. Microsoft has been a strong and successful company for many years.
Microsoft was a small company that grew significantly over time. Bill Gates & Paul Allen, two of the founders behind Microsoft, worked together as students in high-school on coding projects (Stevenson). Gates graduated from Harvard in 1973. However, he left to join Allen and start a company with the Altair 8800 – “an affordable and easily constructed computer” – after Allen convinced him to do so (Stevenson). In Albuquerque in New Mexico they formed Micro-Soft to show that they created software for microcomputers.
Bill Gates, Paul Allen and their IBM work was successful after several years of failure. Microsoft moved from Albuquerque to Washington State after being hired by IBM. IBM wanted Microsoft to create an operating system to run their personal computer line (Stevenson). Microsoft did not create an operating software from scratch. Instead, it modified QDOS to become MS-DOS. Microsoft’s 1986 public offering was a result of the phenomenal sales. Microsoft released Windows OS version 1 in 1988. It was a huge success and quickly became Microsoft’s most famous product. Microsoft released many versions of Windows over the years. It also created an office suite and helped to shape the Internet.
Microsoft’s organizational structure is complex and large due to its wide range of products and services. Microsoft’s employees are divided by division into five different departments. Windows Divisions include Server and Tools, Online Services Divisions and Microsoft Business Divisions. Entertainment and Devices Divisions are also included. The departments are divided into sub-departments or groups. However, they all report to the vice president of that department. The VPs are responsible for reporting to the CEO. This setup creates an extremely tall pyramid, with centralized power. The board of director and CEO make all the big decisions. This vast hierarchy creates a formal environment with written rules and culture. While there are some informal aspects in smaller departments, Microsoft as a whole is very formal.
This structure is still rigid, but it has been influenced in part by the current Microsoft restructuring, which slowly changes the company’s strategic direction. Microsoft’s Satya Nadella implemented “Microsoft One,” a program of restructuring, with the aim to improve efficiency and innovation. Nadella’s focus on “devices, apps, cloud and devices” is a departure from the previous CEO Steve Ballmer’s strategy. Microsoft’s focus on certain categories will help them to stay on top of their products and keep up with the changing technology landscape. Microsoft, just like other technology companies responds to uncertainties in two ways: as a reactor and an analyst. Microsoft changes little with Windows unless the company is forced to.
Satya Nardella’s focus during Microsoft’s restructuring is on another problem: culture. The culture within Microsoft, which was largely developed by Bill Gates, its founder, and Steve Ballmer as his successor, has hampered innovation in the company, despite the success. Many of these problems are rooted in core beliefs and habits that are ingrained and not visible. As an example, “forced rankings” are used to rate employees according to a rigorous evaluation process (Mangalindan); employees worry about their upcoming evaluations and this prevents product innovation. In addition, the “licking of the cookie” concept (which is showing favoritism for one product like Windows and ignoring all others) kills creativity and leads to silos because of miscommunications. This causes distrust amongst employees, and hinders the creation of synergy. Microsoft is unable to move beyond the status-quo due to these restraining influences.
Satya Nadella, Microsoft’s new CEO, has a completely different leadership style than his predecessor Steve Ballmer. Ballmer was the CEO of Microsoft from 2004 to 2014 (Anders, 67). He had little room for growth beyond his vision. Ballmer had little oversight of Microsoft’s departments, but was always the one to make the decisions. Nadella does not just manage employees as Ballmer did. Instead, he aligns them and motivates them. This is enhanced by his willingness to accept change. Nadella has a quiet, humble nature that he uses to communicate with employees. Nadella thinks that his more relaxed attitude will lead to greater innovation at the company. Nadella is a leader who embodies the qualities of Level 5, which are quiet, humble and puts company success above one’s fame.
Microsoft makes decisions more based on what’s best for its company than it does about its employees or consumers. Microsoft has announced that it will be laying off 18,000 staff in order to increase its overall growth and success. Nadella believes the move to make Microsoft a platform and productivity company is “necessary.” While not the best thing for employees, Microsoft’s bottomline will benefit from this. Carrol’s hierarchy explains that this decision satisfies the legal and financial requirements of business, as well as those of society. It does not however move to the ethical or voluntary realms. Microsoft reaches the discretionary category with its many contributions to the Bill and Melinda Gates Foundation.
Microsoft Corporation has been a company with ups and downsides for the past few decades. However, it is now a company with a management concept that will help them to continue their success in the future. Microsoft’s current restructuring and new leadership is helping it move beyond its chaotic past and improve its innovation. Microsoft’s future is centered on creating a seamless experience and integrating its products and services. Microsoft will achieve its goals by embracing the next generation of technology.
