In Satya Nadella’s email to employees one section in particular stood out to me:
As we look forward, we must zero in on what Microsoft can uniquely contribute to the world. The opportunity ahead will require us to reimagine a lot of what we have done in the past for a mobile and cloud-first world, and do new things.
We are the only ones who can harness the power of software and deliver it through devices and services that truly empower every individual and every organization. We are the only company with history and continued focus in building platforms and ecosystems that create broad opportunity.
Though there are few specifics in the email, but as a general principle the first part of this is pretty good: Microsoft needs to focus on what it “can uniquely contribute to the world.” All companies need to know what it is that they’re uniquely good at, shore that capability up to keep it uniquely good, and put it at the center of every product and service they offer to consumers.
Here are some examples:
- Google – uniquely good at ingesting and analyzing data about the world and the people in it in such a way as to serve up content and advertising that is very effectively targeted at end users.
- Apple – uniquely good at tightly integrated software, hardware and services that make computing experiences natural, intuitive and enjoyable.
- Amazon – uniquely good at developing logistics and information technology to maximize efficiency in the delivery of physical goods and IT infrastructure.
The problem with Nadella’s summary of Microsoft’s core strength is that it’s backward-looking: it talks explicitly of history rather than capabilities, and this is a core problem Microsoft faces as Nadella takes over. I would argue that Microsoft is not uniquely good at anything at this point: its main competitive advantage at this point is scale in key areas such as operating systems and productivity software, which are based on certain advantages it enjoyed in the past. But this is a bit like Facebook saying it’s uniquely positioned because it’s the world’s largest social network, or that it’s the only company with history and continued focus in building successful social networks. The core capability isn’t the achievements of the past but what enabled the company to achieve those things. Unless they can continue to do those things, they will lose the one advantage they have, which is scale.
Microsoft has no particular advantage in software at this point, and suffers from a major disadvantage as well, which is that its two major existing software products – Windows and Office – are so widely used that it is almost impossible to evolve them without alienating some users and over-serving many others. Google, on the other hand, truly does seem capable of building “platforms and ecosystems that create broad opportunity” – just look at Android.
If Microsoft is to be successful long-term, it has to get past this historical thinking and get at the core of what it can really be uniquely good at as a company. There’s an enormous and talented team of people at Microsoft, but no-one has yet articulated accurately why they should be successful in any of the spaces that really matter today and in future.
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