Inside Microsoft: the untold story of how the internet forced Bill Gates to reverse course

Introduction

The case deals with Microsoft’s ability to transform its core products and services in response to changing market dynamics and the formation of the Internet Industry with cut-throat competition amongst various players. It showcases how Microsoft was an Operating System (OS) focused organizations. Other organizations such as General Motors Corporation and IBM leaders in their product categories failed to read the fundamental change in their industries. But, Bill Gates and team were able to see the shift in customer preference and usage of Internet.

The product development focus involving number of resources working on aligning Internet to product offerings, the budgetary allocation for such projects was absent in Microsoft’s strategy. However, within 6 months the organization was able to reinvent itself. What is of particular importance is the clarity of communication that Bill Gates and his core team sent to the employees and Wall Street analysts. Microsoft’s absence in the Internet product offering space helped traditional competitors exploit the vacuum.

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There was a boom in internet registered sites between the 1991 and 1994. A lot of dotcom businesses were being formed all who needed technology to run it. America Online (AOL) was starting to make its presence felt. The industry had already showed signs of moving on from television centered data usage to exploiting the benefits of internet. The internet was no longer viewed as a techie’s domain and the industry recognized the fact.

Question: 1. What is/are the fundamental thing(s) this case is telling me?

Answer: 1.

The case study dwells with the following - Leadership and its influence on the organization - The importance and difficulty of large corporations undergoing change The case study differentiates between the leadership influence of Bill Gates and his ability to steer the organization to a radical business model. Whereas, other organizations such as General Motors and IBM failed to recognize customer preference change, Bill Gates reacted to such changes. He encouraged an open culture where he was open to feedback and criticism of his employees.

He sensed opportunities and challenges and was not afraid to make a complete U-turn in decision making. He organized think tank meetings when he wanted his employees to discuss important issues with him. He bought about a structural thinking approach while evaluating options. He asked his employees to study the impact of Microsoft changing its core focus and the right amount of money the organization should invest. Even when change did happen at Microsoft, all employees were made to feel part of the change process. Communication in form of emails, letters and video tapes were sent to all employees and the belief was ingrained in the employees that the leadership knows what the best business model is.

Question: 2. How does this case study relate to the Terminal Course Objectives (TCO’s)?

TCO. A. Given an organization and industry context, identify and suggest a strategy to facilitate the success of a technologically driven organization The success of a technologically driven organization rests on the following parameters: - Ability to market the technology products - Managing the life cycle of the product - New product development The case study is relevant to all the three above aspects. Microsoft found that their products would not be marketable if they were not integrated to the internet experience. The lifecycle of the product was very important for Microsoft and they decided to make changes to MSN even before it was launched. Since its inception to its rollout MSN had to go through fundamental changes to enable convergence with internet.

TCO. B. Given an organization and industry context, identify the technological competencies of the organization In the case of Microsoft the technological capability of the organization is to transform from an OS approach to integrating it with new challenges such as the internet. Apart from the hard skills to help program systems, the soft technological skills of understanding technological advancement, customer usage and adoption of technology in every day life and estimating the impact of Microsoft’s potential change in focus are some of the technological competences that helped Microsoft.

TCO. C. Given a company situation be able to describe the key external and internal forces that influence effective technology strategy. The key external and internal factors that influenced effective technology strategy were - Business environment (external factors) - The competition (external factors) - Team skills (internal factors) Business environment in case of Microsoft was skewed towards being negative as the regulators were in the midst of a huge investigation concerning Microsoft’s alleged anti- competitiveness practices.

The competitive business environments such as Netscape’s public offering that saw its stock rise by over a 100% in the initial days of listing and creating a bull run and potential analyst and market pressures around Bill Gates to match the achievement of Netscape were one of the influencing factors for Microsoft to recognize the potential of internet. More than 20 million people were already surfing the world wide internet using software that didn’t belong to Microsoft. The web with a boost from Sun Microsystems Java platform was already threatening the Window’s dominance.

Internal factors such as team skills played a key part in effective technology implementation with teams structured around specific product development initiatives. The teams worked in cohesiveness to integrate web into the business model. TCP/IP got integrated into Win95 and Windows NT, the applications group agree to give word processing program to enable the ability to create web pages. Cross functional teams came together to make Microsoft’s internet strategy a success.

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