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Microsoft Innovative - YES according to AD in WSJ

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Microsoft is famous for its back story of a couple of nerds who changed personal computing for the entire world.  They went from a few thousand dollars in revenue to$70 billion in revenue each year.  They must have been innovative to accomplish such a feat and have $77 billion in the bank.  They just spent $7 billion of that hard earned cash to buy Nokia's Devices & Services business. 


Then, why did they have to point out not once, but twice about innovation in their full page ad on the back page of Section A in the Wall Street Journal?  Here are the two quotes with emphasis and commentary added by me. 

"By bringing together these great teams together, Microsoft will be able to deliver more choices and faster innovation to consumers in phones and smart devices of all kinds" 

I thought a couple of years ago that Microsoft gave billions of dollars to Nokia and its CEO Stephen Elop (a former Microsoft executive) to accomplish the task already.  Microsoft and Nokia were already joined at the hip as partners when Nokia gave up its own operating system in favor of Windows. 

Staples has the "Easy Button."  Perhaps, Mr. Elop has the "Innovation Button." 

"Together, we will create more unified development, manufacturing, and marketing efforts to bring innovation to market with greater efficiency and speed." 

The market did not think so, and erased 4.6% of Microsoft's share price after the announcement.  That decline in share price pretty much wiped out the nice bump in Microsoft shares after CEO Steve Ballmer indicated he would retire within 12 months.  


Ballmer went on to say in a Wall Street Journal story on the same day,"For us to really fulfill the vision for what we can do for our customers, we have evolved our thinking." 

Very recently Ballmer announced the "devices and services" approach at Microsoft after a major reorganization of the 100,000 person company (now 132,000 after Nokia acquisition).  Sounds like he is going all in for devices.  Other than the X Box gaming device, Microsoft does not have a successful record creating hardware.  See Surface Tablet and Microsoft's recent $900 million write off for unsold inventory. 

The Takeaway

You need an Innovation Engine to help create an ecosystem of innovation.  You cannot decree it, you must work hard to create it. 

Your turn.  Tell me what you think.  Please comment below.

  1. Does your business have a culture and climate of innovation?
  2. What is the most innovative new product or service your company has created in the last 5 years?
  3. Do you feel that Microsoft and Nokia can out innovate Google's Android platform and Apple's iPhone platform?

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The post is very on point. Microsoft has many fine qualities in which to be proud. However, innovation in the last 5 years is not one of them.

posted @ Friday, September 06, 2013 8:14 AM by Rob Berman

Microsoft doesn't have the greatest track record in creating their own devices. But I see it more as a software issue than a hardware one. As you pointed out, the tablets had to be written down to the tune of over $900 million. The majority of complaints and reports attributed the problems to the operating systems. Microsoft has a record of deciding what is needed and not listening well to their customers. The tablet and Windows Phone are two good examples.  
Regarding the purchase of the Nokia phone division, this is interesting. Nokia had already fully committed to running Windows Phone exclusively, aside from the simpler phone models. Microsoft in the reorganization separated the software group to keep other phone manufacturers interested in Windows Phone. So its not clear exactly what value the purchase of Nokia brings. On a separate note, I wouldn't be surprised if there was some concern over Mr. Elop's commitment to Nokia shareholders.

posted @ Friday, September 06, 2013 1:50 PM by Jay Borden

Excellent post. To add, it is not sufficient to have an innovation goal, culture or process. There is also a need for portfolio wisdom and risk.. 
Microsoft is so big and so dependent on (and one could say addicted to) the revenues of a single thing called "Windows" and a single customer segment called "business". Regardless of all the great technical innovations they have come up with, they could not be successful because they were managed as mere side-shows to add but not to affect the big machine. 
Balmer, a great sales leader, would have found it very difficult to take his eyes off the sales line and take a hit on the main product. So potential breakthroughs were only cautiously developed and marketed. Problem is that by not doing so, and simultaneously making blunders in the Windows line, they hurt themselves in every way. That portfolio thinking is critical, even if some lines are not big revenue generators - today. 
Thus the difference between Balmer a sales leader and Jobs a Marketing leader.

posted @ Friday, September 06, 2013 1:50 PM by Dvavid Davidovic

1.Yes,our company is having a culture and climate in innovation. 2.As we are in manufacturing process of paper pulp machines and carbonless papers. 
We are very much strict on the quality innovation and analysis of customer need. 
3.Yes due to this collaboration the two company's can prove there talent. Google and apple are creating innovative software and applications on their own. In this collaboration the Microsoft can help in software and Nokia can continuing on doing innovative applications and can maintain same quality of phone. The quality of Nokia is very good I am a fan of Nokia even i use this phone. It is the best collaboration which going to help the customers to use more technological phones and software.

posted @ Saturday, September 07, 2013 12:54 AM by Ramakrish

Excellent points. Thank you Rob, Jay David, and Ramakrish.

posted @ Saturday, September 07, 2013 9:23 PM by Jatin

Very insightful post Jatin- much in character with who you are! 
Clearly, amongst all the many things that Microsoft and Nokia teams would do- the designs, the manufacturing, the market development, bringing " choices" for customers and driving innovations that will feed into these choices is that one ONE element that will hugely impact the success of Microsoft and Nokia.. Can they out do Apple? Can they create excitement through innovations that will create a buzz of anticipation? Microsoft would do well to leverage Nokia's Lumia platform.  
To the comment about Ballmer and his ultra focus on Sales numbers- nothing wrong with that- but if Sales focus could bring innovation to customers- then I would say, bring it on! Too often, Sales Focus becomes self serving and not customer serving. Can we drive innovations here that make the customer believe the sales person actually listens..?! 

posted @ Tuesday, September 10, 2013 8:52 PM by JP Singh

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