Microsoft may be the most striking example ever of the phenomenon that Harvard academic Clayton Christensen famously identified in his 1997 book, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press). Good managers, Christensen wrote, tend to direct resources toward protecting established lines of business, usually by investing in incremental improvements that help pad profit margins.
Christensen called these “sustaining innovations.” We call it playing defense. It’s not that Microsoft lacks creative talent or that it simply has run out of ideas. In fact, the company has an abundance of both. But for most of the last quarter century, it has overwhelmingly devoted these vast resources to the innovative defense of its existing franchises. That’s why it has missed opportunity after opportunity to launch important new businesses. And why, in all likelihood, it will miss many, many more.
I can personally attest to this mentality. Talk to folks about some innovative idea at Microsoft and what you will hear is: “Well, that is a great idea, but this could potentially cut into product XYZ’s sales.” Sure, they are intelligent enough to recognize it is a good idea, but they are unwilling to absorb it into their own group for fear of risk to their group’s control or sales. Most often it is the case that the innovative idea gets put into incubation or research purgatory. This is where true innovation takes place at Microsoft. Yes, there is lots of innovation taking place at MS. However, it is almost entirely done outside of product groups. Moreover, it hardly ever is absorbed by product groups. Perhaps this is due in part to the type of person MS has hired in the past. This personality type, generally speaking, is unwilling to assimilate the ideas of others. In the abstract they are may be keen on a given tech/idea, but would rather implement it themselves. Most often this leads to them making the same mistakes another has already learned from. Sure, buying an existing tech (e.g.- purchasing a 3rd party) and forming a group around that is no problem, but try getting one group to absorb ideas from another – innovation seems to rarely bubble down from incubation or research. In general, Microsoft’s products are only innovative when they absolutely have to be and in my honest opinion they are pissing away $6B a year on research which product groups will never integrate. Perhaps they need a different type of personality in management. I don’t know. I wish they would apply more of the innovative stuff that comes out of their incubation teams and MSR.
Read the above FC article. Carleen, the author, is right-on with respect to many of her/his points (got me what gender Carleen is). If you really want to get deep on the topic of MS innovation take a look at the other articles this author has on this subject: “Microsoft Skills” and “Lessons on Innovation from Microsoft“, which seem to all be peices of a three part series. Feel free to give me a summary on the latter two . 🙂
Aaron Fulkerson 