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How Microsoft Became Innovative Again

• Behnam Tabrizi

Inside the cultural turnaround that helped the tech giant think like a startup.

How did Microsoft revive its culture of innovation? For years, the company has been written off for playing defense on its position in the tech world. But, as signaled by its partnership with OpenAI and its challenge to Google’s search supremacy, it has gone back on the offense. The about face was, at its core, a cultural shift, driven by CEO Satya Nadella. He drove this by inviting an existential moment when he stepped into the job, reconsidering the company’s purpose. Then, he laid out strategic changes that would enable the company to think more like a startup, and made business decisions that committed the company to this new direction.

For years now, observers of tech have written off Microsoft as a 20th-century phenomenon, fat and happy from its Windows monopoly. The tech giant hadn’t had a breakthrough innovation in decades. It was rich enough to be a fast follower, but too big and bureaucratic to lead in any market. Jeff Bezos was known to gesture east and admonish his Amazon colleagues not to become complacent like their Seattle neighbor.

• BT Behnam Tabrizi has been teaching “Leading Organizational Transformation” at Stanford University’s Department of Management Science and Engineering and executive programs for more than 25 years. An expert in organizational and leadership transformation, he has helped thousands of CEOs and leaders plan, mobilize, and implement innovative transformational initiatives. He has written ten books, most recently  Going on Offense : A Leader’s Playbook for Perpetual Innovation  (IdeaPress Publishing, August 2023). TabriziBehnam

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Microsoft Change Management Case Study

Microsoft is one of the most successful and influential technology companies in the world, having transformed the way people live, work and communicate with its innovative products and services. 

But behind this success story lies a series of significant transformations and changes, which have enabled the company to stay relevant and competitive in a rapidly evolving market. 

In this blog post, we will examine the change management strategies and techniques that Microsoft has employed over the years, and how these have helped the company to successfully navigate through various transformations and emerge as a global leader in the tech industry. 

We will also look at some key lessons that other organizations can learn from Microsoft’s approach to change management, and how they can apply these to their own transformation efforts.

Overview of transformations and changes implemented by Microsoft 

Microsoft has undergone numerous transformations and changes since its establishment in 1975. Here are five significant transformations or changes that have occurred:

• Transition to software development: Initially, Microsoft focused on hardware development and created BASIC language software for Altair 8800, a popular computer in the 1970s. However, after Bill Gates realized the potential of software development, the company shifted its focus to software, which led to the creation of MS-DOS, Windows operating system, and other popular software products.
• Move to the internet: With the emergence of the internet in the 1990s, Microsoft recognized the potential of this new technology and invested heavily in it. This led to the development of Internet Explorer, MSN (Microsoft Network), and various web-based applications.
• Diversification: Microsoft was initially known for its operating system and software products. However, in recent years, the company has diversified its offerings to include hardware such as Xbox gaming consoles, Surface tablets, and other products.
• Cloud computing: In the early 2000s, Microsoft recognized the potential of cloud computing and began investing in this area. The company launched its Azure cloud platform in 2010, which has become one of the leading cloud platforms in the world.
• Open source: In the past, Microsoft was known for its proprietary software and closed ecosystem. However, in recent years, the company has embraced open source technology and has made significant contributions to the open-source community. For example, Microsoft has made its .NET framework open source, and it has released various tools and platforms for open-source developers.

What are those factors that drove changes at Microsoft?

Here are some factors that led to the transformations in Microsoft:

• Market changes and competition: As the market for computer technology evolved, Microsoft needed to adapt to changing customer needs and preferences. In addition, competition from other technology companies also pushed Microsoft to make changes to stay relevant and competitive.
• Technological advancements: The emergence of new technologies such as the internet, cloud computing, and mobile devices created new opportunities for Microsoft to expand its offerings and reach new markets.
• Leadership changes: Over the years, Microsoft has had different leaders at the helm, and each leader brought their own vision and priorities for the company. For example, when Satya Nadella took over as CEO in 2014, he emphasized the importance of cloud computing and digital transformation, which led to significant changes in the company’s focus.
• Customer feedback : Microsoft has always had a strong focus on customer feedback, which has played a significant role in shaping the company’s products and services. Customer feedback can also drive innovation and change in the company’s offerings.
• Cultural changes: Microsoft has undergone cultural changes over the years, such as the adoption of open-source technology and a more collaborative and inclusive work environment. These cultural changes can help drive innovation and lead to new ideas and products.

How strong leadership caused transformation in Microsoft ?

Strong leadership has played a critical role in all of the transformations made by Microsoft over the years. Here are some ways in which strong leadership has contributed to these transformations:

• Clear vision and direction: Strong leaders at Microsoft have always had a clear vision and direction for the company, which has helped to guide its transformation efforts. For example, Bill Gates and Steve Ballmer led the company through its early years, and their vision of putting a computer on every desk and in every home helped to drive the company’s success in the 1980s and 1990s. Similarly, Satya Nadella’s vision of empowering people and organizations to achieve more has driven the company’s recent focus on cloud computing and digital transformation.
• Strategic decision-making: Strong leaders at Microsoft have made strategic decisions that have helped to position the company for success in a rapidly evolving market. For example, the decision to shift the company’s focus from hardware to software development in the 1980s was a strategic decision that helped to pave the way for the company’s success in the following decades.
• Agile approach: Strong leaders at Microsoft have embraced an agile approach to change management, which has enabled the company to quickly respond to changes in customer needs and market trends. For example, under Satya Nadella’s leadership, Microsoft has shifted its focus to cloud computing and digital transformation, which has helped the company to remain relevant and competitive in a rapidly evolving market.
• Employee engagement and empowerment: Strong leaders at Microsoft have recognized the importance of employee engagement and empowerment in driving change management. For example, under Satya Nadella’s leadership, the company has created a culture of innovation and collaboration, and has encouraged its employees to take risks and experiment with new ideas.

The biggest outcome of the successful changes at Microsoft 

The biggest outcome of the successful changes at Microsoft is the company’s continued growth and success in a rapidly evolving market. By successfully navigating through various transformations, such as the shift from hardware to software development, the move to cloud computing, and the focus on digital transformation, Microsoft has been able to remain relevant and competitive in the tech industry.

The company’s continued success has been reflected in its financial performance, with Microsoft consistently posting strong earnings and revenue growth in recent years. In addition, the company’s products and services, such as Windows, Office, and Azure, are widely used and trusted by customers around the world. Overall, the biggest outcome of the successful changes at Microsoft has been the company’s ability to stay ahead of the curve and remain a leader in the tech industry.

Final Words 

Microsoft’s successful implementation of changes provides valuable lessons for organizations looking to navigate through periods of transformation and change. By adopting a customer-focused approach, embracing an agile methodology, empowering employees, and having strong leadership with a clear vision and purpose, Microsoft has been able to successfully navigate through various transformations and remain a leader in the tech industry.

Additionally, the company’s willingness to experiment with new ideas and take risks has enabled it to stay ahead of the curve and remain relevant to its customers. As a result, Microsoft’s continued growth and success serve as a testament to the importance of effective change management in driving organizational success. Overall, Microsoft’s successful implementation of changes provides a valuable case study for other organizations to learn from and apply to their own transformation efforts.

About The Author

Tahir Abbas

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People Centric Organizational Change – Examples, Challenges and Future

How to Create Change Management Heat Map? – Benefits and Limitations

Microsoft: A Case Study in Strategy Transformation HBR On Strategy

• Entrepreneurship

In early 2015, Microsoft’s senior leaders were facing a set of difficult decisions. The firm had been struggling to innovate and grow as fast as its competitors. Now they were considering new opportunities that would yield higher growth but lower margins — like shifting away from perpetual licensing to focus on subscription sales. Harvard Business School professor Fritz Foley studied this period of transformative change at Microsoft for a business case study he wrote. In this episode, he shares how Microsoft’s leaders analyzed different options and worked to get both investors and employees on board with new ideas about growth. He also explains how the company’s risk-averse culture evolved in order to execute such a huge transformation. Key episode topics include: strategy, growth strategy, business models, corporate governance. HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week. · Listen to the original Cold Call episode: The Transformation of Microsoft (2018) · Find more episodes of Cold Call · Discover 100 years of Harvard Business Review articles, case studies, podcasts, and more at HBR.org ]]>

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The Transformation of Microsoft

• Format: Print
• | Language: English
• | Pages: 15

About The Authors

C. Fritz Foley

E. Scott Mayfield

Related work.

• Faculty Research
• The Transformation of Microsoft  By: C. Fritz Foley and F. Katelynn Boland

How Microsoft’s innovations made it a technology giant

Table of contents.

Microsoft is an American multinational technology corporation that offers innovative personal computer software and hardware products and services to advance human and organizational achievement. 

Microsoft is a household name today and has grown exponentially to become the top producer of computer software, consumer electronics, personal computers, and related services. Hard to believe that it was just a small software company founded in 1975, providing interpreters such as the BASIC interpreter for the Altair 8800.

Microsoft’s market share and key statistics in 2021

• Revenue of  $168 billion
• Operating Income of  $70 billion
• Workforce of  181,000  employees
• Earnings per share of  $8.1
• Invested more than  $20 billion  in Research and Development
• Stock Price of  $336  as of Dec 2021
• Market cap of  $2.5 trillion
• Market share of  73%  in desktop operation system (OS) worldwide
• Market share of  85%  in office suite market

Microsoft’s 47 years long journey has been an incredible series of strategic breakthroughs, enabling the company to redefine the information technology industry and transform itself over the years to usher in the future. 

Let’s take a closer look at Microsoft’s tremendous growth…

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Microsoft Cements Itself By Offering Essential Software To Prominent Hardware Manufacturers

Before Microsoft rose to dominance in the personal computer operating systems market, it was simply known as a business venture started by two friends –  Bill Gates  and  Paul Allen  – who were eager to explore computer programming.

Bill and Paul were both math and programming prodigies who spent most of their time playing with computers and writing programming codes.

The inspiration for starting Microsoft came in  1975  when Paul Allen suggested to Gates that they program a  BASIC interpreter  for the  Altair 8800  developed by  MITS ; thereby enabling users to enter and run programs in the BASIC language.

Following the successful development and demonstration of the interpreter which was marketed by MITS as  Altair BASIC , Gates and Allen moved to Albuquerque and, in  April 1975 , co-founded  Micro-Soft  - short for micro-computer software. 

It was not until 1979 that Bill Gates used the term  Microsoft  to refer to the company, and since then, it has become the official name that is renowned all over the world.

Microsoft Signs A Strategic Contract To Develop Essential Software

In 1980, Microsoft formed its first crucial partnership with  International Business Machines (IBM),  which entailed creating an operating system for the in-development  IBM Personal Computer (PC) . 

Although Microsoft had already been working on developing the BASIC programming language for the IBM PC, it had not yet developed an operating system. Nevertheless, Microsoft capitalized on the opportunity since it knew that Seattle Computer Products (SCP) had developed an operating system called  QDOS (Quick-and-Dirty Operating System)  which could be refined to suit the IBM PC. 

Thus, in July 1981, Microsoft purchased full rights from the SCP for their operating system and further developed it for the IBM PC, which was scheduled to ship in a few weeks. Although the name of the operating system on the IBM PC was the  IBM PC-DOS  it was wholly developed by Microsoft. 

Around the same time, the company became a privately held corporation and moved to Bellevue, Washington as it was hard to recruit top programmers to Albuquerque.

Microsoft Leverages Its Operating System To PC Manufacturers

In its contract with IBM, Microsoft had included a clause that allowed it to sell the operating system it had developed to other companies under the name of  MS-DOS . The move paved the way for Microsoft to become the dominant technology company of the PC era.

Before he dropped out to dedicate his full attention to Microsoft, Gates was studying Law at Harvard. He made sure that while the contract between Microsoft and IBM allowed the hardware developer to use and market the software, Microsoft retained ownership of the language.

By 1983, large computer manufacturers who had developed computers similar to IBM standards began using MS-DOS as their operating system. PCs were now being seen as more than just toys, they were serious business tools. 

Consequently, at the end of the year, with the growth of the PC market, MS-DOS sold around  500,000 copies . These sales boosted the company’s  annual revenue to $69 million  (around today after adjusting for inflation).

Microsoft Develops Its Range Of Office Products 

During the 1980s, Microsoft developed its most prominent office products and eventually introduced the highly successful  Microsoft Office .

Gates was aware of the need for a more user-friendly word program which led to the development of  Microsoft Word . The initial product lacked ease of learning, but Gates was adamant about doing market research and strengthening the software’s weak points.

In April 1986,  Word 3.0  was released, which became the company’s best seller. However, Gates had already set his eyes on developing a version of Word for Apple’s Macintosh computer. 

Sales of this version amounted to 20,000 copies each month and by this point, Microsoft had annual sales of  $590 million  (around today after adjusting for inflation) and  employed 2,800 people . 

Gates also sought to offer advanced spreadsheet software which led to the development of  Excel  for the Macintosh (as Lotus 1-2-3 had already become the standard for IBM). By early 1986, Excel dominated the Macintosh spreadsheet market.

Although half of the company’s profit came from the sales of DOS, Word, and Excel cemented Microsoft’s status as the biggest producer and supplier of software for Macintosh. 

In August 1989, the company introduced Microsoft Office - its most successful office product. The office was a bundle of separate, internally developed office productivity applications such as Word and Excel along with rebranded products from their companies such as  Microsoft SQL Server .

Microsoft Office eventually became the dominant business suite with its market share considerably exceeding that of its competitors. 

Key Takeaway 1: Locate the fundamental source of value and conquer it

Microsoft understood that controlling the operating system was more important as the underlying hardware became irrelevant since it could be cloned by other companies. 

The company recognized the true potential of its product and thus introduced the clause that allowed it to sell the DOS to other companies in the IBM contract. Doing so, provided the company with the finances to develop other essential software and ultimately become one of the world’s leading software developer. 

Moreover, the contract with a prestigious company like IBM helped to push MS-DOS into prominence and allowed it to dominate the PC operating system market. 

Microsoft Embodies A User-First Policy

Gates had talked with  Apple  executives during the creation of the  Macintosh  and was impressed by its user-friendliness. 

While the IBM PC used letters and numbers to communicate, the Mac had a  graphical user interface (GUI)  that used small pictures called icons to communicate. Users would click on the icons with the cursor and perform tasks. 

Gates firmly believed that the future of computing lay in GUI. 

Microsoft’s Success Against Competitors

In 1990, Microsoft launched  Windows 3.0  - a new version of its operating system with features such as streamlined GUI and improved protected mode ability. The company sold over  100,000 copies within two weeks .

Despite complaints that Windows 3.0 required advanced hardware to run at an acceptable speed, it generated more revenue than the OS/2, which IBM had asked Microsoft to develop. 

Thus, Microsoft decided to shift its focus entirely to Windows, and so the relationship between the two companies declined. Around the same time, Apple initiated a lawsuit against Microsoft, claiming that it had copied the look and feel of the Mac, thereby committing copyright infringement. 

Amidst the hostilities, IBM and Apple felt threatened by Microsoft’s emerging control of software and operating systems standards and decided to form an alliance. The fact that two of the industry’s most prolific names would feel threatened by Microsoft was further evidence of its growing influence. 

Nevertheless, by 1993, Windows had become the most widely used GUI operating system in the world. It was also dubbed the “ 1993 Most Innovative Company Operating in the U.S. ” by Fortune Magazine. 

The year also saw the lawsuit between Apple and Microsoft come to an end, with the ruling being in Microsoft’s favor.

Microsoft’s Broad Differentiation Strategy Drives Competitive Advantage

At the start of the  1990s , Microsoft decided to shift its focus from supplying software to hardware manufacturers to  selling directly to consumers .

Targeting consumers was part of Microsoft's strategy to  broaden its business  and  appeal to non-technical audiences . As such the company developed unique products for various market segments: individuals, households, and organizations.

The company released  Microsoft Encarta  in 1993 which was the first encyclopedia designed to run on a computer. It also introduced  Microsoft Home  which included Microsoft’s new  multimedia applications .

In 1994, the company even undertook a  $100 million   advertising campaign  and changed its slogan to “ Where do you want to go today ?” - hinting at the endless possibilities offered by Microsoft programs and products.

Microsoft continued to release products targeted at consumers: a successful example being  Windows 95 . This was the latest version of Microsoft’s premier operating system featuring an  original user interface , including a  novel start button .

Windows 95 sold  more than a million copies  in the  first four days of its release .

The company continued its momentum and also entered the  personal digital assistant (PDA) market  in November with the release of  Windows CE 1.0 . The new version of the operating system was designed to be compatible with low-memory, low-performance computer-like devices such as mobile phones, digital cameras, handheld computers, etc.

Microsoft’s Diversification Strategy Yields Desired Results

A part of Microsoft's diversification strategy was to broaden and expand into businesses associated with its core franchise.

As the web began to grow in significance and popularity, Microsoft approached a company called  Spyglass  to license  Internet Explorer . The browser was then bundled for free with Windows 95.

Microsoft also began expanding its product line into  computer networking  and the  World Wide Web . As part of this expansion, it launched  MSN (Microsoft Network)  which encompassed the company’s entire range of online services. 

The most prominent of these online services was  MSNBC  - a joint venture with the  NBC (National Broadcasting Company)  that was basically a  24-hour cable news television station . 

Microsoft’s Value Proposition Captures User Attention

In  2001 , Microsoft released the highly anticipated  Windows XP  which included the  essential features  of both its  business and home product line . 

Windows XP introduced a new GUI - the first after Windows 95. Both the business and personal computers arrived with a full suite of pre-installed Microsoft software. The new operating system was the first to offer a similar user experience regardless of whether it was being used at home or at work. 

Windows XP has been heralded as one of the greatest achievements of Microsoft and is remembered as one of the key operating system releases of all time. Microsoft was also aware of its significance which is why it invested $250 million in Windows XP’s ad campaign. 

The campaign included a wide variety of events and promotions - even including a special concert with Madonna and Sting at the Windows XP launch party. Such strategies successfully captured the attention of the users. 

Key Takeaway 2: Let Consumer Needs and Feedback guide the development of your products

Much of Microsoft’s growth in the 1990s was driven by its commitment to adhering to consumer needs. 

The development of user-friendly features such as unique GUIs, pre-installed software, and bundling the web browser for free with the operating system all contributed to Microsoft’s appeal to consumers in the market. 

Microsoft strategically expanded its business in keeping with the target of directly accessing consumers and designing its product offerings accordingly. By putting the user first, Microsoft was able to develop products with a strong impact in the market and which allowed it to become a leading tech company.

Microsoft Strategic Focus Aligns With Anticipated Trends

In the following years, Microsoft continued to update its range of products and expanded the scope of its business to become not just a leading software developer but a tech company with a global impact. 

Toward this end, Microsoft recognized the need to directly compete with companies in the fields it sought to expand in.

Microsoft’s Product Development Strategy

In the early 2000s, Microsoft leaned into its product development strategy and introduced its own product offerings in new markets.

Microsoft launched the  Xbox  and officially entered the game console market which was then dominated by  Sony  and  Nintendo . While the Xbox was relatively successful, the  Xbox 360  was much more so; although, it too could not outsell the  PlayStation 3  - Microsoft’s main rival. 

Following the introduction of the gesture control feature by Wii which opened up a new market for video games, Microsoft developed the controller-free Kinect peripheral to boost Xbox’s popularity.

The move was highly successful as Kinect was the fastest-selling consumer electronics product in history as of 2011, with sales averaging 133,333 units per day.

In June 2012, the company unveiled the  Surface  computer which was the first in history to have its hardware made by Microsoft. The very next month, it also launched the  Outlook webmail service  to compete with  Gmail .

Microsoft’s Business Strategy Focuses On Devices And Services

In 2010, Microsoft laid out its intention to unlock the full value of its software by factoring in how people use devices and services at work and in their personal lives. 

Consequently, the company was determined to deliver a broad spectrum of Windows PCs, tablets, and phones. Not only was Microsoft going to develop Windows devices but have the relevant services built into them. 

In 2012, Microsoft also made incredible updates to  Office  for  Windows 8 , adding  touch and pen capabilities  and  unlocking new experiences for reading, note-taking, meetings, and communications . 

Microsoft had already released its cloud computing service,  Azure , in 2008 which, along with  Windows Server 2012  and  System Center,  made up the company’s services offerings. 

The company is now focused on helping businesses move to the cloud. In 2014, commercial cloud revenue amounted to a $4.4 billion annual run rate, making Microsoft an indisputable leader in the arena.

To reinforce its device ecosystem and drive its mobile strategy, Microsoft acquired  Nokia’s Devices and Services  business in 2014. 

This acquisition helped create  an expanded Microsoft Devices Group  that included  Nokia phones, Xbox hardware, Surface, Perceptive Pixel products, and accessories . 

Microsoft’s Digital Transformation Strategy

As  revenue continued to increase  across  Microsoft’s cloud services, Windows 10, and Office 365 , the company set its sight on a  new technology paradigm  –  digital transformation . 

With the onset of digitization across organizations, Microsoft aimed to form strategic partnerships with them by helping them build their digital capability, providing innovative technology to drive new growth, and enabling them to digitize business-critical functions.

In 2018, Microsoft identified cloud computing as being foundational to enabling digital transformation and stressed Azure’s hybrid consistency, developer productivity, and  Software as a Service (SaaS) application integration .

Microsoft was also aware of the importance of a business's ability to reason over its data using AI to drive competitive advantage. In order to capitalize on this opportunity, Microsoft Research was dedicated to developing AI technologies and democratizing them with  Azure Cognitive Services . 

Azure Cognitive Services has the most comprehensive portfolio of tools, frameworks, and infrastructure that enables users to build applications that see, hear, speak, search, understand, and accelerate decision-making. 

In 2019, Microsoft brought hyperscale capabilities to its relational database services and offered the most comprehensive cloud analytics through Azure Data Factory, Azure SQL Data Warehouse, and Power BI.

By 2020, Microsoft was pushing the bounds of how AI can generalize learning beyond narrow domains. It was collaborating with OpenAI on a supercomputing platform to train and run AI models of unprecedented scale.

Key Takeaway 3: Anticipate trends to gain an unfair advantage

Microsoft accelerated its growth by anticipating new avenues of technological breakthroughs and developing its products and services accordingly.

It had previously reorganized its strategy to focus on devices and services and built its capacity in those avenues, thereby developing a unique portfolio to cater to diverse needs. 

Microsoft anticipated the growing need for digital transformation amongst businesses and organizations and positioned itself as a strategic partner that allows them to achieve digitization. Doing so allowed Microsoft to capitalize on transformational opportunities as businesses sought out its solutions to help them transition toward digitization. 

The strategy paid off as well since the company reported strong financial results. 

Why Is Microsoft So Successful?

A significant reason for Microsoft’s resilience and why it has retained a relevant and arguably dominant position in a rapidly evolving industry is due to its financial and intellectual resources.

Despite the changes ushered in by the advent of smartphones and the Android operating system, Microsoft was able to adapt to the changing landscape by making its products available on its competitors’ devices and platforms. Such moves allow the company to leverage its brand loyalty more effectively. 

Instead, the company has shifted its focus to capitalize on the market demand for cloud computing. Microsoft's aim is to usher in future technologies by breakthroughs in AI, data management, and quantum computing.

Microsoft’s intellectual property – patents and proprietary software code – in addition to the company’s ability to adapt to ever-evolving trends, technologies, and consumer preferences, and willingness to take risks to explore new opportunities make it extremely successful. 

Microsoft’s Purpose And Mission Statement 

Microsoft is an innovation-based company that continues to grow with time. Its mission is to empower every person and every organization on the planet to achieve more. 

The company’s goal is to foster innovation that generates new ecosystems of inventors, partners, developers, creators, changemakers, public servants, frontline workers, and knowledge workers who drive the engines of growth and opportunity in ways that benefit everyone.

Who Owns Microsoft Today?

Microsoft is a multinational software company, with its headquarters at the Microsoft Redmond campus located in Redmond, Washington, United States. 

The company has a total of  $2.5 trillion market capitalization  as of December 2021. 

A few of the prominent shareholders of Microsoft are:

1. The Vanguard Group , Inc. It is an American registered investment advisor based in Malvern, Pennsylvania. It owns up to 8.01% of Microsoft’s total shares, equivalent to $156,241,379,413.

2. BlackRock Fund Advisors  is an American multinational investment company based in New York City. It is the world's largest asset manager, with US$10 trillion in assets under management as of January 2022. It owns up to 333,373,626, that is 4.47% shares of Microsoft which amounts to $87,167,201,990.

3. SSgA Funds Management , Inc. It is the investment management division of State Street Corporation and the world's fourth largest asset manager. It owns up to 3.94% of Microsoft's shares, equal to a total of $76,756,608,430.

Microsoft’s Growth By Numbers 

What Is Microsoft’s Growth Strategy?

At the heart of Microsoft’s growth strategy is its cloud platform and which the company seeks to expand in the future. 

The company is continually encouraging its partners to embrace cloud technologies to accelerate digital transformation. 

Thus, Microsoft is growing Azure in three essential aspects:

• New cloud-native experiences
• Modernization of applications and data estates
• Migration and modernization of infrastructure and mission-critical workloads

It has even introduced the Cloud for Sovereignty service aimed at governments and public sector customers looking to accelerate digital transformation efforts. 

The company expects to see significant growth through the Microsoft Cloud because of its differentiated market position, customer demand across its solution portfolio, and consistent execution across the Cloud platform. 

With the combination of cloud vertical market specialization and further enhancements of its cloud capabilities, Microsoft is confidently positioned for future growth.

Microsoft’s Innovation Strategy For The Future

Microsoft’s vision for the future involves innovation in a way that will empower every individual. 

It is significantly investing in resources that will help in transforming the workplace into a modern one so that business apps can be introduced to improve how people communicate, collaborate, learn, work and play.

The company plans on building and running cloud-based services that help people and companies get new experiences and opportunities.

Utilizing natural methods of communication and AI to understand and interpret the demands of the client in order to drive insights and take action on their behalf, is also a crucial aspect of its vision.

Additionally, Microsoft wants to use Windows to build its cloud business, boost its market share in the PC industry, and promote greater user interaction with services like Microsoft 365 Consumer, Teams, Edge, Bing, Xbox Game Pass, and others.

With their integrated, end-to-end solutions spanning security, compliance, identity, and management, across all clouds and platforms, Microsoft is attacking security from every perspective.

It is also developing innovative gaming experiences that bring people together around their common love of games on any device, as well as pushing the frontiers of innovation with console and PC gaming by creating the next wave of entertainment.

Microsoft has experienced tremendous growth in the few decades since its establishment. From mainly selling software to hardware manufacturers, Microsoft has become a tech giant with a global impact. The company is aiding the digitization of organizations by developing innovative technologies that offer the necessary digital tools for them to enhance their functions. The future of technology rests in the development of AI and Microsoft has already developed a reputable portfolio of AI capabilities and is further enhancing these technologies. As the world transitions towards a new technological breakthrough, Microsoft is strongly positioned to lead this transformation and further reinforce its status as a leading tech company with a global impact.

Case study - Microsoft's decision-making procedure and effectiveness evaluation

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CASE STUDY: How Satya Nadella overhauled Microsoft's cutthroat culture and turned it into a trillion-dollar 'growth mindset' company

Ashley stewart,shana lebowitz   .

Lehtikuva, Markku Ulander/AP Photo; Yuri Gripas/Reuters; Fabrizio Bensch/Reuters; Ruobing Su/Business Insider

Satya Nadella is the CEO of Microsoft. Steve Ballmer and Bill Gates are the former CEOs.

• Microsoft is a trillion-dollar company thanks largely to a culture shift led by Satya Nadella.
• Since Nadella became CEO in 2014, he's encouraged the entire company to adopt a growth mindset, or the belief that skills are developed through hard work and challenges are opportunities to learn.
• Before Nadella took over, Microsoft was characterized by competition between teams and between individual employees.
• Now, in keeping with a growth mindset, Microsoft evaluates employees' performance based partly on how much they helped their colleagues succeed. The company also looks to learn from its former rivals in the tech industry.
• Business Insider spoke with a range of company insiders and organizational researchers to get the inside story on how to change the culture of a 150,000+ employee software giant.
• Microsoft is a case study in how a growth-mindset culture can help companies succeed in the future economy.
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A cartoonist once drew an illustration depicting Microsoft's organizational chart as warring factions.

Take a look and you'll see three separate gangs: one blue, one green, one yellow. The gangs are assembled in pyramid-shaped hierarchies, with one leader at the top, two or three deputies at the next level, and so on.

A hand sticks out from each pyramid, pointing a gun directly at one of the others. It's clear. This is war.

And then Satya Nadella became CEO.

Nadella described the era of warring gangs in his 2017 memoir-manifesto, " Hit Refresh :" "Innovation was being replaced by bureaucracy. Teamwork was being replaced by internal politics. We were falling behind."

That particular cartoon - drawn in 2011 by a Google employee named Manu Cornet , no less - made changing Microsoft's culture Nadella's No. 1 goal as CEO.

"As a 24-year veteran of Microsoft, a consummate insider, the caricature really bothered me. But what upset me more was that our own people just accepted it," Nadella wrote. "When I was named Microsoft's third CEO in February 2014, I told employees that renewing our company's culture would be my highest priority."

Since becoming CEO, Nadella has been credited with a grand reinvention of Microsoft, exemplified by its market value exceeding $1 trillion, one of just a handful in history to hit that mark. When Nadella first took over, its market value was around $300 billion. The company has shifted from a has-been to a cloud powerhouse.

One of the keys to this transformation is a psychological concept that's become a mantra at Nadella's Microsoft: growth mindset .

Microsoft has traded a fixed mindset for a growth mindset

Growth mindset describes the belief that skills are developed through hard work and that challenges are opportunities to learn. Fixed mindset, on the other hand, refers to the belief that talent is innate and that struggling is a sign of failure. Research on the difference between growth and fixed mindset - and how they predict success - was pioneered by Stanford's Carol Dweck.

Early on in her career as a developmental psychologist, Dweck visited children at school and presented them with a series of increasingly difficult puzzles. Her goal was to better understand how people cope with failure. Some students, she found, weren't fazed by it.

In her 2006 book, " Mindset ," she recalls one 10-year-old boy who "pulled up his chair, rubbed his hands together, smacked his lips, and cried out, 'I love a challenge!'"

Dweck would spend the next five decades trying to figure out the difference between people who relish a good challenge and those who fear failure. Scores of studies published under her name suggest that people who see intelligence and abilities as learnable are more successful, personally and professionally, than people who think they're static.

Recently, Dweck coauthored a study that drew a link between growth mindset and organizational success . Employees who think their companies have a fixed mindset, the study found, interpret the company's culture as less collaborative, less ethical, and less willing to take risks than employees who think their companies have a growth mindset.

Given the rapid pace of technological change , these research findings are hyper-relevant. Across industries, adopting a growth mindset may be the only way to survive, and certainly the only way to thrive. When neither executives nor rank-and-file employees can predict what their jobs will look like next week, they need to embrace the resulting vulnerability, and get excited about learning.

Plenty of companies, in industries from telecommunications to early education, talk about cultivating a growth mindset , and about looking for job candidates who have it . But Microsoft is perhaps the most powerful example of an organization that has used growth mindset, and the psychology behind it, to rebuild its culture.

In many ways, fixed mindset and growth mindset can describe Microsoft before and after Nadella.

Nadella has encouraged Microsoft employees to be 'learn-it-alls' instead of 'know-it-alls'

Bill Gates is the founder and former CEO of Microsoft. He was famous for his meltdowns.

Gates was famous for meltdowns and browbeating - so much so that Microsoft cofounder Paul Allen once described working with Gates as "being in hell." Gates would only back down if you could convince him you knew what you were talking about, Allen said.

Gates' successor, Steve Ballmer, also known for an explosive temper, later presided over the atmosphere depicted in that cartoon Nadella was determined to address. Ballmer was known for cultivating a culture in which Microsoft teams warred with each other, as previously reported by Business Insider .

Nadella, who joined Microsoft as an engineer in 1992, came up in this culture, before becoming CEO in early 2014.

By that point, the company's bid to compete in the smartphone market through the purchase of Nokia was proving to be a burden and would lead it to write off nearly the entire $7.6 billion acquisition price. The personal computer market was shrinking, leading to declines in Microsoft's flagship Windows operating system business, and the Xbox One console's poorly received launch made it a punchline.

Microsoft's history as a tech-industry pioneer wouldn't help the company compete, Nadella wrote in an email to employees on his first day as CEO. The company needed a change in mindset.

"Our industry does not respect tradition - it only respects innovation," Nadella wrote on Feb. 4, 2014, in a memo to employees days after taking on the CEO role. "Every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this."

Nadella's leadership philosophy evolved into the adoption of a growth mindset. He asked employees to be "learn-it-alls," not "know-it-alls," and promoted collaboration inside and outside the organization. Employees are now evaluated partly on how much they've helped others on their team.

Microsoft introduced a new performance-management framework based on growth mindset

With any company culture shift, executives run the risk of promoting jargon more than action, and of HR representatives being the only ones who know there's a culture change underway.

Microsoft has tried to avoid that fate, not only by training its employees on the psychology of growth mindset, but also by embedding the concept into its daily work flow.

Prompts to adopt a growth mindset appear on posters throughout Microsoft's campuses ( something at which employees sometimes poke fun ). At the start of a meeting, a manager might remind colleagues to approach an issue with a growth mindset.

And in one of the most significant manifestations of growth mindset, Microsoft has eliminated stack ranking .

Stack ranking was famously used by Jack Welch when he was CEO of General Electric. Ballmer used the system at Microsoft to evaluate employees, although he did start phasing it out prior to his departure. Microsoft managers had to rank their employees from one to five in equal measure. Which meant that, no matter how good the employees were, some of them had to get the lowest ranking of a five.

Performance was defined in stack ranking as the quality of individual work, and that emphasis on individual performance was linked to fierce competition among Microsoft employees. It was also a barrier to Microsoft's innovation, since it facilitated a culture that rewarded a few standout team members and even gave employees incentive to hope their colleagues failed.

As Microsoft's chief human resources officer, Kathleen Hogan has overseen the adoption of a growth mindset.

Dweck's research helps explain this trend, too. Her studies suggest that stack ranking's emphasis on "star" employees can leave everyone else afraid to try anything new, for fear of failing. In turn, that means companies are less innovative.

Microsoft leadership says its new system for evaluating employees instead rewards collaboration. Managers and employees meet often to discuss performance , in keeping with the general trend of companies nixing annual reviews and having managers regularly speak with employees about their work.

"What we really value is three dimensions," said Hogan , Microsoft's chief people officer. "One is your own individual impact, the second is how you contributed to others and others' success, and the third is how you leveraged the work of others."

To use Hogan's examples, maybe a more seasoned employee helped someone new to the team, or a software engineer built on another engineer's work instead of reinventing it.

Microsoft recently applied growth mindset to a new framework for managers : model, coach, care. That's a combination of setting a positive example for employees, helping the team adapt and learn, and investing in people's professional growth.

To measure the impact of these initiatives in real time, Microsoft emails employees with a different question every day asking how they're feeling about the company and its culture.

The shift from competition to collaboration might seem like it would be a breath of fresh air. And on the whole, it has been. But employees say it's presented its own challenges, too.

Nadella pushes Microsoft executives to take on stretch assignments

Peter Lee said becoming corporate vice president of Microsoft healthcare was a huge challenge.

It was 2017 and Lee - now corporate vice president of Microsoft healthcare - had long worked on broader technology problems as a key leader in Microsoft Research, the company's research division.

Nadella wanted him to take on a new challenge and lead the company's emerging health care business, using his background in artificial intelligence and cloud computing to find new ways to tune the products to the needs of healthcare companies.

"Taking on healthcare was something that really perplexed me at first," he said. "I joked Satya sent me out into the Pacific Ocean and said, 'Go find land.'"

Adopting a growth mindset can be uncomfortable, he said.

"Growth mindset is a euphemism because it can feel pretty painful, like a jump into the abyss," he said. "You need to be able and willing to confront your own fixed mindset - the things that make you believe something can't work. It's painful to go through personally, but when you get past it, it's tremendously rewarding."

The transition has been edifying, both in terms of his personal growth - Lee was recently named to the National Academy of Medicine - and Microsoft's growth in the industry, as it establishes itself as a meaningful player in healthcare tech.

Microsoft now sees the business case for letting go of its rivalries with other tech giants

Under Ballmer, Microsoft was notorious for prioritizing its Windows operating system and Office productivity applications businesses over the rest of the company - at one point, it even canceled the Courier tablet, which would have been an early, future-looking competitor to Apple's iPad, because it may have undermined Windows.

Likewise, Microsoft once shunned Linux, a free open-source operating system once considered the biggest threat to Windows. Ballmer once called it a "cancer." But early on in Nadella's time as CEO, Microsoft changed tack and proclaimed, " Microsoft loves Linux ."

It wasn't just Microsoft being friendly. There was a strong business case for blurring boundaries. At the time, Microsoft said it realized its customers used both Windows and Linux, and saw providing support to both as a business opportunity on-premise and in the cloud. That would have been unthinkable in the Ballmer years, but it's proven to be a savvy business move: Microsoft recently hinted that Linux is more popular on its Azure cloud platform than Windows itself.

Microsoft's relationship with Salesforce has followed a similar trajectory. Whereas Ballmer had frequent and public bouts with Salesforce CEO Marc Benioff , Microsoft under Nadella put aside its rivalry with Salesforce - which competes directly with Microsoft's customer-relationship-management Dynamics 365 product - in order to ink a big cloud deal that was good for the company overall.

Nadella even invites leaders from companies across industries to Microsoft's CEO Summit so the executives can learn from each other. Ballmer, meanwhile, famously snatched an employee's iPhone at a company meeting and pretended to stomp on it.

Which is not to say Microsoft always plays nice in the Nadella era. The company last summer changed licensing agreements to raise prices - often significantly - when customers choose to run certain Microsoft software on rival clouds including Amazon Web Services or Google Cloud. And it's been trading public barbs with AWS over the still contested $10 billion Pentagon cloud contract.

The Trump administration awarded the contract to Microsoft over AWS, but Amazon is challenging the decision in court, alleging political interference. In February, a judge ruled that Microsoft must stop working on the contract.

The culture shift at Microsoft is an ongoing process

The beginning of Microsoft's culture shift was rocky.

In "Hit Refresh," Nadella recalls a Microsoft manager who announced in the early days, "Hey, Satya, I know these five people who don't have a growth mindset." Nadella writes, "The guy was just using growth mindset to find a new way to complain about others. That is not what we had in mind."

Even today, Microsoft leaders acknowledge that the culture change isn't over . Things have improved under Nadella, but the company culture is still far from perfect.

Diversity is an opportunity for improvement at Microsoft. Much like the larger technology industry , Microsoft still employs relatively few women and people of color in leadership and technical roles.

One of Nadella's biggest gaffes as CEO happened early on in his tenure, when he suggested women should not ask for raises, but rely on "faith" and "karma." After these comments, Nadella sent out an internal memo admitting to his mistake, explaining how he planned to learn from it, and stating his belief in "equal pay for equal work."

Nadella writes in "Hit Refresh" that in some ways he's glad to have belly-flopped in public. "It helped me confront an unconscious bias I didn't know I had," Nadella writes, "and it helped me find a new sense of empathy for the great women in my life and at my company."

Kevin Oakes, who runs a human-resources research company that helped Microsoft with its shift toward growth mindset, sees Nadella as an exemplar of a leader during a transition. That's largely because Nadella practices the growth mindset he preaches. In a presentation at Talent Connect, an annual conference organized by LinkedIn (which is owned by Microsoft), Oakes said Nadella has been Microsoft's "culture champion." Nadella understands that organizational culture is critical to the company's performance, Oakes said.

But today's Microsoft is still far from perfect. The positive contributions of growth mindset have not yet matched up with diversity and equity for Microsoft's workforce, according to some employees. Microsoft is the subject of a gender discrimination lawsuit still pending , which was denied class-action status by a federal judge. Employees have also openly alleged sexual harassment and discrimination.

The company released its first diversity and inclusion report in 2019 to track its progress in hiring - and retaining - a more diverse workforce. Results from that report showed that minorities in Microsoft's US offices earned $1.006 for every $1 white employees earned. A closer look reveals that white men still held more high-paying leadership positions than women or underrepresented minorities.

Meanwhile, Microsoft leadership still has some philosophical differences with employees as it relates to employee activism. Employee groups have protested Microsoft and Microsoft-owned GitHub's relationship with Immigration and Customs Enforcement, and more recently, some employees have said Microsoft's relationship with oil and gas companies is at odds with the company's goal to become "carbon negative" by 2030.

The Xbox Adaptive Controller is designed to be used by people with limited mobility. It was advertised during the 2019 Super Bowl.

At that point, Neal recalled, a third meeting participant addressed the male colleague to ask whether perhaps he hadn't understood the female colleague's point. And Neal said it wasn't a passive-aggressive attack. Senior leaders are encouraged to "be curious and ask questions, versus making statements," as a way of modeling growth mindset, he added.

Microsoft has been equally vocal about diversity and inclusion within its customer base, building products that are accessible to as many users as possible. Ben Tamblyn, a 15-year company veteran and Microsoft's director of inclusive design, mentioned Xbox as a prime example. In 2018, Tamblyn helped oversee the release of the Xbox Adaptive Controller , which makes it easier for gamers who have limited mobility or physical impairments to play. (Interviews with Neal and Tamblyn were arranged by Microsoft's public-relations firm.)

Microsoft is a case study in growth mindset

Microsoft's culture shift, and its accompanying business turnaround, is already a case study in business schools and in reports from management consultancies and research centers . That makes sense to Mary Murphy, a professor of psychological and brain sciences at Indiana University and Dweck's co-author on the paper about growth mindsets within organizations.

Growth mindset is essential for innovation in the technology industry, Murphy said, where change rarely happens incrementally. Instead, there are big inflection points from which there's no return. Microsoft, Murphy added, needs to be on the "cutting edge" of growth mindset in order to stay relevant.

Nadella, for his part, has modeled a growth mindset from the top of the organization, not least in his response to his tone-deaf comments about gender and compensation. "I learned, and we will together use this learning to galvanize the company for positive change," Nadella wrote in the memo he sent apologizing for the comments. "We will make Microsoft an even better place to work and do great things."

Got a tip? Contact reporters Shana Lebowitz via email at [email protected] and Ashley Stewart via email at [email protected] , message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242 .

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Microsoft Corporation’s Strategic Management Essay

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

It is important to note that a proper strategic management analysis requires a comprehensive assessment of all critical components of a business entity, which enables a thorough application of strategic models and plans. The prime organization of interest is Microsoft Corporation, which is one of the largest multinational tech companies based in the United States. It mainly specializes in the production and selling of software programs, but its diverse set of products and services additionally include personal computers, consumer electronics, and other technology services, such as electronic market platforms. Microsoft has been a well-established and attributed company for the last decades, and the company has evolved over time, and changes have occurred to its strategies to keep afloat with the current market trends. It is consistently listed as one of the world’s top five companies to work for, and it is one of the big five American IT companies (Kelly, 2022). It is known to be a highly diversified company that produces different products and services for its consumers. Currently, the majority of the computer systems used in a multitude of organizations are mostly produced by the Microsoft Corporation.

Old Vision Statement

Microsoft’s current vision statement is “to help people and businesses throughout the world realize their full potential” (Gregory, 2022, para. 7).

Revised Vision Statement

The revised vision statement is “to be at the forefront of innovation to bring value to our customers, shareholders, and communities.”

Old Mission Statement

In order to comprehensively assess Microsoft’s relationships between its corporate, business, and operational strategies, it is critical to revisit its mission statement. The latter states that the company seeks to “empower every person and every organization on the planet to achieve more” (Microsoft, 2022, para. 1). The mission can be considered rather generic and nonspecific, which is why it would be more useful to tackle each strategic element separately followed by their interconnected dynamics.

Proposed Mission Statement

The proposed mission statement is “to provide innovative solutions to people and businesses.”

The core reasoning behind the proposed mission statement is rooted in the fact that the given industry is heavily focused on competitiveness through innovation. The process of the creation of sophisticated products, such as software and hardware, is highly dependent on human resources and talent. Therefore, innovation needs to be at the core of the vision and mission statement to reflect where and how the value is generated for both the customers and shareholders.

External Factor Evaluation Matrix

The External Factor Evaluation Matrix, or EFEM, is shown in Table 1 below. It reveals that the top priority issues involve talent and human resources since the company’s products and services are heavily centered around innovation. The current state of Microsoft is that it is static with minimal growth, mostly driven by the tight competition from other large competitors. The industry is fully occupied by few large corporate entities, which means there are no threats from new entrants, and even medium size companies are being bought by the giants (Lee, 2022). In such a tight market of technology and software, the leverage is obtained through new and better products and services since other rivals have the same buying and investing power.

Table 1: EFE Matrix

The Competitive

The competitors.

It is important to note that the market of Microsoft Corporation is oligopolistic by nature, and only a handful of big businesses dominate the market. The competition is tight, and each market share requires a significant amount of investment and risk management. There is no risk from new entrants since they are either quickly bought by substantially larger players or driven out of the market.

Although Microsoft offers and sells a highly wide range of products and services, it is stated that “the company’s largest revenue source is its cloud computing business, and it’s the fastest-growing segment of its business model” (Boyd, D. and Boyd, A. 2022, para. 12). The biggest competitors of Microsoft are Google, Apple, Amazon, IBM, and Salesforce (Hughes, 2022). Thus, firstly, the competitive rivalry in the market is intense and significant because the threat is coming from other large and powerful tech organizations with sufficient resources and capabilities to innovate and grow as well. Secondly, for the supplier power, there is no identifiable supplier for the cloud computing business besides microchips and hardware elements, such as China or Taiwan. In other words, the entire industry is impacted by such a force.

Thirdly, the buyer power is about massive primarily due to the presence of equally capable and resource-rich competitors, especially in the cloud computing business, such as Google and Amazon. The threat of substitution is high because innovation is equally valued across all tech giants, and they are constantly pushing the boundaries of what is possible. However, the threat of new entry is minimal or non-existent because the industry is practically ‘ruled’ by a few large conglomerates, and new startups become bought before they can even rival Microsoft or its competitors.

Google/Alphabet

Alphabet, the parent company of Google and other companies, is a large multinational corporation. It was founded in 1998, and it is currently headquartered in California, US (Forbes, 2022a). The CEO is Sundar Pichai, and the company employs around 156500 people (Forbes, 2022a). It provides a wide range of IT services and software, among which the most prominent ones are the Google Search engine and G-mail integrated services (Forbes, 2022a). YouTube is another major business owned by Alphabet, which is considered to be the second most visited website after Google itself.

Apple is the largest tech company in the world, which provides both hardware and software products as well as services. It was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, and it is currently headquartered in California, US (Forbes, 2022b). The CEO of Apple Inc. is Tim Cook, who manages approximately 154000 employees worldwide (Forbes, 2022b). Key competitive products with Microsoft include iOS, phones, market platforms, and computers.

Competitive Profile Matrix (CPM)

Table 2: Competitive Profile Matrix for Microsoft Corporation, Alphabet Inc., and Apple Inc.

Primary Implications from CPM

The CPM can be accessed in Table 2 above, where the analysis reveals that Microsoft holds a strong market position with minor weaknesses and strengths compared to its competitors. For the most part, the performance is equivalent among all three companies as expected since they are resourceful, large, and dominant in what they focus on in the market. Therefore, it provides more justification for increasing innovation.

The Financial Statement

The income statement and balance sheet can be accessed in Tables 3 and 4 below, respectively. Microsoft’s both profitability and asset size have been increasing since 2019, which shows that the company is performing well despite the pandemic. However, the latter can be attributed to the tech industry in general, which was minimally impacted by the COVID-19 pandemic disruptions. In other words, the online nature of the business was a key strength for Microsoft during lockdowns.

Income Statement

Table 3: Income Statement for Microsoft Corporation

Balance Sheet

Table 4: Balance Sheet for Microsoft Corporation

Historical Ratios

The historical ratios for Microsoft Corporation can be accessed in Table 5 below.

Table 5: Historical Ratios: Microsoft Corporation

Internal Factor Evaluation Matrix (IFE Matrix, IFEM)

Table 6: Internal Factor Evaluation Matrix for Microsoft Corporation

The Internal Factor Evaluation Matrix (IFEM) for Microsoft Corporation is shown in Table 6 above.

Strategy Analysis

Strengths-weaknesses-opportunities-threats matrix (swot).

Table 7 below shows the SWOT analysis for Microsoft Corporation.

Table 7: SWOT Analysis for Microsoft Corporation

Boston Consulting Group Matrix (BCG)

Internal-External Matrix (IE)

Internal-external matrix by product.

Table 8: Internal-External Matrix by product for Microsoft Corporation

Internal-External Matrix by region

Table 9: Internal-External Matrix by region for Microsoft Corporation

Strategic Position and Action Evaluation Matrix (SPACE)

Table 10: Strategic Position and Action Evaluation Matrix (SPACE) for Microsoft Corporation

Grand Strategy Matrix (GRAND)

Table 11: Grand Strategy Matrix (GRAND) for Microsoft Corporation

Quantitative Strategic Planning Matrix (QSPM)

Table 12: Quantitative Strategic Planning Matrix (QSPM) for Microsoft Corporation

Strategy Conclusion

Firstly, the company’s corporate strategy is highly centered around the divisional organization, which is about having five independent divisions. These include “Windows & Live Windows Group, Server Software, Online Services, Microsoft Business, and Entertainment and Devices” (Stony Brook University, 2022, para. 1). In addition, each division has its own sales professionals, research and development, and customer service staff, which means that all employees of a division are located in one area for efficiency, convenience, and cohesion.

Secondly, the business-level strategy of Microsoft is focused on market excellence through expansion driven by innovation. It is stated that “the company’s business strategy is currently focused on three elements – ‘cloud-first, mobile-first, growth through mergers and acquisitions and exploring business opportunities related to AR/VR (Augmented Reality and Virtual Reality)” (Analytics Insight, 2019, para. 11). In other words, it is evident that the corporation is extensively trying to innovate and grow through the latter.

Thirdly, one should be aware that the current operational strategy is about productivity above everything else. The company wants to perfect and improve ten key areas, such as maintenance, scheduling, inventory, supply chain, HR and job design, layout design and strategy, location, capacity and process, quality, and design of goods/services (Smithson, 2017). From the information above, all three level strategies are cohesively interconnected. For example, it can be stated that each department works independently from the other and the department heads. The operations managers are able to make strategic decisions due to the expansion of the company’s products and services. The diversification of the business allows the managers to make broader decisions in lieu of its future growth and to maintain efficiency. Creating products of proper quality is at the forefront of the company’s values since before an item is introduced into the market, it undergoes rigorous testing by trying to acquire feedback from the existing customers. The given principles are deeply reflected and based upon Microsoft’s mission and vision statement.

Recommendations

For such a large company operating in a strong oligopoly market, growth can only be achieved through innovation. The main reason is that there is no financial or resource-based leverage for Microsoft since all of its competitors are as equally rich and capable as the company. The growth is saturated and maximized by all competitors, which is why the expansion is about new and better offerings. In other words, the goal is to defeat the rivals by taking their market shares with better products or services. The first option for Microsoft is to invest in the acquisition of new startups on a massive scale, which will drive innovation and provide a ready-to-use product. The evaluation of this path shows that it will be costly and expensive because other competitors want to buy new startups as well, driving the price higher. The second option for the company is to focus on its talent and human resource management to cultivate innovation within instead of buying it externally. The given alternative is more reliable and not-easy-to-replicate.

The evaluation of options reveals that the second option of driving innovation within is a better recommendation. The accompanying business objective of cultivation of internal innovation and its justification comes from the expensiveness of the first option and support from research. It is stated that innovation is mainly driven by the cultivation of innovative traits among employees of an organization (Poirier et al., 2017). Research shows that “knowledge acquisition positively affects innovation performance and that HRM moderates the relationship between knowledge acquisition and innovation performance” (Papa et al., 2018, p. 589). In other words, the business objective of attracting the best talent in the labor market, accompanied by superior innovation-focus human resource management, can improve innovation. In addition, Microsoft does not need to implement these changes radically because they are just as effective when integrated incrementally (Agostini et al., 2017). Thus, Microsoft’s business goal is growth through innovation, which should be done internally through the cultivation of innovative improvements.

Organizational Structure

Old organizational structure.

Improved Organizational Structure

The proposed plan is a strategic and organizational one, which is why the key change agents include the top leadership, management, and HRM. The suitable structure for the implementation of the plan is a top-down approach because innovation needs to be encouraged by high-level managers. Since the role of HRM is significant during this organizational shift, the bottom-up framework might not be most suitable due to HR being most influenced by the top management, not employees. In addition, key motivation factors and improvement of hygiene factors can only take place if the management decides to order HRM to do so. Lastly, the framework is plausible because the existing structure requires some restructuring by adding more cohesiveness among divisions to integrate innovation cultivation universally across the entirety of the company.

The implementation plan needs to occur in three phases in accordance with Kurt Lewin’s model of organizational change. It states that change occurs in three stages, which include unfreezing, change, and freezing (Whatfix, 2022). Microsoft needs to address its current talent before proceeding to new talent, which needs to be followed by improvements in organizational cohesiveness (O’Donovan, 2022). Firstly, the company needs to slowly unfreeze its existing frameworks, during which the management can shift its focus from startup acquisitions to internal cultivation of innovation. Secondly, the second half of the unfreeze stage needs to improve hygiene factors relevant to employees and enhance motivators. Thirdly, during the change stage, the company needs to ensure the restructuring of its organization to become more cohesive and uniform to ensure that changes are integrated properly throughout the entire company (David & David, 2017). Fourthly, the most important part is solidifying the changes in the freezing stage, which requires top management’s constant enforcement of the measures until they become the new norm.

The dependency of the plan on top management and their authority over HRM makes the top-down approach essential. It is stated that the key advantages of such a structure are faster implementation, clearer communication, and widespread familiarity with what is taking place (Asana, 2021). In the case of the plan implementation, Microsoft’s leadership needs to show proactivity and reciprocity about the proposed organizational change. It is clear that culture and leadership play a significant role in facilitating implementation at the company (Bovée & Thill, 2007). In other words, the top-down approach is to be utilized to ensure the effectiveness and efficiency of the plan.

Moreover, when it comes to informing and prompting the leaders to undertake such an endeavor, the strategy might include these elements since they need to be properly adjusted and positively tuned for change. Since the latter statements mean that if the leaders and managers are supportive of the proposed measures for improvements, the culture can be sufficiently primed for the continuous increase in innovation. Any form of implementation and integration plan needs to be properly designed in accordance with organizational needs and specificities. The implementation design for the proposed strategic plan is to be calculated, precise, and quantitative (Norton & Wiburg, 1998). The underlying reason is that the comparison mandates precise measurements, and then these can be conducted through innovation to increase values and talent productivity.

The high research and development (R&D) rate is an external technological element that signifies a rapid technological improvement in the mass media and entertainment sectors. In the context of the tech environment, the technological development represents a danger that intensifies competitiveness. Nonetheless, the same distant or macro-environmental aspect presents a chance for Microsoft to expand by deliberately boosting its R&D pace to meet or surpass that of competitors. Additionally, the growing popularity of augmented reality presents a potential for the firm to improve its performance.

Perceptual Map

Table 13: Perceptual Map for Microsoft Corporation

EPS/EBIT Analysis

Table 14: EPS/EBIT Analysis for Microsoft Corporation

Company Valuation

Table 15: Company Valuation for Microsoft Corporation

The Projected Financial Statements

Projected income statement.

Table 16: Projected Income Statement for Microsoft Corporation

Projected Balance Sheet

Table 17: Projected Balance Sheet for Microsoft Corporation

Executive Summary

In conclusion, Microsoft’s competitive advantage in its saturated oligopoly market depends on innovation. The latter can be bought externally, such as startups, or cultivated internally. Buying new startups is expensive because competitors have the resources to drive the prices up. Cultivating innovation from within is more sustainable and hard to replicate, but it requires changes in hygiene factors, motivator factors, and organizational cohesiveness. The plan needs to be implemented in a top-down approach in three of Kurt Lewin’s stages across a two-year period. The majority of internal and external factors indicate the prevalence of opportunities for developing a larger customer base. The development in these areas will allow the company to increase all of its product lines. On the basis of the analysis provided above, the company’s strategic options include the following:

• Microsoft should revise its human resource management in accordance with its core objectives by attracting talent with less political agenda.
• Microsoft should work on its employee retention methods since the existing workforce is not stable or loyal.
• Microsoft should gradually proceed with its differentiation strategy by ensuring that each new product is launched and sustained to maximize its long-term performance.
• Microsoft should continue using its industry leadership to penetrate the markets of its competitors to capture some of its market shares.

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Case study for Dynamics 365 implementation project training strategies

• 3 contributors

A midsize global fire protection company has earned a reputation for providing maintenance and service of the highest quality to its customers. During its 75-year existence, this company has built its business organically through natural growth, marketing, and geographic expansion, and also through numerous acquisitions of smaller fire protection companies. The company recently hired a new chief information officer (CIO) to replace the one who retired after 15 years in the job. The new CIO had extensive experience working with Microsoft and software as a service (SaaS) products. The CIO's immediate focus was to consolidate and modernize the applications that employees use to conduct their business.

In the training plan, the company included a mix of high-level and detailed training objectives. The high-level objectives included these goals:

• Don't allow access to the live system without a solid training program.
• Prepare a core team of trainers to help support the initiative.
• Continue to receive feedback and improve the training approach.
• Develop the training materials early, and schedule classes early.
• Prepare all business users to use the relevant Dynamics 365 application efficiently, and address any key business process changes that are required in their job function.

Specific objectives were centered on business processes such as Prospect to cash (for example, "All sales team members should be able to execute the standard Prospect to cash flow on their own"). Their specific training objectives, listed here, helped support business goals for the application:

• Increase sales by 10 percent year over year.
• Improve productivity by 25 percent by measuring work order completion time.
• In the Accounting business department, increase user satisfaction (covered in an annual poll) by 10 percent, and increase user competency (measured by metrics in the application) by 15 percent.

The team understood that to ensure successful training and achieve meaningful user adoption, they must begin planning early and set up a strong team to support it.

The team benefited from using a change impact assessment matrix to understand the changed business areas, topics, and affected user groups. The matrix helped the team prepare and prioritize training sessions.

The company had experience developing and conducting trainings for previous projects. They knew that they wanted to incorporate various learning modalities: written documentation, videos, hands-on learning, and multiple training labs that use real and recognizable data.

The company's legacy application infrastructure reflected the way that the business had grown. The back-office system ran on an on-premises application that had been used since 1990. Front-office users (salespeople and field dispatchers) and field technicians didn't use any application. Instead, they were still using pen-and-paper-based methods. Because of the number of acquisitions that the company had made over the years, these methods varied, sometimes by business unit and sometimes by other organizational structure. No overarching governance model consolidated the different methods.

As a result, employees who were in identical roles used different methods to accomplish their day-to-day work. This discrepancy in job execution versus job role could be attributed to the fact that many employees joined the organization via acquisition and had never been required to change. It was necessary to capture all "as-is" processes and assess the impacts of moving to the new application, from both a technical perspective and a business process change perspective.

Given the numerous challenges of supporting a wide variety of applications for all users, the company used the Business process modeler (BPM), task guide, and custom guided help features for content development and user training. By having all business processes documented on one platform, the organization gained a single source of truth. Task guides not only provided consistency to all the business processes that were used across the different departments, but they also made employee orientation and training a smoother experience. Task guides were also embedded in the product help experience to provide a 24/7 interactive help experience.

The company set itself up for success by clearly defining all these processes and the group of users that had to be trained. Its subsequent training delivery was a smooth process that included all user persona business processes.

Because of the evolving nature of Dynamics 365 applications and organizations, and also the fact that the project was being rolled out in multiple phases, the company developed an ongoing training process where training was carried out, reviewed, and updated as a cycle. A well-structured and well-organized ongoing training plan was especially critical for this organization, because it used several interfaces (desktop and mobile applications) that released new versions of their application at different points during the year. Therefore, it was even more important to have defined training cycles.

In addition to planning for the April and October releases of the application, the organization needed a plan to move its technicians to the new version of the Dynamics 365 Field Service mobile application that was available. This transition required a project of its own and a separate training plan.

Formal feedback was recorded after the trainings, and Microsoft Teams channels were created so that employees could continue to provide feedback to the team. Users were encouraged to share knowledge, ask questions, and suggest improvements to the training materials. The team was also able to collect feedback and create metrics by using help desk tickets. This approach helped them identify areas of the application that users found challenging.

The organization determined that mobile Field Service technicians were logging more tickets than other application users. By learning the types of tickets that technicians were creating, trainers were able to pinpoint a specific area of the work order process that had to be made clearer during training. Adjustments were also made to the training materials.

During the initial days, one of the objectives, "Don't allow access to the live system without a solid training program," was difficult to meet. However, over time, the company learned that it could achieve a significant reduction in business process issues by making sure that every user received adequate training.

During the first few months, an evaluation of key performance indicators (KPIs) showed that the organization was on track to meet all the detailed objectives that the team set.

• Training strategy
• Create a training plan
• Define the training schedule
• Delivery approach for the training plan
• Training process and best practices
• Checklist for your training strategy

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