Microsoft Can’t Innovate Because It Has Shitty Culture

A long-time Microsofty has outed the jungle-fighter culture of Microsoft as the root of its innovation woes:

- Dick Brass, Microsoft’s Creative Destruction

Microsoft has become a clumsy, uncompetitive innovator. Its products are lampooned, often unfairly but sometimes with good reason. Its image has never recovered from the antitrust prosecution of the 1990s. Its marketing has been inept for years; remember the 2008 ad in which Bill Gates was somehow persuaded to literally wiggle his behind at the camera?

While Apple continues to gain market share in many products, Microsoft has lost share in Web browsers, high-end laptops and smartphones. Despite billions in investment, its Xbox line is still at best an equal contender in the game console business. It first ignored and then stumbled in personal music players until that business was locked up by Apple.

Microsoft’s huge profits — $6.7 billion for the past quarter — come almost entirely from Windows and Office programs first developed decades ago. Like G.M. with its trucks and S.U.V.’s, Microsoft can’t count on these venerable products to sustain it forever. Perhaps worst of all, Microsoft is no longer considered the cool or cutting-edge place to work. There has been a steady exit of its best and brightest.

What happened? Unlike other companies, Microsoft never developed a true system for innovation. Some of my former colleagues argue that it actually developed a system to thwart innovation. Despite having one of the largest and best corporate laboratories in the world, and the luxury of not one but three chief technology officers, the company routinely manages to frustrate the efforts of its visionary thinkers.

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Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence. It’s not an accident that almost all the executives in charge of Microsoft’s music, e-books, phone, online, search and tablet efforts over the past decade have left.

As a result, while the company has had a truly amazing past and an enviably prosperous present, unless it regains its creative spark, it’s an open question whether it has much of a future.

In the past, I argued that Microsoft was doomed to fail because — like the Roman Empire — it opted to fight on too many fronts. Market dominance in Windows and Office led it to games, phones, tablets, [fill in the blank].

Now it appears that it is failing because the many product line heads are fighting for control, instead of pulling together.

In my territory, Microsoft has never even made a blip. There has been no serious Microsoft innovation in social tools, with the exception of OneNote. Instead of OneNote, however, the company should have been working on making Office social — and I don’t mean Groove (acquired along with the lackluster Ray Ozzie) or SharePoint.

Microsoft could have easily built, or knocked off, Basecamp, and figured out how to build that into and around Office. But now its too late. Web professionals have largely moved away from Office and its document-centered world view.

The death of documents will mean the end of Microsft as we know it.

Update on Wednesday, February 10, 2010 at 10:32AM by Stowe Boyd  

Matt Rosoff followed up on the Dick Brass disclosure, pointing out how Apple completely took the music player/device/store market away from Microsoft at a time when they were watching and involved:

By the time Apple was ready to launch the Windows version of iTunes in October 2003, Apple had sold 13 million songs through the service, outpacing all other music stores, despite the Mac’s small market share. In other words, FairPlay and the consistently priced single-song downloads worked.

Almost seven years later, the iTunes Store is the largest music retailer in the United States, online or offline, and most of the stores based on the Windows Media Platform (including MSN Music) are out of business or have moved to selling unrestricted MP3 files.

Getting back to Dick Brass’s criticism of Microsoft, I find it fascinating that top Microsoft executives were aware almost immediately of the threat the iTunes Music Store posed to the whole Windows Media ecosystem, but Microsoft was still unable to stop it. This matches what I’ve seen time and time again in my last 10 years following the company.

Microsoft has some smart executives who can quickly and correctly assess market changes and opportunities. Often, they come up with a good strategy to capitalize on those changes. But somewhere between strategy and execution, the thread is lost. Windows Media and Zune are most relevant to this blog, but you can see it elsewhere: online advertising, search, and mobile phones, to name three obvious examples.