Wednesday, November 09, 2005

After the Peak: Microsoft Part 2

To see an example of how Bill Gates should be approaching his second act, consider his sometime-nemesis, Steve Jobs.

Jobs has demonstrated a talent for successfully implementing two, perhaps three, business visions. However, to do so, he started Pixar separately from Apple. He didn’t attempt to create it as a division of the latter. Rather, Pixar is about entertainment technology. Who knows how warped its development may have been, were it to have been birthed within a personal computer maker. It seems to be in the nature of human behavior, especially for leaders of previously successful enterprises, that these people seldom lead those organizations to long-term domination of a product/market across technological divides.

It’s interesting to consider that Job’s, and Apple’s, latest and greatest invention, the iPod line, occurred after Pixar. Perhaps Jobs appreciated the needs and solutions for personal entertainment better after having created and successfully run an entertainment-related company. The iPods are a far better concept and implementation than the Apple Newton was in its day.

However, contrast Jobs and Apple with Gates and Microsoft. The former created a radically new business by starting from scratch. The latter are attempting to recover from several product/market defeats with a biased, existing culture. Even Ray Ozzie, Microsoft’s new visionary team member, is on at least his third organization. To him, it’s a new culture and environment, so he isn’t limited by Lotus or Groove Networks.

However, Bill Gates is still at Microsoft. Despite Ozzie, whatever Microsoft does to compete with Google will look a lot like, well, how Microsoft would do online/internet services.

For an example of how wrong this can go, consider this. In my youth, when I joined AT&T, I met veterans from the company’s first large-scale digital PBX development team. They described how Bell Labs product developers had originally provided access to computer software on the product via four-digit numerical access codes. While everyone else in the world was using computers via full keyboards, these guys were going to give their users access via numeric touchpads on a telephone. It was simply the world they knew.

I think Gates will have much more success by simply putting Ray Ozzie in charge of a new company, funded by Gates/Microsoft, to pursue the latter’s latest visions. It will bear none of the cultural burden and ponderous size of Microsoft, both of which are sure to be handicaps in the race to compete with Google, Yahoo, You can’t really believe that Microsoft’s employees feel totally free to change direction with Gates’ personality still in resident. That’s not to say Microsoft can’t develop online service versions of their current product portfolio. But at this point, who cares? Nobody else is competing in those now-commoditized and basic niches anyway.

Mind you, I don't think this takes away any credit whatsoever for what Bill Gates did with Microsoft. He performed a very successful wealth-creation job. Nobody should discount that. It's just that now, Microsoft's time is over- like GM's, IBM's, AOL's, etc. These companies have already seen their most creative, consistently-superior wealth-creating days. They are now simply large, slower-growth, mediocre remnants from once-hot product/markets.

When I began these two latest posts, I was focusing on Bill Gates and his belated attempts to not just change the direction of his supertanker that is Microsoft, but actually rebuild it in the water en route. What I have concluded, surprisingly, is that the really great role model for radical corporate change is Steve Jobs. He had the courage to found an entirely new company (two, actually, if you count Next) in order to implement part of his digital vision. And probably used that to pollinate Apple with ideas that led to the iPod line and iTunes.

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