Wednesday, August 01, 2007

Microsoft's Latest Attempt at Resurrection: Craig Mundie's Mandate

A very recent Wall Street Journal article focused on Craig Mundie, the man who is being touted as 'Bill Gates' replacement.' Mundie is the new chief of strategy and research at Microsoft.

I wrote several posts, here, here and here, among others, about Microsoft's dilemma, and a potential solution. The last of the three, and its predecessor a few days earlier in November, 2005, contain the seeds of my ultimate recommendation and prophesy for Microsoft.

Simply put, as good a guy as Mundie probably is, he can't and won't personally, single-handedly overcome:

- the wooden-headed, arrogant and wealthy Steve Ballmer's insensitivity to Microsoft's shareholders

- the vast, entrenched, far-flung bureaucracy and operational mindset at Microsoft, which has been built over two decades of prior success

- a company so large that it simply will never be able to match the speed and innovation of smaller startups in any area in which Microsoft chooses to try to 'lead' from a technological base

- the apparent trusim that technology firms, as technology firms, simply do not have successful second acts. Ever.

As I read the Journal article, I was struck by how very much like the old AT&T, at which I plied my trade in the 1970s and '80s, Microsoft now is. So large that the same solutions are developed in isolation, multiple times throughout the firm. A single leader is annointed to fix the problem and shake things up, but without sufficient authority.

Time and again in the article, Mundie exhorted some or other staffer to go see another, kindred group, meet with the senior executive of some similar activity, or build stronger ties to produce groups.

The trouble is, it matters to people who gets credit for solutions. Mundie seems oblivious to how the groups in power will respond to being presented with 'solutions' by smaller research units from far away locations. The integration of the various ideas and solutions will not be seamless, if it happens at all.

So long as Microsoft tries to use its existing structure to be something it hasn't been before, it will fail. As I wrote nearly two years ago, what Microsoft needs to do is think and behave like a venture capitalist, and spin out various smaller entities to work on the areas in which it wishes to lead. By retaining a stake in the firms, seats on their boards, Microsoft, the parent, will share in the innovation-based value that these startups will create. In time, these startups could become the next Googles, etc.

But so long as senior Microsoft executives respond to Mundie's efforts with comments like Tom Gibbons, VP for various non-computer software efforts,

"I need to think of this as a completely new effort,"

in response to Mundie's stimuli involving mulicore processors, I think Microsoft is doomed to remain a large, hulking, mediocre giant whose best days of consistently superior total return performance are way, way behind it.

One talented, even motivated executive like Craig Mundie just cannot overwhelm the weight of factors arrayed against him at Microsoft, no matter how correct Mundie's insights and actions are.

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