![]() After all, insisting back in the 1980s on owning DOS and other software platforms had yielded big profits and cash cows. For decades, the company had resisted partnerships. Instead of protecting its assets, in a defensive posture, Microsoft went on offense, ceding big investments in existing tech and looking to jump into emerging opportunities. This reorientation was accompanied by a strategic shift. ![]() With his colleagues, he reoriented the company to “empowering every person and every organization on the planet to achieve more.” Having long accomplished its goal of “a PC on every desk and in every home, running Microsoft software,” the company needed a new goal to attract and inspire its many coders and engineers, and sustain its profitability. This wasn’t just another exercise in corporate purpose - Nadella treated it as an existential moment. He announced it was time to “rediscover the soul of Microsoft, our reason for being.” But Nadella, and the board, were tired of seeing the technology world pass by the one-time leader. At the time, he was the head of the company’s fast-growing cloud computing division, and his promotion seemed unlikely to change the lumbering giant’s trajectory. This process began with Nadella taking the reins in 2014, when Microsoft’s board picked him to replace retiring CEO Steve Ballmer. But, in taking a closer look, we found that something remarkable had happened there: a cultural shift to stop playing defense and go on offense. I’ve been working in Silicon Valley since the 1990s, and Microsoft’s appearance was somewhat surprising. ![]() But the list included some surprises: Namely, that Microsoft made the list, but Google/Alphabet did not. Some were expected: Apple, Amazon, and Tesla. We explored how they performed on a long list of attributes, including interviews with dozens of managers, executives, and frontline and former employees, and coded the data.įrom those efforts, we came up with several companies that seemed to have cracked the code of perpetual innovation. To answer that question, we surveyed 6,873 global executives, academics, and consumers, and narrowed a corporate database to 26 firms, grouped into high, medium, and low degrees of agility and innovation. We wanted to know what makes companies continue to innovate even after their initial success. My team and I recently completed a multi-year research project to better understand perpetual innovation. How did stodgy Microsoft, stuck in slow decline, ever muster the ability to leap ahead in the first place? As any corporate veteran will tell you, no single person, no matter how talented, can transform an organization. Those explanations have some merit, but they don’t go deep enough. Others praise Kevin Scott, Microsoft’s chief technology officer since 2017, who joined with the LinkedIn acquisition, partnered with OpenAI a year later, and pushed hard for technology inside Microsoft. Some say Google’s lead position forced it to move cautiously in order to minimize hate speech and misinformation. We’ve known for a while that high-tech success and transformation is more about the culture than the technology, and the management decisions each company made here seem to have made the difference. And it had laid the groundwork for chatbot-powered search before last week. Notwithstanding Google’s costly flawed demo earlier this month, its LaMDA chatbot was arguably just as good as the ChatGPT3 release that had taken the world by storm. The company had made fundamental advances in AI. Google’s problem certainly wasn’t engineering. Already burned in 2014 by Amazon’s AI-enabled Alexa voice assistant, Google announced in 2016 that it would become an “AI-first” company. This wasn’t supposed to happen, especially not to Google. And in doing so, it was directly challenging Google, the undisputed champion of search, by trying to out innovate Google on its home turf. Yet on February 7, there was Microsoft CEO Satya Nadella telling reporters that artificial intelligence was creating a “new day in search.” Microsoft’s much-maligned Bing was integrating Open AI’s ChatGPT technology to generate information directly for users, not just links. Jeff Bezos was known to gesture east and admonish his Amazon colleagues not to become complacent like their Seattle neighbor. It was rich enough to be a fast follower, but too big and bureaucratic to lead in any market. The tech giant hadn’t had a breakthrough innovation in decades. For years now, observers of tech have written off Microsoft as a 20th-century phenomenon, fat and happy from its Windows monopoly.
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