Tuesday, October 12, 2004

When Microsoft Should Walk Away

Question in a comment:

I dont work for Microsoft and I have no love for the company but I have to ask this question: You basically seem to suggest shutting down all money losing projects. However, surely aren't these the results of the management's efforts to diversify? I would think that MS would need to subsidize all kinds of nonremunerative projects in order to get at least one that might strike it big.

We do need to expand into other markets. Otherwise, we'd be perpetually stuck with Windows and Office bringing in just about all of our profit (hmm). However, Windows and Office revenue provides one hell of a slush-fund for divisions with sloppy management dressed up like innovators dealing with a dilemma.

If something is a good idea, it will take and establish itself and be able to support itself. If something is a bad idea, it should die on the vine after due process and let these people move-on (preferably, move-on to other companies).

For instance: our recent acquisitions have pretty much gone badly (where badly is defined as not turning a profit). The two good kind of acquisitions:

  1. Source code because it's a great product and
  2. HR because the people are so great (product secondary or ignored [LookOut]).

What rarely rarely works is #3: people and product. That company succeeded because of their unique development environment and personalities. Now that environment is gone and they are forced to develop the Microsoft Way. They've been blue bagded. And slowly the greatness that was their product has the life drained out of it and it becomes less and less relevant (e.g., Great Plains).  These acquisitions are where we should have been spending money to have great partnerships and not blow a bunch of cash and fritter away a product just to feel we have a market segment covered.

To succeed, we need to be quick and nimble and not continuing to pull the plow in a dead, sterile field being sowed with the best seed in the world. So yes, let's try expansion and if it takes off, relish in our success and make heaps of money from delighted customers. If it is a bad idea or a rapidly declining market, don't be stubborn and try through sheer will to manifest success. Walk away.

Most importantly: reward success. Reward profit.


Anonymous said...

> If something is a bad idea, it should die on the vine after due process and let these people move-on (preferably, move-on to other companies).

But how do you know when a product/service "is a bad idea"? How long do you give a product/service to be profitable? 6mos? 2 years?

Anonymous said...

From Neko: I have a suggestion? Why not open-source Windows and Office and basically cut the profit it brings. Numerous successful projects have been created under pressure and under-funded. When you have so much money behind, you become too lavish and pointless. Case in point: how many times Office toolbars have to change before most of the people realize they don't get enough value and excitement for their money.