Innovation Dynamics in Microsoft - Case Study Example

INNOVATION DYNAMICS IN MICROSOFT Introduction Innovation is the term that has been used often in the business management as the process or product changes, modification or new product launches altogether for sustainability in a competitive market. The unique quality of the process or product is supposed to create a differentiation in the business that would give its business superiority over other competitive products. In this context, Microsoft has been used to demonstrate the various innovations that lead to change in business sector. The last three decades would be critically analyzed to ascertain the reasons of innovation in both software and hardware sector that has caused disruption in one business while gave boom to another. The opportunities of changing business dynamics and its effects on business survival or development would be analyzed in the software and hardware computing sector to assess the role of innovation. The theory and practice for change and innovation would be analyzed with examples from hardware and software sector perspectives. Microsoft and Innovation: The sector in last three decades Bill Gates is one of the most familiar names around the globe as being the founder of the US multinational based out of Washington. In 1972, the journey of its business started from an automobile density measuring software and in 1975 the name Microsoft came into being. In 1979, after a contract with ASCII magazine of Japan, the business moved to Washington, Bellevue as ASCII-Microsoft. The business of operating software came into being in 1980s with its own version of Unix called ‘Xenix’, however the business started its actual dominance on its MS-DOS platform. The Xenix was the first production in terms of Platform specific software development from Microsoft. The first big breakthrough was received from IBM in the same year to provide a version of CP/MOS for the IBMs upcoming personal computers. Microsoft retained the ownership of the operating software when IBM launched its first Personal computer. In 1983 it came up with Microsoft mouse and retained the MS-DOS that gradually made it the market leader with time (News.microsoft.com, 2015). The first of many Microsoft Windows came into being in 1985 and by 1986 Microsoft produced 12000 new US billionaires from among its employees, with its first initial public offerings. Office suites came up in 1990 with MS Word and MS Excel applications with its improved graphics and user interface designed by Intel 386 micro processors. This was the second breakthrough in the sector that facilitated the use of microprocessors for a compact product development. Prior to this, the personal computing was not developed to an extent to which the facilitation of such innovation could take place. In 1995 the advent of World Wide Web saw the launch of Windows ’95 with new user interface with pre-emptive multitasking ability bundled with MSN online server with web browser. The third innovative intervention changed the data transfer and multimedia interactions reach a new level. In 2001, more competent and diverse face of Windows as Windows XP and the year next saw Xbox or the game console to challenge Sony and Nintendo. The forth most disruptive innovation, Xbox gamming console for the business, brought in the new addition of product line over and above its software wing, giving the business a brand extension to seek new market share (Warren, 2015). The European Union (EU) made the business scratch off its windows media player in 2004 with a huge lawsuit. This fifth disruption caused existent Windows had to be scraped for a new version that had no media player in it after the lawsuit. The period of 2006 to 2010 became the sixth phenomenal intervention in series where in 2007 launch of Windows Vista that had a focused security and interface addition to give the market the most competent Personal Computer experience (Sizemore and Mac, 2015, Link and Scott, 2010, Freel, 2004). The innovations in the first two decades of the business saw multiple innovative disruptions. The mouse as a hardware is one, the other one is the microprocessors by Intel that changed the production line suitable to bring in personal computers as a product. The brand extension through the launch of Xbox is another innovative disruption that led the business venture into gamming console for the first time, adding a new market share and product extension for them. The launch Windows 2004 version with Windows Media player, caused lawsuits concerns for the business. Microsoft had to face a major disruption where the brand had to redesign and re-launch its product without Windows Media players. The year 2008 saw the business enter the new cloud computing domain with Azure Service platform, which can be termed as the seventh major innovative disruption for the business. The next year 2009 was another great year when business came up with its personalized shops to cater users with official launch of Windows 2007. Further, the growth of mobile technology boomed in 2007 which gave Apple and Google to come up with operating platforms for smart phones. However, the entry of Microsoft in the flagship ventures of mobile technology in 2010 with strategic alliance with Nokia which was acquired by the business. This can be viewed as the eighth major intervention for the business in its lifecycle. From 2011 onwards, the brand revamped its branding ventures with Smartphone applications and Windows 8 OS and in 2012, the market got Microsoft Surface, the first PC to have Microsoft made hardware along with Outlook mail services to challenge Gmail’s growing popularity (Timesofindia.com, 2015). Microsoft Dynamics AX was the latest enterprise resource management module to support industry specific operations and process all across the globe. This from the researcher’s view is not an innovation as a whole as the competitors already had the ERP idea implemented. Keeping pace with change in the global business and sector innovation has been competently adopted by the business of Microsoft. However, the trends post 2010 has made them venture into the Smartphone segment with Nokia as the partner brand. The late entry makes them face strict competition from Google’s innovation of Android and Apple’s OS in the segment (Statt, 2015, Pelly and Kramer-Eis, 2011). This can be termed as the latest and ninth innovative disruption which made the business of Microsoft to take a look into its business model altogether. The new age of Smartphone OS was the future for the business of hardware and software, which entered the mainstream strategic focus for the business much later and late. The last decade is or the period between 2005 till date saw Microsoft have few major innovative disrupting its business processes. The server platform of Microsoft saw a revamp with change in time where the business has to set its processes in accordance to its competitors like Sun and IBM. The other inputs in the business followed the competitor’s processes where the business faced a period of no new innovations as the history of Microsoft shows. The Microsoft Dynamics AX or the Microsoft Windows 7 and 8 versions were few of the new offerings from Microsoft. The Dynamics AX followed the Oracle and SAP developed enterprise resource systems but much later than the first development in such a field. The Smartphone era started from 2007 changed the entire business perspective for Microsoft. The Apple and Google were the two most prominent platform providers for modern Smartphone operations. Microsoft responded by implementing Microsoft Mobile instead of Microsoft Phone OS. Again the business created its strategic alliance with Nokia in 2010 to promote its new OS among users. However, Nokia’s sales dipped the most in the period of smart phones due to their Symbian operating system’s use that was much backdated and not as superior as Google or Apple’s offerings. Without innovation, the business couldn’t sustain in such a competitive atmosphere (See Appendix for 2008-2013 results). The sales for the business is at its lowest when the business ventured to acquire Nokia and Skype, but how that acquisition would prove to be a boon for the business, is to be assessed. The Xbox 720, Windows Phone 7, Windows Server 2012, Tablet (Surface) and Windows 8 for personal computing are the newest of innovations that is coming from the brand. However, the effects of such innovation have done little in developing the lost impetus for the business. It is observed that the business failed to take its clues from the market and innovate accordingly to note and react to the paradigm shift of computing from PC to Smartphone. Integration of Innovation in Business: The Next three decades The change in business is caused by various business environment elements that have direct effect upon the business health. This process of change is aimed at creating more effective process and products to increase the likelihood of business success (O’Gorman, C., 2014). Thus for the Microsoft’s business, the next three decades would be dependent on new idea generation to adapt with the changing environment to achieve edge over the competitors. The innovation can be risky for a business as it involves new process or product or business model adoption, for better productivity and performance. Since innovations are not tested in the market scenario, they have the risk factors involved where the product or process may get rejected by the consumers. Again the competitors may evolve even better processes or even the cost to benefits of the innovation may go negative affecting the business health. Thus innovation is a sword with duel edge for business and thus implementation of innovation needs careful planning and gradual execution to get the desired output (Konsti-Laakso et al. 2012, Tan, 2006). The step by step approach of business towards innovation is suggested in the following steps: At first, market analysis and identification of the market environment, consumer’s wants, competitor’s offerings would give the business managers idea of the required changes. This change is further developed in the second stage where strategic response to the needs for change is answered. This can be answered with innovation of a process or product to suitably compete and gain edge in the market. The next step is to achieve leadership in innovation where the business focuses on training and empowering employees to think and innovate. The atmosphere of innovation is a part of the culture that business develops with reward systems. The inspirational leadership is considered as a driver to change with motivation and active participation of all in the management. Love and Roper (2015) argues that the risks that an employee takes are to be suitably rewarded to grow the competence of business wide innovative culture development. The fourth step is where the business tries to seek advice from the stakeholders like consumers and employees to generate the ideas for improvement in process product and services externally and internally (Huggins and Thompson, 2015). Since innovation is the key for competitive advantage, generation as well as a source for risks in business process, therefore the implementation of innovation is a step by step approach for the business where the implications of execution are checked at each step (Corrocher et al. 2013). Therefore the Microsoft’s future innovation would focus on innovation that has genuine utility with a strong market research before launch so that the chance of failure is reduced. The adherence to objective in new process or product implementation is imperative to the reforms that the business is looking for without much of risk (Nuur et al. 2009). However, Kanungo (2002) noted that the innovation in a market is short-lived especially in the markets with perfect competition, as the competing brands have the ability to come up with similar offerings in a short period (Das, 2003, Ahlstrom, 2010, Andrews, 2004). The future of the Microsoft business would need a more market specific outlook to accommodate its processes with the changing market dynamics (Eichenwald, 2015). The next three decades shall see a rise in technology orientation of daily life for people all across the globe. The rise in social media for knowledge sharing and real time interactions has made the Smartphone so popular. The combination of nano-technologies and bio-technology in the mobile devices can act as an impetus for the step forward (Hovhannisyan and Keller, 2014). The business may use these new innovations to add personal health data known to all that the individual may allow to give an idea of the health condition. The predictability of health would enable a better preventive diagnostics giving the medical science a leap forward. Further the device may add the ability to taste the air quality and predict the changing weather conditions to help people look for protective cover before a natural calamity. The use of cloud computing can be utilized in the next three decade to integrate each aspect of an individual at the finger tips of user to make their everyday life easier. The changing environmental conditions are driving the current day business to adopt new environmental friendly processes. Microsoft can pick the trend up and use Nokia to innovate a battery to be environment friendly that would use and charge its cells during the day under the sun while store the rest for a 12 hours long night. These innovations would be one that would give the business a leap, where each of the competing businesses faces the challenge of long battery life. The renewable cell sourcing its energy from renewable means like human body heat, solar energy would be a futuristic idea that Nokia and Microsoft may look into. Reference List Ahlstrom, D., 2010. Innovation and Growth: How Business Contributes to Society. Academy of Management Perspectives, 24(3), pp.11-24 Andrews, D., 2004. Innovation. Business Communication Quarterly, 67(3), pp.265-266 Corrocher, N., Cusmano, L. and Lenzi, C., 2013. Growth in Knowledge-Intensive Business Services: Evidence from Lombardy. Industry & Innovation, 20(6), pp.563-584 Das, G., 2003. Preparedness for Innovation: An Indian Perspective. Global Business Review, 4(1), pp.27-39 Eichenwald, K., 2015. [online] Vanityfair.com. Available at: [Accessed 7 Mar. 2015]. Freel, M., 2004. Small Firm Innovation, Growth and Performance: Evidence from Scotland and Northern England. International Small Business Journal, 22(6), pp.561-575 Hovhannisyan, N. and Keller, W., 2014. International business travel: an engine of innovation?. Journal of Economic Growth, 20(1), pp.75-104 Huggins, R. and Thompson, P., 2015. Entrepreneurship, innovation and regional growth: a network theory. Small Business Economics, 21(1),pp. 123-125 Kanungo, R., 2002. Entrepreneurship and Innovation: Models for Development. Global Business Review, 3(2), pp.224-224 Konsti-Laakso, S., Pihkala, T. and Kraus, S., 2012. Facilitating SME Innovation Capability through Business Networking. Creativity and Innovation Management, 21(1), pp.93-105 Link, A. and Scott, J., 2010. Employment growth from the Small Business Innovation Research program. Small Business Economy, 39(2), pp.265-287 Love, J. and Roper, S., 2015. SME innovation, exporting and growth: A review of existing evidence. International Small Business Journal, 33(1), pp.28-48 News.microsoft.com, 2015. Facts About Microsoft | News Center. [online] Available at: [Accessed 7 March 2015] Nuur, C., Gustavsson, L. and Laestadius, S., 2009. Promoting Regional Innovation Systems in a Global Context. Industry & Innovation, 16(1), pp.123-139 O’Gorman, C., 2014. Creating Competitiveness: Entrepreneurship and Innovation Policies for Growth. International Small Business Journal, 32(7), pp.854-855 Pelly, R. and Kramer-Eis, H., 2011. Creating a Better Business Environment for Financing Business, Innovation and Green Growth. OECD Journal: Financial Market Trends, 2011(1), pp.129-140 Sizemore, C. and Mac, R. 2015. Microsoft on the Forbes Worlds Most Valuable Brands List. [online] Forbes. Available at: [Accessed 7 Mar. 2015] Statt, N., 2015. Microsoft is banking the future of Xbox on Windows 10 - CNET. [online] CNET. Available at: [Accessed 7 March 2015] Tan, J., 2006. Growth of industry clusters and innovation: Lessons from Beijing Science Park. Journal of Business Venturing, 21(6), pp.827-850 Timesofindia.com, 2015. Microsoft-Nokia deal - News Stories, Latest News Headlines on Times of India. [online] Available at: [Accessed 7 March 2015] Warren, T., 2015. Microsoft wants to make Windows 7 seem really old. [online] The Verge. Available at: [Accessed 7 March 2015] Bibliography Branscomb, L. and Keller, J., 1998. Investing in innovation. Cambridge, Mass.: MIT Press. Cain, S., 2012. Quiet. New York: Crown Publishers. Drucker, P., 1985. Innovation and entrepreneurship. New York: Harper & Row. Evans, J. 2009, Innovation: Harnessing Creativity for Business Growth. (2003). Work Study, 52(4), pp. 22 Kiuchi, T. and Shireman, W., 2002. What we learned in the rainforest. San Francisco: Berrett-Koehler Publishers Nijkamp, P. and Siedschlag, I., 2011. Innovation, growth and competitiveness. Berlin: Springer. Pinchot, G. and Pellman, R., 1999. Intrapreneuring in action. San Francisco: Berrett-Koehler. Usselman, S., 2002. Regulating railroad innovation. Cambridge, U.K: Cambridge University Press Wessner, C., 1999. The Small Business Innovation Research Program. Washington, D.C.: National Academy Press Appendix: Microsoft’s Performance 2008-2013 (Source: Theverge.com, 2015) Read More