Organizational Culture and Innovation of Microsoft - Research Paper Example

 Organizational Culture and Innovation of Microsoft Table of Contents Executive Summary……………………………………………………………………….3 Position……………………………………………………………………………………4 Sense………………………………………………………………………………………5 Uncover……………………………………………………………………………………8 Solve……………………………………………………………………………………..11 Build……………………………………………………………………………………...13 Achieve…………………………………………………………………………………..14 Bibliography……………………………………………………………………………..17 Executive Summary The changes which are made in specific corporations are based on the way in which they associated with the internal and external environment. When looking at Microsoft Corporation, it can be seen that there are several weaknesses which are leading to the problems within the company. The ability for the company to begin to change is one which is based on the need to stay in a forward position as knowledge based company, specifically by providing innovative solutions and measures toward the corporation. However, the ability to do this is reliant on several dependent factors that began to alter the way in which the company functions. The main problem with Microsoft is based on complexities within the internal structure which are not allowing the company to provide innovative solutions. This is leading to stakeholders who are deciding not to invest in the company as well as a changing reputation from loyal customers who are looking for more innovative products. While Microsoft still has a strong standing in technology because of the brand identity and long history of providing products, there are now complexities based on the lack of innovation and growth, as well a problems with product quality. To drive the company forward, Microsoft is in need of changing the organizational culture and environment so it reflects in innovative solutions which can be offered to the community. By evaluating the Microsoft corporate solutions, as well as the relationships to employees, leaders, stakeholders and customers, there is the ability to alter the way in which Microsoft functions, while continuing to meet the main objectives of the organization. Position Microsoft Corporation is one of the widely recognized corporations that are currently functioning. The establishment began in 1975 with a focus on software, computer services and innovative computer needs within the community. The mission of Microsoft is to provide innovative tools for technology with a specific focus on computer operating systems. The vision is to ensure that all computer tools are recognized as a top brand with the ability to continue to provide innovation and growth on a world wide level. The values which are associated with this are to provide tools to customers so the individuals can use technology to reach their own potential. This is done with continuous updates and improvements on old tools as well as finding a position to incorporate new and emerging technologies that can be incorporated into various lifestyles. The concept of serving customers is followed with a commitment to communities through extra programs and divisions in the company. There are several different segments that are in the company, including the windows and windows live edition, operating servers and tools, business division, online services division and the entertainment and devices division. These are known for building several types of software systems that can enhance the lives of those within society (Microsoft, www.microsoft.com). The position of Microsoft is one which is furthered by the stakeholders in the corporation. This is governed first by a Board of Directors which works within the Microsoft Corporation. An executive team is underneath the board which comprises of those who understand the vision of Microsoft. The main attributes that are noted by stakeholders are based on the retained earnings from each of the divisions of Microsoft. The strongest sales in Microsoft are from Microsoft 7, which led to almost 7% growth in the industry and over $62 billion in FY 10. The operating income growth increased by 15%, EPS was at 30% growth and $16 billion was returned to shareholders with buybacks and dividends. The overall sales and marketing expenses increased by 3%, general and administrative expenses increased by 8%, cost of revenue increased by 2% and research and development decreased by 3% (see appendix A). These figures are important as it shows that the changes in Microsoft are leading to complexities in the company. It can be seen that there is an increase in expenses, such as sales, marketing, administrative and cost of revenue. The growth in 2010 was based on Microsoft 7 while other areas of the corporation didn’t develop as much. This is seen by the growth in operating income. While there is continuous demand for the products, which is continuing to increase, shareholder value is decreasing with $16 billion returned to shareholders. At the same time, the business division noted a decrease of 2% and operating systems in other departments continue to increase in cost (Microsoft, www.microsoft.com). The main association with Microsoft is one which fluctuates specifically because of demands in innovation and technology as well as short life cycles in various products. Keeping loyal customers and shareholders and competing against other technical companies are some of the main challenges associated with Microsoft. Sense There are several problems that are intertwined with Microsoft and the approaches which are currently being taken in the marketplace. These link to both the internal and external environment and are being reflected in the sales, workforce and stakeholder agreements that are within the corporation. The first problem is associated with the organizational environment. The trend in Microsoft has been one which has continues to grow as an innovator in past years. It is noted that the growth became so large that now there are difficulties with maintaining the same momentum as in the past. The problem began with several executives that were replaced in the corporation. When these executives came into power, there was a promotion of specific pieces of technology and equipment. The employees working within Microsoft noted that there were several problems with the new and innovative releases, with the leaders not paying attention to the flaws. Microsoft Vista began the particular trend in bad releases in Microsoft, followed by smaller applications and the latest problem of the Kin smartphone. Each of these has moved back into the corporation or has been taken off the market. However, the set-up of the company is not one that can continue with the basic innovations from before, specifically because there are complexities with the name of Microsoft. Investing in innovations may further make the trends problematic within the organization because of the name of Microsoft, which is allowing other competitors to surpass technological innovations. The organizational environment is then suffering from the leadership styles as well as the conservative view of the corporation (Mendleson, CB). The problem in the internal environment is one which is not only causing problems with innovations and products offered by Microsoft. This is affecting the way in which consumers are responding to specific products. The stakeholders are known to have reached a decline in the past five years by an average of 20%. Consumers are following this with changing their level of loyalty to Microsoft. While some are remaining loyal with the operating systems and other products, others are noting the weaknesses of Microsoft. The brand name and identity is one which is beginning to alter in terms of innovation and the ability to provide quality and functionality for basic needs. While there is still continuous demand for products, the other side of this notes new weaknesses in products, ranging from security threats to a lack of functionality with the technology offered. Since Microsoft is matching competitors, instead of providing more innovative features, it is leading to many finding the best products, most which are not based on Microsoft compatible features (ENN). The third weakness that is a part of Microsoft is based on the global marketplace, competition and external environment that are a part of the corporation. In the past, Microsoft had very few competitors and was able to develop innovative products that weren’t provided anywhere else in the technology sector. This strong foundation is what has allowed Microsoft to continue to move forward within the technology industry. However, the changes in software products have altered the competition. Apple is now the number one provider of computer systems, specifically because they provide more stability in systems. This is followed by the Oracle Corporation. The dominance of these three corporations is also opening into smaller firms that are offering applications, as opposed to basic software as well as open source systems that many are beginning to turn to for a different type of option to Microsoft. The ability for Microsoft to stay ahead of the competition is one which is based on the foundation of the company; however, the current development is not providing the same opportunities for the corporation (Hoovers, www.hoovers.com). These various aspects of Microsoft all show that, while there is still demand for products, the marketplace is now changing toward alternatives in technology. Figure 1 shows the integration of each of the problems and how it is altering the company. Urgent Not Urgent Mission Critical Not Mission Critical The one problem which will be addressed is based on the organizational structure and how this relates to innovation in the company. The innovation of technology is one which links to all sectors of the corporation, including the organizational environment and the competitors in the marketplace. By understanding this weakness of Microsoft, there will be the ability to alter the way in which the marketplace functions as well as what is expected in terms of the organizational changes of the company. Uncover The issue of the organizational structure and innovation of Microsoft is one which is based on the human resources and way in which different projects are approached. To sustain different products in the marketplace, there is the need for Microsoft to both maintain what is available through the current market while changing the products to provide more innovation. The main problem associated with this comes from the human resources, specifically with the changing leadership that is more conservative in nature as well as dissatisfaction from the employees within the work force. The corporate culture, human resources and attitudes and behaviors of Microsoft are all incorporated into the main problem, specifically because of gaps in the communication and way in which the work structure is used within the environment (Sandler, Blanck, 39). The first way in which Microsoft can begin to alter the organizational structure for better innovation is based on closing the gaps between employees and the leaders that are looking into various innovations. Currently, there is a main gap in the organizational culture. The leaders have all been altered in the main system, which is changing the organizational culture. This is followed with conflict from the pre-existing culture that was developed for the leaders who are now working at Microsoft. The organization is one which is dynamic and changes according to leadership and those who are working with specific products. It is also known that interactions, belief systems and expectations change according to the human resources that are a part of the company (Keyton, 36). The second aspect which relates to the organizational culture and attributes which are associated with this are based on the knowledge base and ability to convey and interchange information. The main component of Microsoft is based on being a knowledge management corporation. The software, services and other developments are required to incorporate a combination of knowledge as well as innovation in order to succeed in the market. If there is difficulty with the specific types of innovations used, then it can be directly attributed to a lack of knowledge management. To define this, there is the need to create a sense of performance, communication and understanding over the Microsoft tools and what is being incorporated into the culture. The performance base, responses from the external environment and lack of innovations being noted by the company shows that there is a lack of communication in terms of the knowledge management that is a part of the corporation (Lee, Yu, 340). Even though it is the organizational management which is focused on, this is based on several internal and external forces that are altering the way in which Microsoft is functioning. The result is a loss of shareholders; however, there is also noted with differences in the leadership styles and organizational structure. The fish diagram below shows how the main aspects of Microsoft are changing because of the organizational structure which is followed. Fish Diagram: Changes in Microsoft The main approach attributed to the problems will be on changing the internal organization and culture, specifically in terms of leadership management and alterations in employee advancement. However, the reflection that is being shown with Microsoft currently is based on the drop in stakeholders. Microsoft will need to reverse this by changing the internal structure, which will essentially change the responses from the external environment. When the internal structure closes gaps in terms of communication, aims and objectives, there will be more innovative products and the ability to enter into the marketplace. This will change the way in which consumers respond as well as the way in which stakeholders respond. When stakeholders see that there are organizational changes being made, there is a response in a positive manner, which will increase the amount of investment and responses in the corporation. The growing and changing marketplace can then be used to monitor how effective this change is, as well as whether it can provide sustainable growth (Gallivan, 243). Solve The first way in which the problem can be solved is by redefining the life cycle of products and the way in which this is affecting both the internal environment and the innovation of the corporation. Dynamics of products in the current marketplace are changing at a rapid pace, specifically because of innovations and knowledge that are entering the market on a continuous basis (Adner, Levinthal, 611). The product life cycle which Microsoft is working with doesn’t include new innovations, but is instead recycled products from older innovations. This is allowing other companies to catch up with Microsoft and to offer open source as well as other technical products within the market. To solve this, Microsoft will need to redefine the products and step into more levels of innovation while enhancing the product life cycle in which they are currently working with. To continue with the product life cycle, Microsoft will also need to redefine the internal organization and the way in which it works with the external environment. Communication processes, knowledge bases and human resources will need to be developed differently. As this occurs, there will be the ability to market the products differently and to change the target market and level of loyal customers in the marketplace. It is noted that the organizational culture is one which directly affects the external environment and the way in which consumers respond. Microsoft will first need to change communication processes, leadership development and aims and objectives of the company. This will need to tie into the demands in the market as well as how the human resources can be used effectively to offer innovation and new products within the community. As the organizational culture and leadership can respond to customers and the market in a positive manner, the less likely that they will lose the competition and stakeholders to products which are developed (Schein, 17). The last step to take is to redefine the stakeholders, expectations and relationships that are associated with the corporation. Currently, the association is based on investments which are required with software products and innovations. However, most stakeholders are finding that other corporations are more effective in this and that Microsoft is only applicable to the brand name which was associated with the company in the past. Microsoft will need to re-establish relationships with stakeholders while showing how the organizational structure and relationships to customers through products has changed. As the products are able to provide innovation and promise for a strong market, the easier it will be for stakeholders to respond in a positive manner. As this is done, there is the ability to create a stronger firm performance while allowing innovation to drive forward the company, as opposed to the conservative view in the corporation (Deshpande, Farley, 3). Build The first level of building the new change is to work with the current structure of Microsoft to understand where innovation, development and new leadership skills can be implemented. Using technology is the first level in which this can be associated with the company. The technology will be used to work with communication gaps in the company while altering the culture and style of communication for innovation. The change which will be incorporated will be based on developing a team structure in which employees and those who are at a leadership level have higher amounts of communication and knowledge within the corporation. The second part to this will be the operational feasibility, which will incorporate the ability to use the technology while ensuring that there is a smooth transition process and changes which can be altered within the system. The last part of feasibility to consider is based on changing the resources in the company, specifically with a focus on providing a basis for human resources that change the quality of leadership and styles within the corporation (Bentley, 417). The changes in structure in the Microsoft Corporation will then lead to alterations within the community in relation to costs and how this will change the overall structure. The costs and benefits of this are seen in figure 2. Figure 2: Costs and Benefits of Microsoft Tangible Costs: Wages directly associated with the project Technology for better communication processes $750,000.00 Leadership training skills $100,000.00 Communication analysis $460,000.00 Human Resources Development $575,000.00 Total: $1,885,000.00 Tangible Benefits: Projected increase in stakeholders by 3% every year $5 billion Intangible Costs: Employees need to adjust to the new environment Potential loss in innovative measures Relationships with management might not develop correctly Glitches in technology and leadership training Intangible Benefits: Stakeholder initiatives Ability to offer more innovation Employee satisfaction and stronger corporate environment / culture Marketplace strength through innovation and customer loyalty Achieve The achievement of these projects can be done within a one year time frame, specifically with the technology structure changing from the internal environment. This will begin with feedback from employees and leaders on how to improve and change the system. The technology can be built and structured within the in – house team with a new incorporation of communication features for the company. This will be structured within a 6 month time frame and will cost no more than $750,000. This will be followed by training for employees and leaders, specifically which will begin to close the communication gap and which will widen opportunities for innovative products and measures. This will be done within a 2 month time frame and will cost $100,000, specifically which will be used with the technical training and options offered by mediators who can assist with the communication gaps. The last component will be to evaluate the HR development. The human resources will be responsible for ensuring that the communication begins to change and that employee satisfaction, as well as alternatives from leaders is met. An investment of $1,000,000 will be made with both a communication analysis and HR development, specifically to ensure that there will be changes in a positive direction with the internal environment. The evaluation of the internal environment will be followed by showing whether Microsoft continues to be recognized in the market as one losing its reputation or whether it can grow substantially. The evaluation of growth will be based on the amount of revenue that is in the marketplace, as well as what the stakeholder interest is. It is the stakeholders and response from the customers that is showing the main weakness of the company. There will need to be specific changes which identify this changing, specifically with stakeholders investing in Microsoft and with customers becoming loyal to the products. Market evaluations will be done to ensure this works correctly. The main process of building will be followed by an evaluation of the new products and innovations with are offered into the market. It will be expected that the change in the organizational structure will follow with a change in development. Growth will be shown first by the organizational culture and next by the new products and quality of technology which is offered into the marketplace. The growth which occurs will show in the marketplace, specifically as all the different divisions of Microsoft begin to grow and as stakeholders and customers begin to respond in a positive manner. This will help with sustainable development in the company while providing a new outlook in the organizational culture to assist with the overall changes in the corporation, as can be seen in Figure 3. Figure 3: Changes in Microsoft Corporation The changes that are made in Microsoft will be initiated with human resources and development of technology for planning. This will lead into leadership and communication training, which will result in changes both in the internal and external environment. The result will be that Microsoft will have the ability to open toward innovation and new processes for a stronger market and stakeholder value that will lead sto growth and stability of the corporation. Bibliography Adner, Ron, Daniel Levinthal. “Demand Heterogeneity and Technology Evolution: Implications for Product and Process Innovation.” Management Science 47 (5), 2001. Bentley, L. System Analysis and Design for the Global Enterprise. Macmillan: New York, 2007. Deshpande, Rohit, John Farley. “Organizational Culture, Market Orientation, Innovativeness, and Firm Performance: an International Research Odyssey.” International Journal of Research in Marketing 21 (1), 2004. ENN. “Microsoft Reveals a Score of Weaknesses.” ENN. Retrieved from: http://www.electricnews.net/news.html?code=9407701. Gallivan, MJ. “Meaning to Change: How Diverse Stakeholders Interpret Organizational Communication About Change Initiatives.” IEEE Professional Communications 44 (4), 2001. Hoover. “Microsoft Corporation.” 2010. Retrieved from: http://www.hoovers.com/company/Microsoft_Corporation/rcrtif-1.html. Keyton, Joann. Communication and Organizational Culture: A Key to Understanding Work Experiences. California: Sage Publications, 2005. Lee, Siew Kim Jean, Kelvin Yu. “Corporate Culture and Organizational Performance.” Journal of Managerial Psychology 19 (4), 340-359, 2005. Mendleson, Rachel. “Winners and Losers 2010: The Slacker – Microsoft.” CB Online: Your Success for Business 2010. Retrieved from: http://list.canadianbusiness.com/rankings/winners-and-losers/2010/microsoft/article.aspx?id=20101122_10020_10020. Schein, Edgar. Organizational Culture and Leadership. John Wiley Base: California, 2010. Appendices Quarterly Earnings Shareholder Return Read More