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Satya Nadella just fixed Microsoft’s biggest problem

Article by Chris Dodds, Cloud Architect

For as long as I can remember there have been two Microsofts: Microsoft Sales and everyone else. It’s a split that exists in most tech companies, but those that are most successful at the moment have a different divide; Google is Engineering and everyone else, AWS is Engineering and everyone else, Apple is Product and everyone else.

But Steve Ballmer is a salesman and that philosophy fit the 90s’ tech scene fairly well, so Microsoft became Sales and everyone else and remained so even after Satya Nadella took over.

That’s finally changing.

Last week, Kevin Turner, the last of the Ballmer-era executives and the leader of Microsoft’s Sales org announced his departure from the company. Shortly after,Nadella announced that he was breaking the Sales silo apart.

It’s the best change he’s made at Microsoft so far.

Don’t follow dinosaurs

Toward the end of Steve Ballmer’s tenure at Microsoft, the company was spiraling into irrelevance. Ballmer and RIM’s co-CEOs seemed to be in a weekly competition to see who was more oblivious to the world changing around them.

“$500, fully subsidized, with a plan! That is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine.”

“Linux is a cancer that attaches itself in an intellectual property sense to everything it touches.”

“DRM is the future.”

“I’ve got my kids brainwashed: You don’t use Google, and you don’t use an iPod.”

While competitors like Apple, Google, and Amazon charged forward into mobile and cloud services, Microsoft focused on squeezing every dollar they could out of the past. I can’t imagine how many internal meetings must have focused on “How do we sell more Office licenses?”.

They ignored the convergence of consumer and enterprise, designing software targeted at consumptive, ideal users that no longer existed (and maybe never did). Open source blossomed with dozens of best-of-breed projects, while Microsoft fought to keep control of the entire software stack — monolithic mediocrity.

Even the least savvy shareholders lost patience and Ballmer was pushed out.

Busting silos

A lot has changed since Satya Nadella took over Microsoft. They’ve become a serious contender in cloud services and have made slow, but increasingly solid progress in end user hardware. Too many false starts and wasted opportunities left Microsoft too far behind to compete in the smartphone space, but they’re accelerating forward on almost every other front.

The silos that were so visible from the outside have been torn down — the Office group actually talks to the Windows group now. There are some rough spots like OneDrive for Business, Yammer, Internet Explorer/Edge, and Skype, but Office for Mac doesn’t suck anymore and that’s a big deal for a product that used to feel like it was maintained by one programmer in a basement closet.

For as big a company as Microsoft is and as misguided as their previous path was, the turnaround has been impressive. Other legacy vendors like Cisco would do well to mirror the changes Microsoft has made.

Correction:(previously) into four cohesive pillars: Operating System, Apps, Cloud, and Devices. Per Peter Bright of Ars Technica, this was initiated under Ballmer.

Nadella pulled down external walls as well.

Where Ballmer viewed Linux as anathema, the new Microsoft smartly engages with the open source community — a third of Azure VMs are running Linux.(Clarification: Azure supported Linux at launch under Ballmer. Nadella accelerated the community outreach. h/t again to Peter Bright. Thanks Peter!) Microsoft’s Outlook iOS app is probably the best mail client on iOS, which seems weird unless you remember that Microsoft once had the best web browser for MacOS. You can save Office Online docs to Box and Dropbox. 

Although both Bill Gates and Nadella fought against it, Nadella was too late to his role to prevent the disastrous Nokia acquisition, but seems to have worked through most of the mess left to him.

Last week he kicked off the fix to Microsoft’s biggest remaining problem: their sales organization.

“Where’s my commision check?”

The only reason Microsoft got away with Sales being an independent silo was their market share. A few years ago, if you tried to negotiate with Microsoft the response was pretty much “Where else are you going to go?”, which you couldn’t really argue with, because Microsoft owned 95% of the OS market (they just dropped under 90%) and what business doesn’t need Excel?

That attitude has persisted even as solid alternatives are chipping away at Microsoft’s business.

Where a conversation with Google or AWS might start with: “What business case are you trying to solve?”, the same conversation with Microsoft would begin with “How many seats should I quote for this thing I’m getting comped on this quarter?”. The first approach leads to happy customers and customer-driven innovation. Microsoft’s approach leads to anger, mediocre products, and technical stagnance. It’s how they became so disconnected from reality during the late Ballmer years.

Because Microsoft Sales is disconnected from engineering and product, it’s hard to find someone who knows anything about what they’re selling, they just know it’s important that they sell a lot of it for the next three months. Salespeople don’t need to be technical, but the technical resources they escalate to need to have some connection to the products or at least a line of communication to the product teams. At Microsoft, those resources are so disconnected from engineering that they seem to rely on whitepapers and customers to learn about their own products.

There’s no accountability for answering “yes” to every question and no feedback loop to make better products that customers actually need.

The problem isn’t the people, a few of which I like very much, it’s the role and culture they’ve been placed in. From the outside it seems so toxic that I have a hard time not feeling sorry for the employees in those roles.

Being “Sales and everyone else” has held Microsoft back and is the source of 90% of my frustration with the company. It will take time, but tearing down the Sales empire and transforming into an Engineering-led company will help Microsoft stay competitive and build great things. Best of all, it will allow the company to have better relationships with their customers.

Keep on keepin’ on, Satya. You’re doing the right things.

Article by Chris Dodds, Cloud Architect

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