How To Revive Microsoft

[Editor’s note: Joachim Kempin is a former top Microsoft executive and author of a new memoir, Resolve and Fortitude: Microsoft’s `Secret Power Broker’ Breaks His Silence. It’s a fantastic book, and I’ve asked Kempin to write a few columns for us sharing his perspective on Microsoft. In this column, Kempin explains what Microsoft should do to regain momentum in the marketplace. –Dan Lyons]

Quarterbacking while sitting in a living room chair, or in this case composing a guest column on a PC, is always easier than actually being in the field feeling the heat of battle, or enduring fierce competitive push-backs. Therefore, take this column with a grain of salt, if you wish. I worked for Microsoft for nearly 20 years as an executive, and I will use this opportunity to present some provocative, yet serious, ideas on how to get Microsoft back on track.

Historical Perspective

Microsoft grew up as a software company developing programming languages for early PCs. Its management used the introduction of the IBM PC to branch into PC operating system and application software, and a variety of software development tools. For 32 years, it was led by a visionary executive who had pure software DNA in his blood. No wonder the company reached dominant positions in many of the software markets it tried to conquer.

Competition was always tough, but the technical foresight and unrivaled business acumen of Bill Gates and his management team gave the company an edge. Even if product version number one was not always flawless, Microsoft never gave up reaching for perfection and fighting for market share. This required guts and stamina, and a “take-no-prisoners” approach. When we executed with resolve and fortitude to near perfection, Wall Street listened and rewarded the company’s shareholders.

A Focus On The Enterprise

Today, Microsoft no longer occupies that splendid coveted position. During the last decade, its leadership focused mainly on the business community and no longer kept the younger generation in its sights. In 2008, when Bill Gates retired, he gave a weird goodbye speech at the worldwide sales meeting. He was off message. (You know when he’s going off message because his right arm starts drifting upward from his body, and his hand just hangs out there at the level of his face.) He said, “We aren’t a consumer company. We are a big company company. We make our money from standards that are adopted by big enterprises.”

To some degree this has worked well; Microsoft’s revenue and profits grew quite impressively, but its reputation as an innovative tech leader deteriorated in the public eye. Once cool, today Microsoft is a well-oiled money machine, but the contagious excitement around the time when Windows 95 launched is long gone. That torch has passed to the Apples, Googles, Twitters, and Facebooks of this world, which, judging by public enthusiasm, best support the still growing mobile and social media trend.

No doubt Microsoft suffered from partially losing its antitrust battle. Infighting of opinionated and polarized fractions and losing talent hand-over-fist caused additional damages. With the former tech guru losing his luster before finally leaving the company, Microsoft became a ship without an anchor drifting in a sea of opportunities and waiting for the right wind to propel it in a promising direction.

Meanwhile, competitors sailed right by! It frustrates me, someone who uses Microsoft’s products daily, to observe how its tech leadership is being whittled away. Competitors, companies I once helped to beat, have been able to regain lost ground because Microsoft is no longer fighting to stay ahead of the game. With $68 billion in the bank, Microsoft can find and acquire talent. I can find no valid excuse for letting the ship continue to drift. Let’s see how the company could be revived and regain its tech leadership.

The Cry For A Technical Leader

First of all, the company needs a bold and charismatic executive with bona fide technical credentials to head all of its product divisions. This dynamic leader must not only serve as the main spokesperson for all products, but he or she must also inspire and command the respect of developers. (Unfortunate Ray Ozzie did not survive in this role, and the one who came after him, Craig Mundie, was from the beginning the wrong person.)

This new tech leader should streamline Microsoft’s offerings in several key product areas. The first one to tackle should be cloud services components and infrastructure tools—including search. On top of the list should be cloud resource management. Its objective would be to save costs through clever infrastructure design. I recommend that Microsoft’s team works closely with the development community in that field, to make add-on development more effective and less time consuming when using Microsoft’s core creations.

Microsoft lags in this area, but is by no means shut out. Search is evolving from finding things to finding relationships between things. It will continue to evolve, always upsetting existing standards. This is exactly what Microsoft needs to understand and execute upon. Have a vision and pursue it like in the old days, expressed as a mission statement in its original logo: “A computer on every desk and in every home.” Mimicking Google, and trying to beat Google, which is what Microsoft is doing today, is a distraction and will not lead to dominance.

Security And Connectivity

Next on my list is security, and protecting privacy and identity on every computing and communication device for consumer and business communities alike. Hackers and spies need to be defeated, just as my old team once crushed the software pirates.

While the executive in charge will have to continue to improve Microsoft’s bread-and-butter products, like Office and Windows, Microsoft’s focus for them needs to shift. Instead of adding more features we need a crusade resulting in making phones, tablets, notebooks, desktops, game consoles and TVs work better together.

Windows 8, which unifies the user interface of these devices, has been a step in that direction, but much more can be accomplished by looking comprehensively at communication interfaces and connectivity improvements, and not just in parts. I can hear the drums from Redmond already signaling we are doing this already. Not fast enough! It needs to be further accelerated to ensure that all devices mentioned above will soon create plenty of blossoming opportunities for Microsoft’s hardware partners.

Schools And Education

The US school system is antiquated and needs to be brought into the 21st century. This presents an opportunity for Microsoft to engage and help teachers, parents, and children to excel. I am convinced that if Microsoft would seriously commit to develop educational software it could help tremendously to improve the competitive position of the United States in the world. From a marketing perspective, wouldn’t it be great to introduce the next generation early in life to a company called Microsoft instead of Google?

If the Gates Foundation would fund this as a charitable endeavor it would add no additional expense to Microsoft. The products could be made available free of charge. The foundation already supports the Kahn Academy; there is an opportunity to link up.

Games And Openness

Last but not least, I would create a game division with the goal of writing exciting games for all game consoles, and not just for Xbox. This might need an acquisition, and compares well with Office running on Windows and some Apple devices. I would change that as well, by opening Office to all relevant computing platforms.

This would establish Office as the dominant standard for integrating most corporate services. Protectionism, as it is practiced today by Microsoft, never works long term. The market will cure itself with competitive products, while the protectionist loses a revenue stream.

Next Steps

In my next column I will recommend additional aggressive product moves, explain how to reorganize the research group and say what products the company should refrain from making. Later, I will get into a big picture company reorg proposal.