Is Culture Undermining Your Company?

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A few weeks ago, Steve Ballmer, CEO of Microsoft, announced his intention to retire. The stock rose 7% on the news. Why was it good news? Because despite robust earnings year-in and year-out, the stock has been stagnant; Why? Because the company has failed to focus its innovative sights on entering/creating new markets with new services and products.

Did you know that months before Apple unveiled is iPad in January 2010, Microsoft was working on a tablet computer codenamed Courier, which folded like a book and let users sketch and jot ideas on a touchscreen. That Spring, Mr. Ballmer told the development team that he was pulling the plug on the device – and redirecting the resources to work on the next version of the Company’s Windows Operating system which was two years away. In 2000 Microsoft developed word-processing software for the Web; fearing it would cannibalize Office sales it was folded into Office.

Tech and business magazines and newspapers have interviewed former and existing staff to understand why. What emerges is a picture of a culture that dramatically changed. Twenty five years ago Microsoft helped launch the PC revolution; now instead of seeking innovations for growth, the focus was on generating profits from successful franchises like Office and Windows. The culture allegedly became one of protecting entrenched interests; people were punished people who swung-for-the-fences, leading most people o stop. As one former employee said “so much energy is expended on repressing good things to play defense and protect the castle.”

Microsoft did create a half-dozen new business in the last years – from the Xbox videogame system to workplace collaboration software called SharePoint. But these lack the “wow” factor of iPhones, iPods, iTunes, etc. which results in making it hard to hire the best and brightest talent. The title of a Wall Street Journal article says it all:  “Next CEO’s Biggest Job: Fixing Microsoft’s Culture”; and its follow-up article focused on “11 Fix-It Strategies” offered by senior executives of other firms.

Every organization must keep the pulse of its culture, so it senses when it shifts from innovation and growth to one of protecting the existing castle. This means ongoing evaluations of employees’ alignment with the original mission and vision of the company and recognizing when the values, behaviors, and attitudes no longer include change. Clearly every employees need to focus on achieving the strategic priorities for today’s sales, profits and customer satisfaction, But part of employee focus has to be aspiration- for growth-focused changes which change the game for the company and even possibly the industry!

Dr. Peter Drucker, the father of modern management who famously said “culture eats strategy for breakfast”, also observed that “lack of creativity is…not the problem of organization. Rather it is organizational inertia which always pushes for continuing what we are already doing.”  Have you seen such a culture shift in your company or that of a supplier or customer? What are the early signs? How could change have been implemented early enough to maintain the culture?  Share your answers with us.

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