Paul Graham offers an interesting essay on why Microsoft is Dead. Not dead as in buried, only to return as a zombie. Rather, dead in the McLuhan sense of obsolesced – no longer the dominant structuring force in the software industry. I disagree with Graham’s assessment that web-based desktop applications have killed Microsoft; on the other hand, I think that his comment about the combination of Apple’s OSX and Microsoft Vista weighs heavily against the Redmond giant. Microsoft’s history parallels that of IBM as I describe in my talk, How to Determine the Business You’re Really In, from a few years ago. Microsoft reached the pinnacle of its power, and then hit a nexus point - its strategic decline (despite the fact that it is rolling in cash, a result that is a lagging indicator of success for Microsoft) being quite predictable from watching IBM's history. Unlike IBM, however, Microsoft has not been able to re-make itself, a feat that the Lords of Armonk have been quite adept at performing throughout IBM's history. In McLuhan for Managers, I describe Microsoft's strategic nexus point: it occurred when Nathan Myhrvold left the company, rendering then-president Bill Gates without a cool, forward sensing organ (even hotter now with Ballmer at the helm).
Expressed in terms of Valence Theory, Microsoft’s problems become even more clear. In an organization conceived according to Valence Theory, employees, suppliers, customers, and to a certain extent, customer’s customers, are equivalent. This means that inequitable treatment among these various constituencies, especially on account of imbalanced valences, leads to organizational dysfunction. This situation is most evident within Microsoft in products like Vista and the seemingly ill-fated Zune. When it becomes a matter of identity, that is, how your organizational identity is collaboratively constructed among its various constituencies, the relevance of your organization – and perhaps its very survival – is at stake.
This is a theme that I will be introducing next week in New York as I take my Valence Theory out in public (as it were) for its first presentation to a live business audience at Omnicom’s CEO Forum. I can hardly wait!
[Technorati tags: microsoft | paul graham | valence theory | mcluhan for managers]