Chapter 12 Microsoft Analysis

David Jacobs, Brandon Hayes, Mark Piechalak

Innovation is very important to Microsoft, its so important that Microsoft has created

internal innovation programs and groups to enforce new ideals and the communication of these

new ideas. For example, Microsoft has a group (among many groups) called “Think Space”

where employees brainstorm new ideas in a free lance type of way. Microsoft has a plan of

implementing innovation as well, which they call “The 4E’s to Innovation in the

Enterprise”which are “Engage, Evolve, Evaluate, and Execute.” In the engage stage Microsoft

plans on discussing the ideals in teams, next they plan to process automation in the evolve stage,

next their plan is to do a “what if “ analysis and check to see if the ideal is a strategic fit in the

evaluate stage and lastly in the execute stage, Microsoft plans to accelerate the concept to launch

process and implement it. Reports show that ​Microsoft officials believe they can use technology

and process improvements to make innovation happen more rapidly and repeatedly.

Microsoft has seeked many different types of innovation according to their products. To

be more specific they seek an incremental innovation when it comes to game consoles (updating

Xbox to Xbox 360), and updating Windows 7 software to Windows 8. The reason we believe

this is because Microsoft just enhances existing practices and/or make small improvements to

these items. Microsoft uses this as a source of competitive advantage because they provide new

capabilities that minimize expenses and speed productivity. On the other hand, Microsoft

creation of internet browser called Bing ,was more of a radical innovation rather than a

incremental innovation. Because the creation of “Bing” fundamentally changed existing

practices of Microsoft, by it being Microsoft’s first official internet browser. Microsoft has done

a excellent job at this because they continually to sustain innovation, which in result extends

sales in an existing market.Microsoft uses the observing trait as a definition of their scope of
 Chapter 12 Microsoft Analysis
David Jacobs, Brandon Hayes, Mark Piechalak

innovation.We feel this is true because they observe to see what the consumer needs most or

wants most then implement that into their new ideas/innovations. They also don't rush when it

comes to creating and places new items on the market. The usually space out the time in between

releasing certain products.This positively helps Microsoft manage transitions and develop an

internal rhythm because there is no rush.

Some challenges that Microsoft faces with its new innovations are its competitors are

coming out with a similar innovation which may be viewed in the buyers eyes as a better

product. For example Sony is coming out with the PS4 and in some people's eyes it will be better

than Microsoft’s “XboxOne”. Also Microsoft’s “Bing” may be viewed as a lessor option than

Google because Google came out first, so that is another example of innovation challenge

(putting out the product first). Another innovation challenge that Microsoft could face is when

they use the incremental innovation strategy. Consumers may think that the new features added

to a product are not worth the new price for the product, or the product may get to

enhanced/updated and too complicated for the previous consumer to handle or understand.

Microsoft faces the innovation challenge of (as the book states) “Incremental versus Preemptive

Launch.” This deals with timing of releasing a new product relative to the older product already

being out on the market. Microsoft is faced with this type of situation because they don’t want to

release a new product or upgrade to quickly after the launch of the initial product, because

consumers will stop buying the old and buy the new which may hurt all the potential profits that

could have been made with the older initially released product. For example the Xbox was

released in 2001 and the Xbox 360 was released in 2005. This gave Xbox plenty of time to shine

before the next generation console hit the market. But if Microsoft would have not allowed
 Chapter 12 Microsoft Analysis
David Jacobs, Brandon Hayes, Mark Piechalak

ample time between releasing the next gen console and releasing the original console, consumers

would have been very upset, and Microsoft wouldn’t have earned all/the most of its potential

earning from initial release. So you can see how this can be a very complicated process and

could potentially be an innovative challenge that Microsoft has to deal with.

Microsoft does use Corporate Entrepreneurship, and has had many struggles with it.

Having spent billions on R&D, many of Microsoft’s products have failed. For example, the

Zune music player which is a rival to the iPod, was an idea that they wanted to run with, but was

a disaster. According to the book “ Microsoft has struggled to translate its innovations into

market success. There are three reasons that have been talked about in the business press. The

first reason is having dominance over certain software products, such as Windows and Office

suite, which has set the bar high to launch new products. Second, Microsoft has a difficult time

attracting top software designers because of being too bureaucratic towards their employees.

Third, great innovations are increasingly the output of collaborative, open-source design, but

Microsoft is reluctant to fully embrace the open-source development model.” (Dess 449).

Just recently Microsoft has made some investments in start up firms. “The most recent

example of this is Microsoft’s “​Bing Fund​”, which is a new angel fund and incubator program

that seeks to partner with entrepreneurs that focus on the mobile and web experience spaces.

Microsoft also invested $240 million in Facebook for 1.6 percent of the company back in

2007.”(Schawbel). This is a great example of Microsoft trying to startup new opportunities.

We think that Microsoft needs to invest in R&D including the consumer market, because

there won't be a repeat of previous misfortunes like HTC, where Microsofts has a very difficult

written program with HTCs impressed hardware. If Microsoft can focus more on innovation with
 Chapter 12 Microsoft Analysis
David Jacobs, Brandon Hayes, Mark Piechalak

something they are good at like more products in their industry, like software, instead of cell

phones, they will have a greater chance to create value.

Another topic from the book besides Corporate Entrepreneurship is competitive

aggressiveness. The book states competitive aggressiveness as “ a firm’s efforts to outperform its

industry rivals.” (Dess 460). An example of competitive aggressiveness could be to cut prices.

Microsoft has been too aggressive lately. “ Some companies have severely damaged their

reputations by being overly aggressive. Although it continues to be a dominant player,

Microsoft’s highly aggressive profile makes it the subject of scorn by some businesses. Efforts to

find viable replacements for Microsoft’s products have helped fuel interest in alternative options

provided by Google and Apple.” (Dess 460). Microsoft has been too aggressive over the last few

years, which is why people are buying alternatives like Macs.

In Conclusion, Microsoft places a ton of value on company and product innovation. As

stated above they have various groups where new ideals are formed and they teach the motto of

“The 4E’s to Innovation in the Enterprise” to implement this innovation process. Microsoft uses

incremental innovation for their game console and windows software. A challenge Microsoft

faces when it comes to innovation is “Incremental versus Preemptive Launch”, which deals with

time spacing of products. Microsoft has had a few struggles with Corporate Entrepreneurship.

Also they have been too competitive aggressiveness, which has made customers switch to

alternative products.
 Chapter 12 Microsoft Analysis
David Jacobs, Brandon Hayes, Mark Piechalak

Works Cited Page

Dess Gregory, et al. Strategic Management. New York: McGraw-Hill Irwin, 2012. Print.
 Chapter 12 Microsoft Analysis
David Jacobs, Brandon Hayes, Mark Piechalak

Schawbel, Dan. “How Big Companies are Becoming Entrepreneurial.” ​Tech Crunch.​ 29

July, 2012. Web. 26 July, 2013.

http://techcrunch.com/2012/07/29/how-big-companies-are-becoming-entrepreneurial/

http://www.zdnet.com/blog/microsoft/how-microsoft-thinks-about-innovation-these-days

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