QUIZ 5: ANALYSIS CHAPTER 14
Students: Lê Trung Hiếu . SB01319. _ FB0901
Microsoft: from an Organizational Behavior perspective
Software giant Microsoft is 36 years old and struggling. The competitive landscape faced by Microsoft today consists primarily of companies founded after 1998. In addition to the obvious age disparity, there are various (and well documented) differences in organizational structure, company culture, and product orientation that are motivating significant changes in Microsoft’s approach to leadership. Namely, our analysis will address changes in power distribution and culture in order to assess Microsoft’s position in the market relative to Google, Facebook, Apple, etc.

After Bill Gates left his post in 2000, Steve Ballmer took over as chief executive officer and Ray Ozzie was brought in as chief software architect. As of 2008, Gates was practically phased out, and began dedicating most of his time to his non-profit. Some critics describe Gates’ move as avoidance of the innovator’s dilemma, suggesting that he left while Microsoft was at its best. Since 2000, we have seen Apple and Google rise above Microsoft with an ever-widening gap in stock price and market share, effectively ‘cornering’ the incumbent. Comparing financials among these technology giants clearly shows that Microsoft is struggling to keep pace with its rival brands. But what qualitative evidence complements this claim?

We can begin to shed some light on the issue by considering two major changes in the role of technology companies. The first is sheer product line expansion. Companies competing in the large-scale tech space serve consumers through more product functions than ever before, including mobile, cloud, tablet, PC, music, television, and enterprise services. This perpetual creation of new product types forces the supporting organization to adapt by constantly adding new sub-units to its structure in order to accommodate the new market. The second change in the role of technology companies is the shift from product-centric to customer-centric design and service. This is evidenced by the increasing importance of marketing, customer relationship management, and more importantly, company culture. It is widely suggested and logical to assume that the companies who will survive are those that adapt to these two changes most efficiently.
Microsoft is divided up into five main business units: Windows, Servers/Tools, Online Services, Business to Business, and Entertainment/Devices (Microsoft Investor Relations). As consumers, we generally associate Microsoft with its original mass market products such as the Microsoft Office Suite (Word, Excel, Powerpoint, Access, Outlook). However, in order to better understand the implication of a major management shift, we need to broaden our current framing of the organization’s products and services. Most consumers are well aware of Microsoft’s competition with Apple in the PC marketplace. However, Microsoft is also in a steady state of competition within several other product marketplaces with mobile phone companies, online advertising companies, gaming companies, business-to-business consultancies, and as of recent, search engines. Considering that most of this diversification has occurred over the last ten years, it definitely makes sense that we are seeing shifts in power and structure.
If we take a look at Apple, Facebook, and Google, we will find that they all differ from Microsoft in only a few key organizational characteristics. The ‘faces’ of these companies are all engineers, and their new innovations come from the tech people. While recent promotions by Ballmer demonstrate that Microsoft’s reorganizational strategy is to place engineers in higher positions of power, the direction of the company is still chosen by Ballmer who, at the end of the day, is still a business man (Lowensohn). By contrast, Steve Jobs is renowned for being a refiner rather than a leader. This type of relationship between organization and leader seems to be working in a variety of business and non-business contexts (i.e. democracy).

In the past, Microsoft had businesspeople running technology divisions – however, there has been a recent move to put “geekier” people in charge. This will change the way that their culture operates and the way products are developed. The technique with which founders and company leaders choose to hire and retain their employees is vital to shaping an organization’s culture. Company managers are shown to demonstrate patterns of only hiring and retaining the people that think and feel the same in the same manner as they do. In this circumstance, Microsoft CEO Steve Ballmer is looking to replace their top executives with people with stronger technical backgrounds. An article about this shift states “This trend toward technically oriented executives has already been evident at the company, with the appointment of Office engineering veteran Kurt DelBene as Microsoft Office president; and video-game industry veteran Don Mattrick as Entertainment & Devices Division president, for example.” Changing the people who are in leadership is an effective way to change the focus of the culture at an organization.
Microsoft has continued to be defined by its three core products over the past decade – Windows, Office and Internet Explorer. Relying on the same business operations has come at a cost of a decrease in competitive advantage over rivals like Google and Apple, who have expanded their platforms to highly successful product lines like iPads, iPods and Android devices. This has been more damaging for Microsoft because of their spill-over use in the corporate world – a domain which was previously dominated by Microsoft. Gone are the days when Microsoft could simply force out its competition, as was the case with the browser war with Netscape during the late 1990’s. The technology market is much more saturated today and the only way to survive in this environment is by developing differentiated products from one’s competitors. In these circumstances, it makes perfect sense for Microsoft to place more tech-savvy engineers at the top to drive future innovation. Having senior management who understand the technicalities of a product will benefit the company in many ways. They can lead the development process much more efficiently since they’ll have a much easier time communicating with project teams since they understand all the technical jargon. Since they understand technical details and product specs much better than a business manager, they will be better suited to identifying core strengths of individuals in the various business divisions and delegating tasks accordingly. Business managers are prone to filter ideas through lenses of existing knowledge since they are limited by their technical know-how and are thus more likely to make bounded rational decisions as opposed to their engineer counterparts. This is exactly why innovation at Microsoft has slowed down over the years ever since senior management has been focusing their attention on existing products and existing markets. ext they need to make sure that the newcomers accept and adopt the Microsoft culture. This can be done by creating company-wide (or department-wide) activities that promote new hires to bond with current employees so that they can ‘pick up’ the company’s cultural knowledge as well as bond with one another, so that the newcomers start becoming held accountable for upholding Microsoft values. These activities could range from anything from cooking classes to in-office contests and races. Seeing fellow workers in vulnerable positions and vice versa generally helps win over ones’ trust. Further, Microsoft needs to then maintain the culture through an informal reward system. Money or promotions seem too much like bribery and over time fail to motivate employees. However, tactics such as rewarding exceptional performance with better offices, more office perks, or public acknowledgement of one’s accomplishment helps an organization’s culture stick much better.

More minor revisions can be made as well. For example, since Microsoft is now hiring more tech-savvy workers it would be smart to make sure that within departments, especially in R&D for new products, that the people who are most apt at fixing technological issues are appointed project managers while those who have a niche in organization are made managers or general members. That way they can handle the red-tape issues such as giving out personal assignments, dealing with other departments or business, and time and budget constraints. Additionally, making sure that group members are assigned projects that challenge and interest them while giving them the freedom to reach the end goal however they please is an important facilitator of innovation. This could possibly be done via department-wide activities so that employees simply attain a grasp of each other’s interests and skill sets. Or it could also be done through maybe company-wide surveys and questionnaires. Whatever activity is chosen, Microsoft should make sure that whoever assigns projects knows the group members well enough that they can tell if it is a good match or not. If a member is not interested in their project there is little chance they will be excited enough to come up with new, creative ideas.

As a more general recommendation, by bringing engineers from within the company to senior executive positions, Microsoft can bridge structural holes among various business divisions that previously existed with business-related executives who were not as aware of the interdependencies of the departments in the overall business operations.

Lastly, Microsoft could also continue their trend of acquiring the resources of outside companies (as they did with Nokia and Farecast) and pump the acquired companies’ resources into their already built manufacturing and marketing processes. This could be done with companies in any of the various other marketplaces that Microsoft is currently competing in, such as the tablet industry.
*ANALYSIS:
I. Work Specialization
Describes the degree to which tasks in an organization are divided into separate jobs. The main idea of this organizational design is that an entire job is not done by one individual. It is broken down into steps, and a different person completes each step. Individual employees specialize in doing part of an activity rather than the entire activity. Example: a big organization like Microsoft.
II. Departmentalization
It is the basis by which jobs are grouped together. For instance every organization has its own specific way of classifying and grouping work activities.
*Functional Departmentalization (Microsolf)

Positive Aspects | Negative Aspects | * Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations * Coordination within functional area * In-depth specialization | * Poor communication across functional areas * Limited view of organizational goals |

III. Chain of command
It is defined as a continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom.
In Microsoft, boss like Billgate ‘ll manage all people in company. Everythings like reports about product, solfware,.. he always direct research and introduce.
IV. Span of Control
It is important to a large degree because it determines the number of levels and managers an organization has. Also, determines the number of employees a manager can efficiently and effectively manage.
V. Centralization and Decentralization More Centralization | More Decentralization | * Environment is stable * Lower-level managers are not as capable or experienced at making decisions as upper-level managers. * Lower-level managers do not want to have say in decisions * Decisions are significant. * Organization is facing a crisis or the risk of company failure. * Company is large. * Effective implementation of company strategies depends on managers retaining say over what happens. | * Environment is complex, uncertain. * Lower-level managers are capable and experienced at making decisions. * Lower-level managers want a voice in decisions. * Decisions are relatively minor. * Corporate culture is open to allowing managers to have a say in what happens. * Company is geographically dispersed. * Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions |

VI. Formalization
It refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.