Comments

I do wonder where Microsoft can go. It seems that many of their ventures outside the territory of Windows and Office do not become profitable.

The PC platform is very mature now. MS Office and Windows have virtually reached a plateau in terms of user features. PCs may be getting faster, but for general office work, how much faster do people need?

At the same time, connectivity is improving. 3G telephones can deliver internet and email over a phone. Wireless can be had in most small towns. Broadband usage with it's "always on" internet is growing, and hosting costs are coming down. People are trusting the connectivity more, and with it, users are graduating towards internet services over desktop/in-house applications.

It seems to me that Microsoft is still very much defending the PC-centric view, which I think has reached it's limit. I think people want more ways to connect with each other more quickly, and simply.

Of their existing businesses, there are also threats. Apple are growing in popularity, and the new Intel-based Macs will, I think see more growth of their market share. On the server, there is Linux.

Posted by Tim Almond at January 6, 2006 2:31 PM

I agree that size is an issue. I am delighted as a woman to see that there is a man who thinks there is a problem with "big". No reference to Freud :-)!

I agree, that, like the Titanic, one can be so big that one forgets that one is vulnerable.

I believe that the one thing that any of these companies can improve is "big" improvements to service - which are usually small things that involve listening, understanding, intuition, and empathy. Any company which can build custom made solutions from listening to people's individual stories will survive. Any company that thinks they can get big by thinking "one size fits all" is shortly to go the way of the dinosaur.

Posted by Heidi Jury at January 6, 2006 3:21 PM

In MSFTs case, I predict that Vista sales and response will prove disappointing, as underlying architecture issues have been ignored and neglected which leaves the OS massively vulnerable to problems. the registry is a mess. security badly broken. layering .net on top looks pretty but a more secure platform it isn't.

if MSFT had really bet the company, and redesigned, ground up, like with WinNT, they might have hit a homerun.... compatibility hangs like the sword of damacles over gates and balmer, and yet, they can't be everything to everybody. by breaking compatibility, in spite of Bills pronouncement, you lose your assets, you don't gain assets by preserving the serious flaws and mandating poor compatibility.

Vista is modest, late and more refinement than major tectonic shift.

it's a classical problem. race to become the dominant player in a market, then every fund, 401k and IRA owns a piece of you. Meeting expectations becomes, mediocre performance.

only divesting divisions and pieces into new companies can i think share prices get an opportunity to improve. as each segment can really focus and perform.

as a monolith, CSCO is has the same problem.

they purchase and integrate companies inside a quarter, but they lose the unique qualities of the acquired business, by integrating them inside "CISCO" culture, in spite of the PR to the contrary. the freshness of the acquisition is lost in the move towards corporate efficiency and efficacy.

CSCO has many methodologies that were pretty good years ago, but are out of date now. "go to the web" was a disaster years ago, with data everywhere disorganized and not organized.

breaking up their strategic units into fledgling enterprises can they resume earnings and sector growth. i don't see how they can do it in their current framework. and sure won't go long in these enterprises.

Posted by kurt at January 6, 2006 10:43 PM

Dear Tom,

Samll is beautiful. I am reminded of a quote by Paul Ormerod - Why Most Things Fail: Evolution, Extinction and Economics - that goes like "I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for myself?’ The answer seems obvious: Buy a very large one and just wait." I guess it’s so damn true!

Logically speaking size would definitely cause a lot of confusion, chaos, problems in terms of getting thingz done, organizing thingz, convincing people, executing ideas, leadership issues, managerial styles & philosophies, gender-bias, ownership vs control, getting the numbers right (atleast sounding to the external world that it is true & fair for reasons best known to all of us!) et al. However, that being said, one (usually the top mgmt / leadership team) must take cognizance of this fact & constantly assure / re-assure to think bizarre & be innovative, creative, proactive, definitive….because as we all know the “bottle-neck is at the top of the bottle!”

Posted by K.Sriram at January 6, 2006 10:46 PM

Bigger isn't better. Need I say more?

Posted by Steve Yastrow at January 7, 2006 12:37 AM

So what's the solution - semi-indy skunk works?

Posted by PaulH at January 7, 2006 9:00 AM

Investment wise - international emerging funds, Oppenheimer like tax free bonds and commodities are to my liking - lucked out with almost 30% return in '05 - but the taxman cometh.

Posted by Sean at January 7, 2006 10:56 AM

Reminds me of the book "The Book of Five Rings" by Miyamoyo Musashi.

When discussing a small army battling larger armies, Musashi says "The Way of battles is the same for man to man fights and for ten thousand a side battles. What is big is easy to perceive. what is small is difficult to perceive. In short, it is difficult for large numbers of men to change position, so their movements can be easily predicted, An individual can easily change his mind, so his movements are difficult to predict. You must appreciate this, The essence of this book is to train day and night to make quick decisions".

Smaller companies will take the bigger companies' lunch by being nimble and quicker!

Nari

Posted by Nari Kannan at January 7, 2006 12:29 PM

Tim Almond wrote: "3G telephones can deliver internet and email over a phone."

And much, much more. Today, a family member in Brunei called her sister (the sister has a 3G phone), and the conversation was held with 2-way video. All I could think of afterwards was the "picture-phone" a la the 1960s, and how it was here today and done with something as small as a handphone.

Posted by JD at January 10, 2006 7:28 AM

Tom's comments on giantism are right on the mark! I wrote a book on this subject called "Bigger Isn't Always Better" which was just published last week. The book is an extended riff on Peter Drucker's wise observation:

"The idea that growth is by itself a goal is altogether a delusion. There is no virtue in a company getting bigger. The right goal is to become better. Growth, to be sound, should be the result of doing the right things. By itself, growth is vanity and little else."

Amen.

Bob Tomasko

Posted by Bob Tomasko at January 13, 2006 5:22 PM

This has been a generalized issue for a long time, organizational “Scale Limits,” especially since enterprises went global indeed. I believe some new criteria have not been instituted, because some universal laws are yet unknown to us (up to now). Nonetheless, there is some interesting data. Lord John Browne, group chief executive of British Petroleum, an applied physicist, structured BP as an atomic system with its stemming sub-atomic systems. What Browne did is to me quite some novelty to consider. Incidentally, he is also a “non-executive director of the Intel Corporation.”

To make a point on the “Scale Limits” and as per the book “Presence,” “…Not many people realize it, but VISA INTERNATIONAL IS ARGUABLY THE LARGEST BUSINESS IN THE WORLD, WITH OVER $ 3 TRILLION IN TRANSACTIONS AND A MARKET VALUE APPROACHING A TRILLION. Yet to many it doesn’t even look like a business. It’s organized as a self-governing network of more than twenty thousand member institutions that are also its owners. It’s governed by a constitution that stipulates how governing boards are elected, the rights and obligations of members, how new members are admitted, and how members can be disqualified. In short, one of the world’s largest corporation operates as a self-governing democracy…The genetic code became Visa’s purpose and principles, its governing ideas, and the core governance processes spelled out in its constitution. The subsequent work of prototyping and institutionalizing took over four years, but in the end Visa International was formed, more or less in its current form…”.

I believe it is quite interesting to bear in mind the Visa International case. I don’t see its geometric growth slowing down any soon. In order to address the “scale limits” hurdle(s) very differently, it may be easier to tackle the grave “corporate governance and concurrent risks” a la Visa’s Magna Carta perspective. The “Scale Limits” issue has many angles. Clearly a talented-leadership (shared throughout any organization) will be essential along with STRONG VALUES (applied ones). A remedy to this challenge is to concentrate on deepening a strategic position, rather than broadening and compromising it. One approach is to look for extensions of the strategy that leverage the existing activity system by offering features or services or advantages that competitors would find unattainable or expensive to match on a stand-alone basis.

Put differently, managers can ask themselves which activities, features, or forms of competition are feasible or less costly to them because of supplementary activities that their organization performs. Deepening a strategic position requires making the firm’s activities more unique, strengthening fit, and communicating the strategy per se better to those clients who ought to value it. Leadership vested with strong values will be irrelevant if innovation (creativity) is not thoroughly redefined, instituted and implemented. I am speaking of the type of creativity that transfers breakthroughs through what I would call “BIP” (Business Innovation Processes). I would not recommend anyone wait for the Technological Singularity “just to happen,” acknowledging that everybody has his/her free will to decide whatever. Do we have in the business environment any pre-Singularity events already signaling us? Are we paying attention to any disconfirming evidence? This is not a happening. This is long-term, on-going, persistent effort that leads to an unimaginable “conquest.” To me we must all redefined the term “unprecedented,” since its “core meaning” won’t suffice shortly. Having biotechnology and nanotechnology collaborating with each other and irrupting in our Era, seemingly towards the Convergence of Science as per many respected authors and researchers, What could “MOLUTECH” do to eradicate the organizational “Scale Limits”? What are its opportunities? What are the risks? How do we subtract the risks from the opportunities? I just wonder.

Posted by Andres Agostini at January 14, 2006 5:21 PM