Microsoft recently announced plans to write off $7B and lay off up to 7,800 employees. Wondering how this happened?
Lack of focus.
Unlike Bill Gates and Steve Jobs, Steve Ballmer (the former CEO of Microsoft) never was and never will be a product guy. He is a brilliant sales executive and understood how to maximize the sales of a leading franchise. But he did not understand product. Steve Ballmer probably would not recognize a “Purple Cow,” a Seth Godin term of art, if he saw one.
What is a “Purple Cow”? Here is a quote from the Amazon listing for “The Purple Cow” by Seth Godin:
“Cows, after you’ve seen one, or two, or ten, are boring. A Purple Cow, though…now that would be something. Purple Cow describes something phenomenal, something counterintuitive and exciting and flat out unbelievable. Every day, consumers come face to face with a lot of boring stuff–a lot of brown cows–but you can bet they won’t forget a Purple Cow. And it’s not a marketing function that you can slap on to your product or service. Purple Cow is inherent. It’s built right in, or it’s not there. Period.”
To produce “Purple Cows” you need focus. A “Purple Cow” is a highly differentiated product. Difference is not a commodity. Differentiated products address specific needs for specific audiences.
When Steve Jobs joined Apple for the second time, he eliminated 70% of the product line. A product line with too many products is hard to differentiate. Apple had cows of many colors but too few “Purple Cows”.
Under Steve Ballmer’s leadership, Microsoft got fatter, bloated, and tried to play in every technology space. They added more and more software products and ultimately purchased a phone manufacturer. As Microsoft began to sag under the weight of all of these products, the board selected an innovative new “product focused” leader in Satya Nadella. Nadella’s actions have already demonstrated that he recognizes “Purple Cows”.
Nadella has embraced standards with the new Edge browser, open-sourced the “.net” framework, shipped Microsoft Office (clearly a “Purple Cow”) on IOS and Android, and now refocused Microsoft as a software/cloud company. If I was Google, I would be concerned. Microsoft is getting back their mojo. By doing less they are doing more. They are focusing on software products that are well differentiated in sustainable markets.
For an example, let’s look at the world of “unified communications”. Unified communications companies want to sell you a suite of services that handle all communications. Have you noticed that most unified communications companies are struggling while Slack is hitting a homerun? Why? Slack is focused where UC companies often try to be everything to everyone.
Focus does not limit your ability to expand your product line. It does, however, require that you time product expansions appropriately.
When Steve Jobs took over Apple he shut down the Newton PDA because it was not the right time and Apple was not the right company. Today, the iPhone is the majority of Apple’s revenue. Basically the Newton is back, but at the right time and the right place.
Proper focus will maximize a company’s success. Microsoft has taught the business world an important lesson, now companies of every size need to ensure they are listening.