Of Microsoft and Innovation - 09 Feb 2010

I suspect we've broached the topic of Microsoft innovation in Windows IT Pro UPDATE more than once in the past. But with some interesting recent revelations about how dysfunctional Microsoft can be internally, timed not coincidentally with the release of an Apple tablet device, the topic has a new urgency. Has Microsoft simply grown too big to lead the tech industry into the future as it has for so many years? Or can truly innovative ideas still spring from the software giant's convoluted and overly deep corporate hierarchy?

The latest controversy arrives courtesy of an editorial last week in The New York Times. Dick Brass, a former Microsoft executive who oversaw the company's Tablet PC efforts a decade ago, lobbed a common charge at the company: Microsoft no longer innovates. "Microsoft has become a clumsy, uncompetitive innovator," he wrote. Worse still, the company's biggest successes are behind it, and its core products, Windows and Office, are decades old yet still generate almost all of Microsoft's profits. "Microsoft, America's most famous and prosperous technology company, no longer brings us the future," he noted.

Ouch.

Microsoft, uncharacteristically, responded to the Brass editorial with a post on "The Official Microsoft Blog." I don't actually feel that the company offered up a compelling counterpoint, however. Even the title of the post—"Measuring Our Work by Its Broad Impact"—speaks to the point Brass was trying to make. Yes, Microsoft can and should be credited with bringing computing to the masses. But that work started decades ago. It's more recent initiatives have been largely failures, giving competitors like Apple and Google a chance to dominate markets that, in another time, would have been Microsoft's for the taking.

The Brass editorial "Microsoft's Creative Destruction" is worth reading if only for the insights he provides into specific products and technologies like the Tablet PC and ClearType, both of which he alleges were killed because of internecine warfare. "Engineers in the Windows group falsely claimed [that ClearType] made the display go haywire when certain colors were used," he wrote. "The head of Office products said it was fuzzy and gave him headaches."

Although not named in the editorial, the "head of Office products" is most likely Steven Sinofsky, the man who now runs the Windows Division. (And the headache comment does sound just like him.) Sinofsky is many things, but mostly he's what I think of as a finisher. That is, he's championed very few Big Ideas (the Office ribbon being a notable exception) but has shown incredible fortitude at getting previously out-of-control projects locked down and matured. Windows 7 is great, and the reviews are off the charts. But let's be serious: It could never have happened without Vista first, and the guys responsible for that underrated product have been systematically driven out of the company.

So what's the point? Well, Microsoft is apparently a company that values ensuring that internal competitors fail as much as it does getting the right products to market. Such a company is bound to fail, assuming nothing changes. And when you combine this mentality with the unfathomable layers of bureaucracy in Microsoft, it's astonishing that the company gets anything done.

Microsoft's inability to deliver is a problem for all of us because we've placed enormous technological and financial bets on Microsoft. I'm reminded of the decades-old phrase, "No one ever got fired for buying IBM." And while it's likely that such a phrase could have been said about Microsoft as well, one gets the feeling that this era is coming to a close, too.

Of course, it's not like Microsoft's going away. The company just reported record quarterly revenues thanks to massive Windows 7 sales. That can be looked at a number of ways—many consumers were simply waiting for something better than Vista, for example—but regardless, it's a big, big company. And Microsoft's cash cows—Windows, Office, and Windows Server—are infrastructure products, really. It's natural that development of such products would slow down as they—and the company that makes them—mature.

This circle of life stuff is interesting. While it has no direct bearing on our businesses, it's relevant in the sense that we all need to pick the right infrastructure now and in the future. Consider this: When it debuted in September 1995, the magazine that publishes this newsletter was named Windows NT Magazine. Had that publication started today instead of 15 years ago, it might be called Cloud Computing Magazine instead. The people who founded Windows NT Magazine believed in NT and the promises it brought with it. But today it's unclear if Microsoft could ever make such a difference in the market again. It's certainly not clear if Microsoft can successfully transition its business to what I believe will be the mobile and cloud computing mainstream future.

But Microsoft is trying. Today, layers of management, infighting, and an unclear technological path are getting in the way. The only question is whether these issues are natural but surmountable or an obstacle that may one day choke the company and all those who bet on their products and technologies.