At the beginning of Microsoft’s successful hunting era, the company recruited super talented personnel, which made it easy for Microsoft to become an apex predator on the market. Eventually the tide changed and today Microsoft is swimming upstream against heavy resistance with its solutions and brand. Why? We live in a transparent market in a culture best described as open source, which is not an advantage for Microsoft. Being big often means having a hard time adjusting to change, especially change that occurs faster than the company’s ability to adapt to it. But sometimes the mighty ones develop cultures that are unwilling to adapt (denial has that effect).
In today’s deadly waters not even market leaders like Microsoft have a choice except to improve its defence skills unless it wants to be eaten alive like a whale carcass when the competition come calling. At the beginning of the open source revolution, Microsoft tried to defend its market share with pure denial and arrogance, which back-fired big time. When times change, it does not matter how mighty the market leader is. These companies need to change the direction of their solutions and follow the currents to where the market is taking them. If they don’t they will end up stranded on the beach. This is the simple reason for why Microsoft moved into open source and the reason for why it acquired Skype. The latter has the flavour of consumer power which Microsoft so desperately needed to add to its corporate DNA and survive in the seas it operated in. As Microsoft’s CEO Steve Ballmer admitted:
Skype is a phenomenal service that is loved by millions of people around the world.
The question Microsoft needs to answer is who loves Microsoft?
If it can answer that question without having to pay for that love, Microsoft will engage followers to become a part of its defense. Those things you can’t purchase (such as internal and external loyalty) tend to represent good defence. So long as its competitors do not organize themselves against Microsoft, or grow big enough to attack, Microsoft is quite safe. But it’s only a matter of time when that will happen, so Microsoft has to keep developing its defence skills.
Above from the Sharkonomics book.