Published:

The astonishing pace of change in the digital age was the subject of yesterday’s Deep End. Today, we focus on those who have shaped this brave new world: the global IT corporations who are themselves falling victim to the permanent revolution they helped to bring about.

Consider, for instance, the case of Google and Facebook, which were, until what seems a moment ago, set to divide the internet between them, but which are now – according to Bryan Appleyard’s brilliant article for the Sunday Times – fighting to stay relevant as computing goes mobile. The best example, though, is Microsoft, profiled by Kurt Eichenwald in a lengthy, but rewarding, feature for Vanity Fair.

On the eve of the Millennium, Microsoft was the brightest star in the digital firmament, but within months the shine (along with Bill Gates) had gone. It has yet to return: 

  • "Over those years, inconsequential pip-squeaks and onetime zombies—Google, Facebook, Apple—roared ahead, transforming the social-media-tech experience, while a lumbering Microsoft relied mostly on pumping out Old Faithfuls such as Windows, Office, and servers for its financial performance. 
  • "Amid a dynamic and ever changing marketplace, Microsoft… became a high-tech equivalent of a Detroit car-maker, bringing flashier models of the same old thing off of the assembly line even as its competitors upended the world." 


Eichenwald illustrates this point with an astonishing fact: 

  • "…today the iPhone brings in more revenue than the entirety of Microsoft… One Apple product, something that didn’t exist five years ago, has higher sales than everything Microsoft has to offer. More than Windows, Office, Xbox, Bing, Windows Phone, and every other product that Microsoft has created since 1975." 

What makes this lost position of leadership all the more noteworthy is the degree to which Microsoft threw away early technological advantages. Important products like e-book readers and mobile computing operating systems were developed in prototype by Microsoft engineers, but never properly taken through to market.

Eichenwald pins the blame on Microsoft’s management culture – one which emphasised immediate results rather than the careful nurturing of new ideas: 

  • "The group working on the [e-book] initiative was removed from a reporting line to Gates and folded into the major-product group… Immediately, the technology unit was reclassified from one charged with dreaming up and producing new ideas to one required to report profits and losses right away." 
  • "…The plan to give consumers something light and simple that would allow them to read on book-size screen was terminated." 

The conclusion of the article features a quote from the late Steve Jobs: 

  • "The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.… [Then] the product guys don’t matter so much, and a lot of them just turn off." 

So there you have it: A hugely successful enterprise is taken over by a bunch of salesmen, who, for all their ruthless capability, have not only neglected the development of new ideas, but also forgotten what made the company so successful in the first place.

Can you think of any other organisations like that?

Comments are closed.