Tuesday, October 12, 2004

When Microsoft Should Walk Away

Question in a comment:

I dont work for Microsoft and I
have no love for the company but I have to ask this question: You basically
seem to suggest shutting down all money losing projects. However, surely
aren't these the results of the management's efforts to diversify? I would
think that MS would need to subsidize all kinds of nonremunerative projects
in order to get at least one that might strike it big.

do need to expand into other markets. Otherwise, we'd be perpetually stuck
with Windows and Office bringing in just about all of our profit
(hmm). However, Windows and Office revenue provides one hell of a
slush-fund for divisions with sloppy management dressed up like innovators
dealing with a dilemma.

If something is a good idea, it will take and
establish itself and be able to support itself. If something is a bad idea,
it should die on the vine after due process and let these people move-on
(preferably, move-on to other companies).

For instance: our
recent acquisitions have pretty much gone badly (where badly is defined as
not turning a profit). The two good kind of acquisitions:

  1. Source
    code because it's a great product and
  2. HR because the people are so
    great (product secondary or ignored [LookOut]).

rarely rarely works is #3: people and product. That company succeeded
because of their unique development environment and personalities. Now that
environment is gone and they are forced to develop the Microsoft Way.
They've been blue bagded. And slowly the greatness that was their product
has the life drained out of it and it becomes less and less relevant (e.g.,
Great Plains).  These acquisitions are where we should have been
spending money to have great partnerships and not blow a bunch of cash and
fritter away a product just to feel we have a market segment

To succeed, we need to be quick and nimble and not continuing
to pull the plow in a dead, sterile field being sowed with the best seed in
the world. So yes, let's try expansion and if it takes off, relish in our
success and make heaps of money from delighted customers. If it is a bad
idea or a rapidly declining market, don't be stubborn and try through sheer
will to manifest success. Walk away.

Most importantly: reward success.
Reward profit.

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