Microsoft and Innovation

I just read a fascinating articled by Dick Brass*, who was a vice president at Microsoft from 1997 to 2004. He wrote the article on the occasion of Apple’s release last week of the iPad, a tablet computer. Many people are probably unaware that Microsoft has been advocating tablet computing for about ten years. Dick Brass was the guy in charge of tablet computing at Microsoft, so it’s fascinating to read his account of why Microsoft failed with their tablet PC, with a ten-year head start over Apple. (Of course, we don’t yet know whether Apple will also fail or not…but Apple has certainly got far more publicity in one week than Microsoft has in ten years.)

According to Dick Brass, it’s bigger than just the tablet computer–the real issue is a culture and organizational structure at Microsoft that repeatedly blocks innovation. Brass gives a second example to prove his point: he also turns out to have been in charge of an e-book project at Microsoft, also ten years ago and thus far ahead of Amazon’s Kindle.

Well, you might say “if Dick Brass failed twice, then maybe the problem is Dick Brass.” I don’t know enough about Microsoft to evaluate whether his account is the right one or is self-serving, but it has the ring of truth. After all, his projects aren’t the only ones at Microsoft that have failed to generate innovation–it’s widely known in the industry that Microsoft is quite bad at innovation. They report record earnings each year, but the money all comes from the Windows operating system and the Office productivity suite: products that are about 20 years old. Almost all of their new products come from their acquisitions of other companies that came up with the innovations.

Brass writes “Microsoft has become a clumsy, uncompetitive innovator.” And that it’s not a cool place to work; “There has been a steady exit of its best and brightest.” What happened? “Microsoft never developed a true system for innovation…Despite having one of the largest and best corporate laboratories in the world.”

How did the Tablet PC get blocked? “The vice president in charge of Office at the time decided he didn’t like the concept…he refused to modify the popular Office applications to work properly with the tablet….so even though our tablet had the enthusiastic support of top management and had cost hundreds of millions to develop, it was essentially allowed to be sabotaged.” And last year when everyone knew Apple was about to release a tablet computer, Microsoft eliminated their tablet group.

Another part of the problem is that Microsoft focuses on software and prefers not to develop hardware. It’s not a bad strategy because software is extremely profitable, and hardware is much riskier. But this sharp divide makes it harder to develop “beautifully designed products” like the iPhone–these depend on the new discipline of “design thinking” (formerly known as “concurrent engineering”).

Brass’s conclusion? “Unless it regains its creative spark, it’s an open question whether it has much of a future.”

*New York Times, Thursday Feb. 4, 2010, p. A25