Microsoft Corporation

Microsoft Corporation

Thesis Statement : Microsoft is a giant multinational organization that deals mainly in software products for computing devices. In this thesis, we shall examine how Microsoft has implemented the organizational concepts of Organizational Structure, Organizational Culture and Human Resources Practices in achieving its mega-success.

Introduction to Microsoft

Microsoft Corporation is a large American multinational company that develops, licenses, markets and supports software products for different computing devices especially the Personal Computer. Bill Gates and Paul Allen founded it in 1975 in Albuquerque, New Mexico. It is presently headquartered in Redmond, Washington. It has over 76,000 employees in 102 countries. Its best-selling products at present are Microsoft Windows Operating System and the Microsoft Office Suite consisting of Word (for word processing), Excel (for spreadsheets), Powerpoint (for presentations), Outlook (email client), Access (database management system). These two products enjoy 90% of the market share in their categories. An original Windows advertising blurb says "Windows will instantly deliver you a more productive present. And a leap into the future." (Microsoft timeline).

History of Microsoft : In 1975, Bill Gates and Paul Allen set to work to adapt the BASIC (Beginner’s All-Purpose Symbolic Instruction Code) computer programming language to the first Personal Computer named “Altair 8800”, launched by MITS (Micro Instrumentation and Telemetry Systems) of Albuquerque, New Mexico. After successfully licensing BASIC to their first customer MITS, Gates and Allen set up Microsoft in Albuquerque, New Mexico. In 1980, Steve Ballmer joined Microsoft and later succeeded Bill Gates as the CEO. Microsoft also developed their versions of FORTRAN, COBOL and Assemblers. Microsoft also licensed BASIC to other personal computer companies besides MITS. In 1979, Microsoft moved from New Mexico to Bellevue, Washington. In 1981, Microsoft signed a contract with IBM to develop languages and an operating system for their new personal computer. In 1982, MS-DOS was launched and brought Microsoft its true success. With MS-DOS being purchased by various manufacturers of personal computers, Microsoft rose to become a major software vendor. Microsoft also launched MS-Word, a hugely popular product. In 1983, Microsoft launched its first version of Microsoft Windows, an extension of MS-DOS, providing a graphical operating environment. At this time, Microsoft also introduced the Microsoft Mouse, which made its GUI (Graphical Use Interface) programs much easier to use. In 1989, Microsoft launched the Microsoft Office Suite that consists of several products such as Word, Excel etc. Till date Microsoft has launched several versions of Windows, growing from strength to strength. In the recent past, Microsoft was investigated for possible anti-trust violations and monopolistic practices but was finally let off the hook. With the growing popularity of the Internet in the mid-1990s, Microsoft launched its online service, MSN (Microsoft Network). Around 1998, Microsoft’s browser, the Internet Explorer, became hugely popular and soon overtook all competition in the browser market. In 2001, Microsoft released Windows XP and later on entered the gaming console market by releasing it’s gamebox Microsoft X-Box. Microsoft’s latest offering is Windows Vista, which was released in January 2007.

Microsoft’s Mission Statement states “At Microsoft, our mission and values are to help people and businesses throughout the world realize their full potential” (microsoft.com). As a part of their “Realize your Potential Campaign”, Microsoft donates software, hardware, funding and training to programs all over the world. Bill Gates had a vision of putting a PC on every desk and in every home and that vision has been amply achieved. He now dreams of putting a Server under every desk! With a strong and visionary leader like Bill Gates at the helm, Microsoft has used its resources to its full potential and stayed on top of the computing world for decades.

In their journey to becoming a mega business house, all large organizations use several organizational behaviour concepts. Let us examine three such organizational behaviour concepts that Microsoft has successfully used over time : Organizational Structure, Organization Culture and Human Resource Practices.

Organizational Structure

Organizational Structure is the formal framework by which the organization manages, divides and co-ordinates all its tasks. Microsoft has successfully used the concept of Organizational Structure to leverage its success over the years. The company is run by a Board of Directors consisting of 10 members, who are elected every year. Five committees have been constituted which oversees matters like audit, finance, governance, nomination of Board members, antitrust violation etc. The company is broadly divided into a few major teams to handle specific corporate aspects of business.

A few years back, Microsoft was re-structured to increase focus on customers and software services.

Microsoft has established business divisions based on the requirements of core customers. The business division leaders will think and act in parallel, each empowered with driving product planning and marketing strategies for their respective customers. The customer-focused parallelism represents a move away from the alignment by products and technologies that had served the company since its inception. (Microsoft.com).

Microsoft's core customers are the IT manager, the knowledge worker, the developer and the consumer. The new business groups of Microsoft are : Business and Enterprise Division, Consumer Windows Division, Business Productivity Group, Developer Group, Consumer and Commerce Group. These groups are more aligned towards Microsoft’s core customers and while each group will work in parallel to manage internally their own affairs, whenever required they will also partner across groups for specific works. Groups will also share certain core processes of marketing and management. The new alignment of the organizational structure is expected to improve information flow and build a better architecture for the developers. Besides it is also expected to boost the online experience for consumers, build more user-friendly PCs and also to take advantage of the many new computing devices that are expected to emerge to complement the PC. Steve Ballmer, Microsoft’s CEO, has said that the new structure is a step towards re-inventing Microsoft to better meet the needs of the future.

It can be seen that Microsoft follows some degree of the matrix organizational structure. The company has parallel divisions catering to different aspects of the business while sharing certain core functions. This combines the benefits of the pure functional structure and the pure product structure. Hence in Microsoft, information sharing is of prime importance.

Let us examine the organizational structure of a typical Microsoft Product Group – the Internet Explorer Group. Tony Chor, the Group Program Manager of the IE Group describes the organizational structure of the group as follows: “The basic structure of the team consists of a Product Unit Manager (PUM) leading a team that includes a Development Manager (who leads a group of Development Leads and Software Development Engineers), a Test Manager (who leads a group of Test Leads, Software Design Engineers in Test, and Software Test Engineers), and a Group Program Manager (who leads a group of Lead Program Managers and Program Managers).” (JobsBlog). This is the usual structure followed by Microsoft Product Groups.

Thus Microsoft has been able to successfully use its organizational structure to make the best use of the organization's resources to achieve organizational goals.

Organizational Culture

The members of an organization share certain beliefs, values, assumptions about their company and certain expectations that they have. These shared views often permeate throughout the organization and affect the entire environment including performance, decision-making, interaction among various members, dress code etc. This common environment prevailing in an organization is known as its organizational culture. Organizations sometimes also actively foster a type of culture that the top management or the proprietors would like to have. The dominant culture and the subcultures within an organization determine the prevailing environment within that organization and are often a key to the organization’s success or failure.

Microsoft has a very positive organizational culture which allows its workers to grow alongwith the company. Microsoft is aware that its success depends on its development capabilities, whether for desktops or for its online services. So Microsoft treats its developers as the “stars of the show”. Fresh University graduates, recruited as developers, are given private single or shared closed office rooms. This shows them how important they are to the organization. Even top-level managers are often developers or were former developers. Since Bill Gates himself is an outstanding developer, his technical background has helped him to hire many good people in a lot of key positions.

“Microsoft has a strong risk-taking personality and employees are encouraged to take chances, fail, and then learn from their mistakes (Gates, 1996)”. (Jaskolka, 2001). This risk-taking and innovative character has been actively spread among all its employees from the top down. Microsoft employees pay minute attention to detail, which has helped the organization to develop top-of-the-market software products. The top management of Microsoft is very much people-oriented and team-oriented. Employees are encouraged to be aggressive and committed to their tasks.

Microsoft also believes in testing out their software on their own work first, which fosters a sense of trust among customers. Microsoft also provides free technical support to customers through its online services. This not only builds goodwill among customers but also helps to spread the use of Microsoft products.

These positive aspects of the organizational culture of Microsoft has been a key determinant to achieving its mega-success.

Human Resources Practices

In today’s business world, the people within the organization have assumed significant importance. Businesses have come to understand that their success depends on the people who make up their organization. The profitability of an organization depends on the productivity and well-being of its human resources. Workers must be skilled, knowledgeable and high-performing to enable the organization to stay competitive and economically viable. This recognition of the value of the human resource has contributed significantly to the success of the major organizations.

Microsoft values its human resources to a great extent and this has been a key factor in its rise to the top of the computing world. In an effort to show its appreciation to its employees, Microsoft has put in place a performance review system that supplements the annual review by continuous feedback and review throughout the year, in which an employee can offer his viewpoint on various aspects and can also benefit from corrective advice from his superior. Further Microsoft also has an online system where employees can air their grievances and offer feedback anonymously, which encourages employees to be more free and frank about their viewpoints without any fear of reprisal. This informal and confidential feedback does not follow the employee and is not reported to the Human Resoruce Department. Instead it is used by the Managers and employees to find solutions to problems within the organization. This personal touch has helped to improve employee performance within the organization.

Microsoft also offers stock options and plans to its employees to show its appreciation and in order to attract and retain the best talent. These stock options have made many millionaires out of Microsoft employees. Such Stock Plans help to align the financial interest of the employee with the financial interests of the company which in turn promotes better productivity and commitment.

Microsoft is open to employee concerns. This concern is manifested in the fact that Microsoft allows employees to make their own career choices within Microsoft, thus helping to customize the employee experience.

Microsoft Corp. goes so far as to ask certain types of employees to design their own career paths. The company offers software engineers both a management-focused and technical-specialist career track and allows them to move back and forth between the two. (Cantrell, 2007).

All these Human Resource Practices have set Microsoft on its path to success. Microsoft gives out a very positive message to its employees. This has tremendously helped Microsoft to attract and retain the best talent available in the field, which in turn has been a key factor in making Microsoft the undisputed leader of the computing world.

Conclusion

Microsoft has shown its ample capability in making use of organizational concepts in its giant strides towards success. Without such foresight and skill, Microsoft would not have been the global power that it is today. In fact, in a study on the inner workings of Microsoft, Harvard Business School professors Marco Iansiti and Alan MacCormack have said “Microsoft actually wins through effective management of its intellectual property and an ability to spot and react to important trends before they take hold.” (CNET News). Thus Microsoft has shown great business acumen in utilising organizational skills in establishing its undoubted success.

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References

Cantrell, Susan. (June 20, 2007 ). New Goal of Human Resources : Establishing a Work Force of One. The Wall Street Journal Online. Retrieved on Dec 13, 2007, from

CNET News.com. (Dec 7, 2002). Microsoft’s Secret for Staying on Top. HBS Working Knowledge. Retrieved on Dec 13, 2007, from

Jaskolka, Assunta (Cindy). (2001). The Department of Medicine of University X: A Study of Organizational Culture and Mission. Retrieved on Dec 13, 2007, from

JobsBlog. (August 18, 2004). The organizational structure of a typical Microsoft product group. Retrieved on Dec 13, 2007, from

Microsoft.com. (March 29, 1999). Gates and Ballmer Outline Blueprint to Reinvent Microsoft. Retrieved on Dec 13, 2007, from