Published on: June 2, 2010by Michael Sansolo
In a week of big news stories, there was probably none that deserved attention less than Apple surpassing Microsoft in its market capitalization. It’s a story that’s easy to ignore because the wisdom of a market cap frequently has little to do with important business values such as profit, sales and customer satisfaction.
However, it also is easy to argue that this really does matter. Because the real story between the two technology giants isn’t about stock prices or the relative wealth and creativity of Bill Gates and Steve Jobs. Rather, the lesson is about wide-ranging business practices and how two amazing companies have traveled such divergent paths in the past decade.
The simple lessons distilled recently by BNET, a business management website, are best found by studying mistakes made by Microsoft over the past decade. While some are unique to the world of high-tech, many have obvious parallels in other businesses, including the comparatively low-tech world of supermarkets. And that makes them lessons worth considering.
For instance, Microsoft gets criticized for something called backward compatibility, or remaining linked to old and aging features. As BNET says, the pace of innovation in the tech world creates an environment where companies much constantly “eat their young,” in short abandoning successful products to move to the next level. It’s advice well taken by any business. Sometimes the most difficult decision is how to move beyond a product, store, service or practice that has fueled past growth. Done poorly, this could easily wreck a company; never doing it leaves you stuck in the past while competitors go zooming by.
Compounding this problem, Microsoft found itself too often imitating where it should have been innovating. Matching the competition always makes sense, but the breakthroughs come from those who build the new definitions of value.
There are similar parallels in BNET’s criticism of Microsoft’s bureaucratic and feature bloat. The first is a challenge for any business, especially in challenging economic times. All companies need internal administration and procedures, but troubled companies get weighed down when these areas—which rarely improve the final customer’s experience—grow too large and unwieldy. Lean operations move with less friction and cost, creating a win-win situation for the company and its customers.
This might explain why a second news story last week found that Apple - makers of the iPod, iPhone and iPad - spends less on research and development than many of its competitors. It simply gets more bang for the buck. It also may explain why Apple went from facing extinction in the 1990s to hero worship in 2010.
While I don’t consider myself a technology expert, feature bloat is easy to understand. On my computers it’s the glut of programs and choices that I never come close to using just as in a store it’s an overabundance of products that in no way seem to improve my experience. Microsoft’s challenge would seem a great parallel to the struggles many retailers are having to pare down assortment without diminishing the shopper experience.
But the Microsoft sin that seem to resonate most involves the company’s partnership practices. As BNET explained, Microsoft became a partner that other companies needed, but feared. Too often, the Redmond behemoth would work on a solution or product with another company, only to turn on the partner and compete with them or force them out of the business. What Microsoft seems to be learning is that when their partners win, they can win too. It seems as especially appropriate lesson for supermarkets at a time when the balance between national and store brands is becoming so much more complicated.
The bottom line is the lessons are all there. Complacency, arrogance, greed and more are enough to slow even a company like Microsoft. Just imagine what those same sins can do to you.
Michael Sansolo can be reached via email at firstname.lastname@example.org . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
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- Just FYI...Apple CEO Steve Jobs engaged in a wide-ranging discussion yesterday at the Wall Street Journal All Things Digital conference...coverage of which can be found here.