What Can Microsoft Teach You About Digital Business?

It’s only crumbling, archaic companies that have to worry about digital disruption, right? Companies that cling to out-moded ways of operating, where out-of-touch, besuited executives languish in mahogany-paneled boardrooms pondering strategy over cigars and brandy.

Oh no. Digital disruption impacts every business and every company.

No matter how “born digital” you may think your firm is, there’s always room to get leaner, meaner and closer to your customers. Take this as an example.

You might think that Satya Nadella, recently appointed Chief Exec of software powerhouse Microsoft, has nothing to worry about. While Microsoft wasn’t strictly “born digital”, it isn’t far off. It boasts an impressive array of digital services in its suite of products – Hotmail, Xbox Live and MSN to name just a few. But Nadella is only too aware that what’s made Microsoft successful in the past will not continue to differentiate it in this uncertain future.

In a recent New York Times interview Nadella was asked about how he wanted to change the culture of Microsoft. He succinctly sums up exactly why every firm must become a digital business:

“Culturally, I think we have operated as if we had the formula figured out, and it was all about optimizing, in its various constituent parts, the formula. Now it is about discovering the new formula. So the question is: How do we take the intellectual capital of 130,000 people and innovate where none of the category definitions of the past will matter? Any organizational structure you have today is irrelevant because no competition or innovation is going to respect those boundaries. Everything now is going to have to be much more compressed in terms of both cycle times and response times.”

He acknowledges that uncomfortable truth:

What’s made you successful in the past is now your biggest barrier to change.

He also acknowledges the power and importance of innovation.

“When you have a $70 billion business, something that’s $1 million can feel irrelevant. But that $1 million business might be the most relevant thing we are doing.”

I’m fascinated to see how Nadella evolves his vision for Microsoft, and I applaud him for being bold enough to say that an incredibly successful company needs to evolve or even transform to stay relevant in the Age of the Customer.

Here at Forrester we’ve been researching exactly these challenges. Being big and old doesn’t mean you will be destroyed by digital disruption. But being young and small doesn’t guarantee your survival either. Every firm must learn to leverage digital technology to both transform its customer experience and drive operational excellence. Few firms – even the digital leaders – can claim to be masters at both.

If you are interested in learning more, we are hosting a series of presentations across Europe over the next couple of weeks entitled Transforming Into A Digital Business In The Face Of Disruption. We’ve already covered London, Frankfurt and Amsterdam, sparking some great debates as to exactly how firms can transform. Geneva, Paris, Milan and Stockholm are on the way. 

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