Is Microsoft in the growing or aging stage of its lifecycle?

The following Reuters article by Bill Rigby provides excellent insight into where Microsoft is in its lifecycle, how it got there and where it might be heading.

http://www.reuters.com/article/comments/idUSTRE69P45I20101027

 

Speaker Services: What CEO’s are saying about Corporate LifeCycles Inc

• “I’ve enjoyed many of the Vistage speakers that I’ve seen during my 2½ years as a member.  Few have moved me to make contact later.  I came to our meeting yesterday expecting to hear a reasonably interesting presentation.  I left, having been thoroughly entertained, dramatically enlightened, and motivated to study my notes and apply your lessons directly on my company.  I thank you for a stimulating event”
• Confirms what I need to do – balance between different functions. Deals with reality for CEOs.
• Ian MacDougall is a fantastic speaker. He has excellent delivery. Highly recommend – very engaging – time moved quickly.
• Fantastic presentation…delivered in an effective way!
• Practical!  Applicable!  One of the best.
• Knows his material thoroughly
• Fantastic, clear, funny, effective.
• Excellent! Engaging and informative. I now see where my company is in its lifecycle.
• Helpful to me as we are growing and want to avoid aging
• Great presentation and subject
• Great speaker. Very engaging
• Ive heard many presentation on personality types and organization life cycles but never understood how these intersect. The info was useful and thought provoking
• I learned where my biz is and where I need to take it
• Very knowledgeable about his subject and Ian has a great sense of humor
• Very entertaining and engaging. Very useful and thought provoking content.
• All good.
• What I needed to hear.
• Wonderful detail. Well structured, well presented, engaging, realistic and pertinent.
• Excellent humor and great set ups. Very clear key points.
• Good material. Liked PAEI- felt very positive about how we are doing at Z-card.
• I thought he was one of the better speakers. Content was very pertinent to my business.
• Great universal lessons and principles.
• Keep the presentation the way it is. Nice style, humor and knowledge. Speaker talks about the life cycle of your company.
• Loved it. Good use of visuals and humor. Organizational life cycles and mnagement team profiles are what the speaker talks about and how they interact to help grow or age a business.
• Nice use of humor. Would have liked a longer presentation.
• Engaging, funny, smart. Strong command of material. Highly thoughtful and engaging.
• Great delivery. Well organized with many good examples to maintain interest.
• Speaker talks about the life cycle of a business and keeping your business in PRIME.
• Engaging and very effective. Excellent consolidation of several views/ideas.
• Energetic and knows life cycle processes well. Great topic with excellent takeaways.
• Relevant and energetic. Very strong speaker and his material was very meaningful to the audience.

Great to Good

Tom Peters and Jim Collins wrote the 2 most popular and influential management books of the last 25 years. Unfortunately both were fundamentally flawed. Each described companies in the PRIME stage of the corporate lifecycle and the authors naively assumed they would stay there. That turned out to be dead wrong! How about a sequel to “Good to Great”. I was going to suggest “Great to What the Hell Happened”

Lifecycle Assessment

From 1999 to 2006 the average tenure of departing chief executive officers in the United States declined from about 10 years to slightly more than eight. Although some CEO’s stay a long time, a lot of them find that their stint in the corner office is remarkably brief. In 2006, for instance, about 40% of CEO’s who left their jobs had lasted an average of just 1.8 years according to the outplacement firm Challenger, Gray & Christmas. Tenure for the lower half of this group was only eight months. Some of these short-timers were simply a poor fit and left of their own accord, but many others were ushered out the door because they appeared unable to improve the business’s performance. Nobody these days gets much time to show what he or she can do.

It is clear then, that within a few months at most, incoming CEO’s and general managers must identify ways to boost profitability, increase market share and overtake competitors. But they cannot map out specific objectives and initiatives until they know where they are starting from. Every organization has its own unique set of issues and accurately assessing these is the only way the management team can begin to know where to focus its performance improvement efforts.

HBR February 2008

We believe that sustainable change can only be achieved through a genuine understanding of the real issues facing an organization and that the bigger the challenges you are facing, the more energy your organization will require to address those challenges.

For many of our clients, our Lifecycle Assessment Workshop was the “breakthrough” event that precipitated wide spread dissatisfaction with the status quo and created the will and commitment required to sustain large-scale change.

For more information contact Ian MacDougall (561)212.8793 or Ian.MacDougall@corplife.com

The Founder’s Trap

Eventually most start-ups reach the point where the growth of the company exceeds the growth of the person in charge.

This crossroad is normal and healthy, according to consultant Ichak Adizes, whose books Corporate Lifecycles and Managing Corporate Lifecycles are among the most insightful on the evolution of companies from startups to maturity. Adizes describes the founder’s trap as the conflict that owners face when they understand that the company’s needs have changed and that a new set of skills is required if the company is to continue to prosper.

“From courtship through the go-go stages of the life cycle, founders are their companies and the companies are their founders. They are inseparable,” says Adizes.

“Companies outgrow the founder’s capabilities to implant their personal leadership styles and philosophies,” he adds. “They can no longer act as one-person shows. That’s when founders attempting to delegate authority and responsibility end up decentralizing and losing control. It usually does not work well.”

Fast-growing startups eventually need formal controls, systems and procedures, and yet founders are often accustomed to solving problems and meeting new challenges intuitively and on the fly. However, the logical, simple solution of establishing controls and systems through bringing in experienced management is rarely simple.

Adizes says founders don’t give up control easily, even when they concede the need for professional leadership. “It doesn’t take long to discover that the ‘hired guns’ are not like them. The paradox is that the founder is looking for ‘someone like us,’ who will ‘do the things we do not do.’ Inconsistent demand, right?” Adizes says. “The founders are looking for pilots who can fly submarines. For this critical transition, companies don’t need leaders like their founders; the new leaders need to complement the founders’ style.”

What happens if the founder can’t make the transition? The organization decentralizes, but the founder retains control, undermining the authority and effectiveness of other managers. Morale sinks, complacency sets in and the company loses its sense of urgency, its momentum and, ultimately, its spirit.

Helping companies make this transition and avoid the Founder’s Trap is a core competence of Corporate LifeCycles Inc. Please visit our website www.corplife.com or call 561.212.8793 or email Ian.MacDougall@corplife.com

Rejuvenating an aging organization

An organization’s vitality is a function of two competing forces – flexibility and predictability. Young companies tend to be flexible and unpredictable while those that are aging are usually predictable and inflexible. When an aging company looks out toward the technological, socio-demographic, political, legal, economic and competitive forces in its environment it sees problems. When a young company looks at the same things it sees opportunities. Other common signs of aging include the following:

1. Loss of market share
2. Inability to incubate and start new businesses
3. Exaggerated emphasis on outward signs of respectability – including offices and titles
4. Denial of reality
5. Infighting and turf battles among executives
6. Dominance of form over function
7. Shift of power from line to staff
8. Mismatch of authority and responsibility – those with authority don’t have responsibility while those with responsibility don’t have authority

Maintaining peak performance and avoiding or reversing aging requires that management systematically address the following:

- Mission and Scope

- Organization Structure

- Accountability

- Compensation and Incentives

MISSION AND SCOPE:

There’s a fundamental question here that’s never going to go away. What business are you in? Never define your business by your product because your product can and probably will become obsolete over time. Define it instead from your customer’s perspective — by the needs that you satisfy. Don’t get hung up on what you’re selling – think instead about what the customer is buying. Young companies often become over divergent in their scope and need to decide what not to do. On the other hand aging organizations consistently define their businesses too narrowly and require more divergent thinking. Companies can diverge their scope in a number of ways: 1) by addressing customer needs that are not being met; 2) by identifying market segments that are not being served; 3) by exporting know how and capabilities currently resident within the organization and in this way creating completely new businesses. The Thomson Corporation, a global provider of information to businesses and professionals, has recently redefined itself as being in the business of helping their customers make better decisions faster. This broader definition of scope enables Thomson to go beyond selling information and focuses them on trying to understand their customer’s work-flows so that appropriate solutions to their decision making needs can be developed.

ORGANIZATION STRUCTURE:

Organization structure is a means to an end. We need to understand what we are trying to do before we can design the structure that will make this possible. A submarine cannot fly and hiring a qualified and experienced pilot to stare down the periscope will not change this. Young companies tend to be highly centralized. The founder cannot, does not and indeed should not delegate much. Rapid growth quickly leads to structural confusion as the organization chart begins to resemble a piece of paper a demented chicken ran all over and if the founder cannot or will not “let go” the organization may feel stifled. To become more flexible a company needs to continuously decentralize by organizing its profit centers around its customers and markets so that it is structured from the outside in rather than from the inside out. In this way the customer becomes the driving force and the organization the driven force.

ACCOUNTABILITY:

While organization charts reflect what a person is responsible for responsibility does not necessarily translate into accountability. People can only be held accountable for what they control or have authority over. Here’s a simple test. Think about all the dollars that come into your company (revenue) and all the dollars that go out (expenses). Can you write one person’s name on each of these? (Note: only one person’s name) Does this person accept that they control it and that they can be held accountable? How many people in your organization are not sleeping well at night because they are being measured and held accountable in this way? If it’s only the CEO we have a problem.

COMPENSATION AND INCENTIVES:

Caution – many compensation and incentive programs are effectively undermining organization performance and are in themselves causing aging. Paying incentives on the basis of reaching certain goals can often create a conflict of interest during the goal setting process. One party may be perceived as stretching too much while the other is stretching too little. Trust is undermined and we never know if our goals reflect the best we can do or if they have been sub-optimized by the process of arriving at them.

MISALIGNMENT

These issues need to be addressed in a systematic way. If they are allowed to evolve independently misalignment will occur. Like a car with misaligned wheels, you can expect difficulties as each wheel moves in a somewhat different direction. Yes, you can drive the car, but it will take more energy, it will burn up more resources, and if you go too fast the whole thing will begin to shake.