Change Management Lessons from Microsoft and Apple

Microsoft

For change management lessons of the difference the combination of a forward looking change management strategy and an innovative culture can make to your organisation, you need look no further than two of the world’s biggest companies. The divergence of the fortunes of Apple and Microsoft highlights perfectly the growth potential achievable from a combined approach of change and innovation.

Now, of course, Microsoft is still a great company with huge customer loyalty and some great products. But this pales in comparison to its market dominant position of the 1990s. It could be argued that antitrust legislation has had some negative effect on Microsoft, but closer analysis shows that it has failed to give consumers what they really want; innovative products that constantly push boundaries.

Apple, on the other hand has flown in completely the opposite direction. It has taken its customers from the iPod to iPhone to iPad. On the horizon is iTV. Microsoft has seen some success with its Xbox, but contrast and compare to Apple’s successes.

Change management lessons: The failure to innovate generally comes in two guises.

The first of these is the failure to imagine the future. This imagination relies on people. Free thinkers, who accept the responsibility of innovation, perhaps even creating new markets in the process, are attracted by companies that will allow them to indulge their creative side.

The second failure to innovate is in the execution of innovation. A friend of mine, based in the UK, first came across touch screen technology as long ago as 1989. This has since founded the basis of smartphones and tablet PCs.

Both Apple and Microsoft are able to attract top talent. This top talent produces the creative ideas that go on to produce the innovative products that customers love. Microsoft has seen tablet PCs and smartphones come from its creative pool of talent. Yet it is Apple that has emerged as the now dominant force in the new consumer markets.

The result is clear to see: while Microsoft’s share price is 40% lower than it was in 2000, while Apple’s share price has risen from around $50 to over $500 during the same period.

The brick wall to innovative progress

You can have all the creativity and free thinking available to you, but unless you can transfer these ideas onto the shop floor and then through to customers in a meaningful way then innovation will stay on the drawing board.

Apple’s product evolution perfectly describes the innovative process. Innovation has its feet firmly in the shoes of small steps. They are experimental in nature and part of an innovative culture is the acceptance of failure.

The problem that organisations like Microsoft face is marrying up these small, experimental innovations – with their inevitable failures on route to big successes – with their need to generate revenue. And that is rarely, if ever, a fair fight.

Existing operations are large, established, and revenue and earnings generative. Managers of these operations have the clout to get their way: after all, without them the company would have no profits.

On the other hand, innovation is by its very nature risky with no guarantee of profit generation. Experimentation distracts focus from existing businesses.

The most vociferous of enemies to innovation are to be found inside an organisation.

Solving the internal conflict between innovation and the status quo

Clearly, Apple succeeded in doing what Microsoft has consistently failed to achieve: it has solved the riddle of partnering existing operations with an innovative culture. Steve Jobs was able to instil his own innovative thinking to the entirety of Apple’s business model. He constantly pushed his creatives to move forward, giving them ‘official permission’ to do so when he said things like:

‘I think if you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long. Just figure out what’s next.’

Building internal partnerships toward innovation

Innovative leaders and the leaders of existing operations first have to realise they need each other to exist. Without the engine of profit performance, innovation and experimentation cannot survive. Yet without product evolution, prompted by innovation, revenues and profits will quickly stagnate (or worse) as customers are attracted elsewhere.

Next, leaders must realise that conflict between self-interests is usual. Innovative leaders must realise that leaders of existing operations are likely to be resistant to change and innovation because they see it as disruptive to process and performance. Leaders of existing operations must realise that without innovation (of process and product) they will likely die on their feet.

The importance of leadership in managing change for innovation

With such internal conflicts, and the resistance to innovation an unequal battleground, senior management must take a senior role in not only establishing but then promoting an environment where innovation is embedded in the culture of the organisation.

It may be that leaders will have to get their hands dirty, becoming involved in the adjudication of low-level conflicts. While these conflicts maybe concentrated between the self-interests of the innovators and the existing business, it is likely, also, that as the innovation culture grows the number of bright ideas will explode. Trying to do too much at one time is as damaging as doing nothing.

Steve Jobs had the magic formula. He understood the need to produce profit today and innovate for profit tomorrow. Under his leadership, Apple focussed on one product launch at a time while Jobs himself stayed on top of the whole business.

In my next post, in terms of change management lessons I‘ll be looking at how you and your organisation can do what Jobs and Apple did: change the company from also-rans to market leaders by targeting change management to achieve your innovative goals.

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