Profiles in Innovation?
This is the first of the award finalists profiles. Don't worry. I'm not doing Microsoft first because they are the biggest - though they are. But they are the first in the alphabet lineup. There is curiously no finalist in the first half of the alphabet, so if I were Google I'd seriously consider a name change. TECHNICALLY, Zoho is a division of AdventNet so you could make the case for something here, but Zoho is the finalist, not AdventNet, so even that grey area doesn't get them first dibs.
Why Microsoft? Ecosystems & Environments, Not Products & Services
Oddly, this is one that you couldn't see coming, I bet.
Nor could I.
A year ago, I was admonishing Microsoft for not getting it....hell, less than a year ago...but I have to tell you, this monster sized company is getting it now. That doesn't mean that they are all of a sudden nimble and quick nor does it mean that one arm knows what the other is doing nor does it mean that they are homering (ahhhh, baseball is back) on every product, but their strategy has been dramatically transformed from a business-focused desktop strategy to a customer-focused 2.0 web based strategy and they are tying it all together.
They're leading the charge in building ecosystems and environments, not dealing in products and services.
When you buy Vista, for example, you're buying an operating system, for sure, but you're also buying a foundation for a consumer-focused media environment or a business driven ecosystem, depending on your chosen Vista flavor. Ultimately, though it ties together services/products/experiences - both visceral and intellectual.
But what does this have to do with CRM?
Let's look at that too - but just for a second.
Microsoft CRM - Only a Piece of the Puzzle
Microsoft Dynamics CRM 3.0 was/is a good product, but not a great one. Microsoft Dynamics CRM 4.0 is going to be a multitenant version that's due for arrival in June 2007. Better late than never. But even late, that can and will increase the level of Microsoft's impact in the CRM market.
And with the architecture of a multitenant CRM, based on web services - as they normally are, the 4.0 (like the O.C.?) will be better suited (architecturally) for integrating all of the initiatives that I'm getting to.
Which touches the tip of the iceberg of what is Microsoft's master plan.
What I think that Microsoft is doing, if the case, will be HUGE! It has the potential to have a greater dramatic impact than Gone With The Wind had on the movie industry in the 30s. Or that Microsoft had with the initial release of Windows.
OK. What DO You Mean, Rhett? (There's a Hidden Joke in This Headline - 2 Actually)
Okay. Let's begin.
What's the difference between...
Products/Services v. Environments/Ecosystems
The former Is the tired business model that dominated the 20th Century because of its manufacturing and generic mass production heritage. It's core idea of value is that it resides in the creation of those products and services.
How quaint. But as customers become the increasingly dominant force (maybe we'll give them their own species or at least gender....), environments and ecosystems begin to rule the planet.
By creating environments and ecosystems, the business model shifts.
From the world of the corporation to the world of the customer.
From separation of business from personal to the unification of the two - at least at an emotional and intellectual value.
From value residing in the products produced and the services created to the customer themselves.
From looking at the return at investment to seeing a return on customer.
From a business model where the company was the producer of goods and services to a model where the company is an aggregator of the necessary components to optimize a customer's individual experience.
To a recognition that it isn't a work life balance but a work-life integration - and the freedom to choose how that will be-achieved-by the employee (look at the Best Buy model). In other words from a business professional/consumer separation to a single"prosumer" model. In fact this is the beauty of what I think is Microsoft's Vista strategy.
It you were to view Vista as strictly an operating system well, I use it, enjoy it, but its got a lot of flaws technically and tactically. Technically, I won't go into it. Tactically, having 5 different versions seems a bit bizarre and has freaked out the consumer world a bit.
But if you see it as the platform. to create an environment for the prosumer... well, kids, folks, prosumers among you, that's another story.
The use of Vista as the embryonic prosumer platform for a highly personalized individual environment- or what I've called a set of personal value chains contained in an ecosystem -is only a small part of the Microsoft strategy-if it truly is a strategy-and not just wild foray emanating from my fevered mind.
Take a look, for example at Microsoft's most recent acquisition reported in the NY Times on Monday February 26. They acquired Medstory which applies artificial intelligence to medical and health info in medical journals, government docs and the unstructured Internet through a sophisticated search engine.
Why in hell would Microsoft do that? Well, a little math - addition works here - is in order. Last year they purchased Azyxxi -that's either a software company or Superman's old nemesis - oh... it's software...that retrieves and displays patient information from multiple sources including documents, xrays, MRIs, and ultrasound images.
Microsoft did this? Huh?
The article explains the "huh?" in two places So patience will be rewarded, bro's and sisters:
"The Med story purchase," said Peter Newpert, vice-president for health strategy at Microsoft, "was a first step in a broader company strategy to assemble technologies that would improve the consumer experience in health care."
"…these companies and others are seeking ways to build businesses on the Internet that profit from what is called consumer-driven health care. The notion is that shifts in demographics, economics, technology and policy will inevitably mean that individuals will want to, and be forced to, make more health care decisions themselves... Aging baby boomers, accustomed to personal choice and to technology, tend to want a say in their treatment decisions."
Does it makes some sense for Microsoft to acquire those companies then?
Actually, not really, because why health care? They already have XBox 360, Windows Vista, MSN Search, Office 2007, CRM Dynamics 4.0, ad infinitum and have penetrated both the personal and the work side of life. Do they need more than that?
Yes, but to see that, kick it up a notch.
It makes perfect sense if you are trying to create the all-encompassing prosumer environment because health care addresses key portions of that personalized value chain - the individual's approach to gaining control over a hopefully rich life. But what about ecosystems? Environment seems to be covered. Microsoft has understood the business value of ecosystems for a long while. With all their faults, this wasn't one of them. The best reflection of their ideas around building ecosystems historically has been their partner network, Think of these two numbers:
775,000 partners globally
95% of total revenue from partners
While those are numbers that could stop Tony Stewart cold in Lap 50 of the Daytona 500, its actually not enough to understand how the ecosystems work in a contemporary frame. The partner ecosystem is a true ecosystem-not just a channel. Microsoft understands they 1. can't do everything to meet the prosumer's imperative or even the business and consumer's separate demands to provide even an adequate customer experience; and 2. can't acquire enough companies to do it without even them running out of money. So they built, after all kinds of permutations and glitches an extraordinary partner-driven ecosystem that covers what is perhaps every vertical and horizontal facet of an individual's life,
Okay - Interlude
Before all you 1984-readers and privacy paranoids get up into Microsoft's face about controlling your life and fulminations about the implications on privacy of this strategy, take a deep breath here. Remember a few things
Microsoft provides tools - not ankle shackles, Technology tools.
YOU CONTROL YOUR LIFE, no one else. Not even Bill Gates....
Use reason, not hyperventilation
Okay back to the strategy... the partner ecosystem was built with a lot of problems along the way. At one point, Microsoft had 54 partner programs, they've consolidated to a single program that is chock full of incentives for partners including Microsoft handing over business. The way that they focus their partner program is not only the revenue driver for the company but also each partner fits into an appropriate place in the overall ecosystem that they are utilizing to provide the level of personalized experience that each of us craves.
They also are quite generous with code so there is a large community of developers Dot Netting away and that can only bear fruit for Microsoft's plan to create that unique environment - because they have outside innovators innovating toward that end.
The Only Downside To Fear Is Microsoft Itself
So what could prevent them from having a HUGE impact on marketplace and life in general over the next year?
Their downside is that while they have the perspective of prosumer, they are still organized around consumer and enterprise as entirely separate operations. That might not be so bad, but the sad part is that one hand has no idea what the other is doing and in the case of Microsoft even the left arm doesn't know what the left hand is doing nor does the left hand know what each finger on the left hand is doing. They don't talk to each other. So the consumer experience side doesn't talk to the customer relationship management side. The CRM side doesn't talk to accounting. Ad nauseum.
But they are big boys and they will probably reorganize their way around that. They have highly capable people in the right places doing the right things and keeping life interesting.
The potential for impact beats anything a comet hitting the planet might do. In a much happier way.
Which is way Microsoft is the first of the 2007 Steppin' Out Awards Vendor Finalists to be profiled here. .