Innovation is considered as one of the most important aspects of modern day businesses as this factor could results in core competence for the organization. In this context, the researcher is required to mention that innovation strategy facilitates to improve communication process and the operation process of an organization (Gawer and Cusumano, 2014) and therefore, managerial efficiency could also be changed due to change in innovation strategy within the organizational process. In this study, the researcher shall discuss the innovation process of Microsoft by considering the background of the company in the initial level. After this part, the innovation process of the technology giant shall be focused by the researcher.
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1.0 Background of the company
Microsoft has been set up by Bill Gates and Paul Allen in April, 1975. In this context, the researcher is also required to mention that the headquarters of the company is situated in Redmond, Washington. Although, the company has been founded in New Mexico, United States, the headquarters have been shifted in Redmond, Washington due to the reason of convenience in communication with the rest of the globe (Verganti, 2013). The company has started its operation in the global market after its introduction of MS Office and Windows (Pisano, 2015).
The researcher is to mention that the company has a complicated organizational structure as the organization operates in international context. Under the CEO of the company, CFO, CTO, Marketing and sales officer and Human resource officer operate. The above mentioned managers are responsible and accountable to the CEO Satya Nadella. Under the CFO Amy Hood, Chief Economist, treasurer, and accountant work. Like the same manner, the legal and the social welfare team also work under the CEO of the company.
Figure 1: Organizational structure of Microsoft
(Source: Facts About Microsoft | News Center. 2017)
From the above figure (Figure 1), the researcher could found that the company has special team for developing the technological innovation standard in the organizational process. For developing the worldwide operation and to encourage the innovation, the company operates human resource and technological innovation team.
The researcher is to mention that the basic product of Microsoft includes software and online services (Appendix 1). In this context, the researcher is to mention that the company serves its clients by assisting with the services of MS Office, SQL Servers, Windows Server, Visual Studio, and Skype. On the other hand, it is also required to mention that the company serves its services to the clients around the world. In this context, the researcher is to mention that the company has a web browser named “Microsoft Edge”, which is also used by corporate clients as well as the individual users. On the other hand, the company also serves the corporate clients by providing the facility of sharing data through “Share Point”. In this context, the researcher is to mention that the “Microsoft Edge” and the “Share Point” are generally designed for the corporate clients as these products of the company are highly sophisticated in terms of data safety. Therefore, these services of Microsoft are served with premium pricing (Facts About Microsoft | News Center. 2017). Along with the corporate clients, the company assists the individuals to develop systems for the personal use. In this regard, it is to mention that the company had also developed a search engine named “Bing”, which is required to be considered as one of the most utilized search engine for the business clients (Pisano, 2015). All of the services of the company have been operated globally; therefore, this company has headquarters in all countries in the world.
2.0 Innovation challenges and opportunities in the organization process of Microsoft
As discussed in the initial part of the study, the researcher is to mention that the company encourages innovation process in the internal organizational structure. On the other hand, the researcher is also required to state that the management of the company considers out sourcing for development in innovation in the internal organization. As stated by Rothaermel (2015), Microsoft operates in international platform, which facilitates the company in getting support from the talents all around the globe. As stated by Grant (2016), due to the internal operation of Microsoft, the company could get the service from the international talents. Therefore, the researcher is to identify the international skills and its access in the organizational structure in the company as the most impactful strength of the company. In this context, it is required to mention that as the cost of serving the clients are required to be lowered, the finance management department of the company could not allocate a larger fund for develop technologies and innovation.
Moreover, the access of the international skills is considered as the most crucial opportunity to the company as the company operates in the international platform. As opined by Rothaermel (2015), operation in international platform helps the international firms to enhance the innovation standard and technological progress. On the other hand, it is required to mention that the innovation process in the organizational level could help the managers to improve the operations in the global stage. As stated by West and Bogers (2014), minimization of the fund allocation in the research and development sector could affect Microsoft as the company is based the innovation and technology. On the other hand, it can be said that as the enhancement in the innovation process helps the technology oriented companies, Microsoft could face difficulties in retaining its existing market.
3.0 Effect of organizational and cultural barriers that enables innovation
Microsoft is considered as one of the largest MNCs in terms of revenue, profit, and operational places. In this context, it is required to mention that as the company operates in the international stage, the management faces the difficulty of lack in effective communication. As opined by Rothaermel (2015), lack in the communication process in the internal organization, MNCs could not achieve the expected goals in terms of technological development. In this contrary, West and Bogers (2014) argued that large firms face the problem of fear of being failure as these companies usually have some effective success failure parameter. In this context, it is to mention that this kind of fear works as a barrier in experiment and developing innovation in an organization. In the organizational structure of Microsoft, frequent change in the workplace is also required to be considered as a barrier that affects the employees to make innovations. Therefore, it can be said that organizational process and decision making approaches in the internal organization could results in declining trend in the innovation in an sophisticated organization like Microsoft.
On the other hand, the decentralization of power is required to be considered as a positive side of the management of Microsoft that enables the company in innovating new ideas and technologies. As cited by Rothaermel (2015), Microsoft enables the employees to make innovation by considering the issues which are country specific. As the company authorizes the nation specific headquarters to make operations and to develop the innovation strategies, regional management founds could apply control over making innovation strategies.
4.0 Strengths and weaknesses in organization’s innovation management structure
In the organizational structure of Microsoft, the issue of innovation and the creativity is considered as the most crucial issue of the management process. As cited by Gawer and Cusumano (2014), decentralized organization process helps the country specific and regional managers to put effort to enhance innovation in the organizational process. Therefore, the researcher could mention that the company is to consider its decentralization policy as strength of the organization. On the other hand, as the company has a good amount in the reserve fund and accumulated profit, the company could make acquisition of the companies or systems in the field in which the company operates (West and Bogers, 2014). In this context, the researcher is to mention that acquisition of Skype is an example of such acquisition that helps the company to acquire new market. Therefore, in innovation through new acquisition is also to be considered as strength of the company. Moreover, the researcher is required to state that the company develops system rather than making them purchase. In this context, Gawer and Cusumano (2014) opined that from developing the software to the manufacture the mobile sets and other gadgets is to be considered as a innovative scope for the engineers of the organization. This kind of scope creation by the management of Microsoft is also required to be considered as strength of the company as this factor helps the regional managers to put effort on the issues of innovating software as well as hardware.
Microsoft operates its management by considering the issues, which are country specific as the organizational structure of the company is decentralized. In this context, Rothaermel (2015) opined that decentralization strategy could negatively affect the innovation process as this strategy could demotivate the software and hardware engineers to make innovation or to show the creativity. Therefore, this strategy of the management is required to be considered as the weakness of the organizational process of the company. On the other hand, the researcher is required to mention that the saturation in the innovation and technological development process could also be considered as a weakness of Microsoft. As stated by Gawer and Cusumano (2014), Microsoft has not implemented new innovation strategies and the company is now focusing on acquiring large hardware and software manufacturer. Therefore, the saturation in the innovation standard is required to be identified as a weakness of the company.
5.0 Process of innovating new ideas in the organization
Innovation is a continuous process and therefore, Microsoft is required to set a certain innovation and creativity standard to enhance the innovations in the organizational process. As opined by West and Bogers (2014), the technological advancement is required to be made in the multinational companies by adopting small goals within the organization. In this context, the researcher is to mention that setting short term and long term goals is to be considered as the preliminary factor of innovation.
Figure 2: Innovation creation cycle
(Source: West and Bogers, 2014)
As cited by Hervas-Oliver et al. (2014), innovation is to be considered as a result of learning and therefore, this factor is required to be considered as the base of innovation process. In this context, Gershman (2013) argued that possibility of making the innovation marketable is to be considered as an important factor for making new innovation in the organization level. In this context, it is to mention that the innovation process in Microsoft is to consider the marketability factor and the learning form the past experiences. Moreover, the researcher is required to state that the management is required to use the knowledge as the base of the innovation process within the business.
Figure 3: Innovation process
(Source: West and Bogers, 2014)
On the other hand, Saemundsson and Candi (2014) stated that the research and development team of the company is required to generate ideas as the base of innovation. After this stage, the employees of the organization are required to define the ideas in terms of opportunity strategy and critical discussion over the strategy. The feasibility study is also to be considered as an important factor for making innovation as this factor is used as the measurement tool of an innovation process (Figure 3). After the feasibility study, the researcher is required to mention that development of the idea by using statistical methods are required to be considered as an important aspect of the innovation process. As cited by Davenport (2013), controlling is also an crucial factor of this theory of innovation as without controlling, the ideas could be spoiled because of cost of the innovation and the managerial skills.
In this regard, the researcher is to mention that the creativity process in the culture of Microsoft depends upon the internal business practice of the company as this organization facilitates the employees to make innovation. In this context, the researcher is to mention that the skill development activities of the company enhance the skills of the junior researchers and give rise to innovation. On the other hand, the company has formed a committee for monitoring the creative activities within the organization process, which is also required to be considered as an example of creativity culture within the organization (Dadfar et al. 2013).
6.0 Effectiveness of current approach
From the above information, the researcher is required to mention that Microsoft is to set up a short term plan in order to develop new innovations in the organization level. As the company is based on the innovation strategies and technologies, the management of the company is to make focus on the skill development strategies around the globe. As stated by Drucker (2014),for developing skill around the world, the management of Microsoft is required to allocate more funds for the talent acquisition. The current decentralization strategy of the company is required to be judged to improve the present scenario of the company. As the company has a large quantity of accumulated profits, Microsoft is to focus on research activities and feasibility study. In this context, the researcher is to mention that the company’s policy to appreciate the researchers in the innovation process is a competitive advantage as this kind of investment helps the company in making future profits through creation of intangible assets. On the other hand, the corporate acquisitions through the accumulated profits are also required to be considered as an important competitive advantage of the company in adding innovation in the organizational process.
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7.0 Examples of addressing the feasibility thinking
Microsoft faces innovation problem in the fields of financing and strategic decision making as the company is managed in decentralized manner. In this context, the researcher could give example of acquiring of Nokia by Microsoft, in which the company had extended its product length. By making this acquisition, Microsoft has made its operations in hardware field along with its software development field (Dadfar et al. 2013). On the other side, acquisition of Skype is also to be considered as an example of forward merger, which has created scope for creating innovation within the organization level. The management of Microsoft is required to create idea for the purpose of innovation. For example, the company could think about the creation of gadgets with the Windows operating system.
8.0 Recommendation for developing innovation strategy
In developing strategic plans forf the company, the researchger is to mention that the company is to form a special committee, which shall be responsible for acquiring new talents from all over the world. In this regard, it is also suggested that the company could appreciate the innovation process in an organization by promoting the persons involved in creativity and innovation. Therefore, it is to mention that the company is required develop the position of creativity and innovation by internal factors as well as the globalization as an external ways through talent hunt programs. In this context, the researcher is to recommend to use the innovation curve in developing innovation strategies as this curve facilitates to identify the strongest base of customers of a company (Dadfar et al. 2013).In this context, the researcher is to mention that change is required to be made in the internal organization process to enhance the creativity standard. As the present scenario of the company is required to be changed in disrupted manner, the researcher is recommend to form a separate team for develop a base of customers in early majority as the company aims to achieve market in the initial stage of marketing a product.
Figure 4: Innovation curve
(Source: Dadfar et al. 2013)
If the discussion is to be made on the strategic plantings that the company is to made, the researcher is to mention that the company is to focus on research and development activities by making optimum investment. As stated by Drucker (2014), research and development activities helps in creating intangible assets, which helps the technology oriented companies to get the competitive advantage in the market.
In the study, the researcher has compared and contrasted the theories of creativity and innovation. In the initial part of this study, the researcher has found that Microsoft is the most successful software developer in terms of revenue generation and the number of customers. The decentralization strategy is to be selected as the key factor that is to be considered as the most impactful challenge in the modern context. On the other hand, the international operation has been considered as the most important opportunity for the company to access the skills of the international students.
References and bibliography
- Dadfar, H., Dahlgaard, J.J., Brege, S. and Alamirhoor, A., (2013). Linkage between organisational innovation capability, product platform development and performance: The case of pharmaceutical small and medium enterprises in Iran.Total Quality Management & Business Excellence,24(7-8), pp.819-834.
- Davenport, T.H., (2013).Process innovation: reengineering work through information technology. Harvard Business Press.
- Facts About Microsoft | News Center. (2017).News.microsoft.com. Retrieved 21 February 2017, from https://news.microsoft.com/facts-about-microsoft/#sm.0001kii0zwfbacw5xxr18to4lcokd#gmzfTJsJvfulEs5d.97
- Gawer, A. and Cusumano, M.A., (2014). Industry platforms and ecosystem innovation.Journal of Product Innovation Management,31(3), pp.417-433.
- Gawer, A. and Cusumano, M.A., (2014). Industry platforms and ecosystem innovation.Journal of Product Innovation Management,31(3), pp.417-433.
- Gershman, M., (2013). Innovation development programmes for the state-owned companies: first results.Foresight-Russia,7(1), pp.28-43.
- Grant, R.M., (2016).Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
- Hervas-Oliver, J.L., Sempere-Ripoll, F. and Boronat-Moll, C., (2014). Process innovation strategy in SMEs, organizational innovation and performance: a misleading debate?.Small Business Economics,43(4), pp.873-886.
- Pisano, G.P., (2015). You need an innovation strategy.Harvard Business Review,93(6), pp.44-54.
- Rothaermel, F.T., (2015).Strategic management. New York, NY: McGraw-Hill.