How Microsoft Changed Its Culture

Microsoft is the world’s leading producer of computer operating systems and application software for IBM PC compatible computers. It also has a strong position in the office software suite market and internet search with Bing, as well as mixed reality (HoloLens), cloud computing (Azure) and the development tools market with Visual Studio.

In the 1980s, Microsoft expanded its lead in PC operating system software with MS-DOS, a graphical user interface that was widely licensed by manufacturers of PCs. This overtook CP/M, a text-based operating system that had been in use since the first personal computers were introduced in 1981, and IBM OS/2, which was more expensive to license. In the 1990s, Microsoft deepened its market dominance by integrating MS-DOS with Windows, which was more user friendly and competitive in price with Apple’s Macintosh operating system. In addition, the company dominated productivity software by offering word processing and spreadsheet programs that were easier to use than rivals from Lotus and WordPerfect.

The company also acquired and developed many popular consumer applications such as Paint, Excel and Visio, which became the standard for business charts and diagrams that adhered to global standards. These programs were offered in the Office software suite at a onetime cost or for a monthly fee as part of the cloud-based Office 365 suite.

But the company had a problem: It had become too large to innovate effectively. It was slow to respond to the rise of web-based services like email and chat, and it was often overshadowed by start-ups like Google.

To change its culture, Microsoft brought in a new CEO, Satya Nadella, who began by encouraging employees to focus on customer needs and fostering a culture of experimentation. He also pushed product developers to embrace open source technologies and to make use of data to improve the quality of code review.

Nadella’s approach has accelerated the pace of innovation at the company. It has refocused Microsoft’s product line on cloud-based software that is connected online, and it has shifted the focus of the organization from sales to customer satisfaction. For example, rather than measuring products by sales, a lagging indicator in fast-moving markets, the company now measures them by user engagement and by how many of their features people actually use.

As a result, employees report that the company’s culture has improved significantly in recent years. In surveys conducted by the employee satisfaction firm CareerBliss, Microsoft employees commonly ranked the company highly for Company Culture, Growth Opportunities, People You Work With and Person You Work For, while rating the culture at other tech companies lower. However, it’s too early to tell if the new approach at Microsoft will sustain its long-term success. The company is facing serious competition from competitors like Google and Amazon in the online marketplace, and it will have to continue embracing innovation if it wants to retain its edge. But if it can’t keep up, its once dominant position could fade away in the coming decades.

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