Startups know what giants don’t: work tech is core to high performance, now

It may seem like a conjurer’s trick, holding up the corporate giant Microsoft, which announced record numbers that nevertheless reveal shrinking margins, and the nimble, focused Intercom, that last week raised $23 million in an investment round, propelling the social CRM start-up ahead.


Work in the highest performing companies, and by the highest performers in other companies, increasingly has web- and mobile-centric work tech at its core. High performance today is predicated on working socially in fluid, nimble, and self-organized networks, and these are sparked and sustained by social tools that allow high degrees of cooperation between highly autonomous individuals connected through software-enabled work graphs.

As I wrote last week, Microsoft is running into decreased margins for its consumer devices — Xbox and Surface — and didn’t have much to say about its smartphone sales, which are probably disappointing (see Microsoft posts record Q2 results, and beats expectations, but no new CEO).

Likewise, the third company in our tale of two cities is Nokia, whose numbers for the holiday period do not give too much confidence in that regard, either. Microsoft is acquiring Nokia’s handheld unit for  $7.4 billion. Sales fell 29% — $3.5 billion — in the fourth quarter, losing €201 million. Nokia smartphones were down 7%, only 8.2 million units sold, and this in what is usually a higher sale period because of the holidays.

Consumers are staying away in droves from Windows phones. There are just not enough apps, and the platform is problematic.

But to zoom back out to the big picture, you have to wonder: why is Microsoft pouring so much time and energy into building what are likely to be consumer devices with increasingly low margins, faced with competitors like Apple and Samsung? Especially when the other side of Microsoft’s business is faring well. The enterprise software side of Microsoft is growing faster than the market, and is the source of the overwhelming majority of Microsoft’s profits.

Meanwhile, we may be approaching a time of disruption in that marketplace, and I wonder if Microsoft is going to be undermined by an inflection point. A tectonic shift in business is under way, right in front of us, and Microsoft — and the other titans of enterprise solutions — may not be prepared for it.

Work in the highest performing companies, and by the highest performers in other companies, increasingly has web- and mobile-centric work tech at its core. High performance today is predicated on working socially in fluid, nimble, and self-organized networks, and these are sparked and sustained by social tools that allow high degrees of cooperation between highly autonomous individuals connected through software-enabled work graphs.

This stands in distinction to the immediate past, and the techniques used in less productive companies or less productive individuals in high performing companies. These individuals and organizations think of work tech as an adjunct to work, a nice-to-have but ultimately non-essential apparatus than only — at the best — speeds up other approaches to communication, coordination, and cooperation. They operate as if email and phones are really all that’s needed, and the rest is — at best — frosting on the cake.


The existing enterprise software giants may think they are operating in line with these new realities, but they aren’t. That’s why Intercom did not come out of Microsoft Research, although it might have if Microsoft wasn’t so busy trying to win the smartphone war of the late ’00s, instead of the war it finds itself in but doesn’t seem to see.

And companies like Intercom are based on accepting — and accelerating — that fact. Leaving aside the details of Intercom’s implementation, it is squarely based on the premise that companies today cannot effectively scale customer contact and social sales without technology specifically designed to do so. It is not paving a cowpath of old-school telephone calls and emails from a ’00s sales professional staying in contact with a database of leads and clients. It is taking a different tack entirely, building its work tech on a model of tooled sociality, operating at a scale that a team of sales people could not emulate.

My real point, again, is neither the particulars of the circumstances for Microsoft (and its soon-to-be-division, Nokia) or Intercom. My point is these tectonic plates shifting below our feet. The existing enterprise software giants may think they are operating in line with these new realities, but they aren’t. That’s why Intercom did not come out of Microsoft Research, although it might have if Microsoft wasn’t so busy trying to win the smartphone war of the late ’00s, instead of the war it finds itself in but doesn’t seem to see.

Relevant Analyst
Stowe Boyd

Stowe Boyd

Lead analyst, future of work Gigaom Research and stoweboyd.com

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