Nadella’s Curse: He has a General Motors and needs a Tesla

If you were going to create a car company today, who would you look to for inspiration?

General Motors? The world beater of the 20th Century, that ‘led global vehicle sales for 77 consecutive years from 1931 to 2007′ (Wikipedia), and which is still one of the world’s largest car makers? The company makes cars in 37 countries under ten brands, some of which I had never heard of, like Wuling, Baojun, Jie Fang, along with the more familiar Chevrolet, Buick, Cadillac, Opel, and Vauxhall lines.

This sprawling mega-corporation has no central design vision uniting it’s efforts, and financial operations are the aspect of the company that actually holds it all together: a vast holding company sitting atop separate businesses.

At the other extreme is Tesla Motors, an America company founded 10 years ago that manufacture electric vehicles, founded by Elon Musk, one of the Paypal mafia and a prodigious inventor. He is also the founder of SpaceX, the commercial space transport company.

How good is the Tesla S? It won the 2013 “Motor Trend Car of the Year”, the 2013 “World Green Car”, Automobile Magazine’s 2013 “Car of the Year”, and Time Magazine Best 25 Inventions of the Year 2012 award. Consumer Reports calls the Tesla S ‘the best car ever tested’, receiving 99 out of 100 points.

The company showed its first profits in 2013.

You can argue that both of these extremes represent worthy achievements. However, one anecdote sheds light on why, today, at a time of great change, Tesla stands as a serious threat to GM and other car companies: a disruptor.

via Wikipedia

General Motors’ then-Vice Chairman Robert Lutz said in 2007 that the Tesla Roadster inspired him to push GM to develop the Chevrolet Volt, a plug-in hybrid sedan. In an August 2009 edition of The New Yorker, Lutz was quoted as saying, “All the geniuses here at General Motors kept saying lithium-ion technology is 10 years away, and Toyota agreed with us – and boom, along comes Tesla. So I said, ‘How come some tiny little California startup, run by guys who know nothing about the car business, can do this, and we can’t?’ That was the crowbar that helped break up the log jam.”

This then, is Satya Nadella’s Curse: he has a Microsoft that is structured like a General Motors — and with the soul and spirit of a holding company — and he really needs a Tesla to complete in the 21st century.

As I said last summer about Ballmer’s reorganization, regarding the idea that no one seemed to own ‘social’ at Microsoft,

Yes, I know that Ballmer, Qi LU, and anyone else in authority at Microsoft will have to publicly stick to the party line — “Windows will continue to be a dominant operating platform for decades to come, we are turning the corner with Microsoft smartphones and tablets, yada yada yada” — but the numbers say different. Ballmer’s memo only mentioned PC four times, and mostly in retrospect, phone only three, and Internet Explorer zero. (I noticed that Surface’s price was dropped today by around $100. Too little, too late?)

However, behind the scenes, Qi Lu and his colleagues must be planning for a transformation to a very different operating model: a leading enterprise software company, integrating a collection of tools necessary for the functioning of business in the past decade, right up to the business of today. But the battle now is to contrive the software platform for the emergent company of next year, and the decade that follows. Qi Lu, with the people at Yammer, Office 365, Sharepoint, Exchange, and Skype, will have to connect the dots in a way that transitions to a very different tomorrow while delivering value at every today along the way.

Microsoft’s battle for the future is not other established mainline enterprise software players, like IBM, Oracle, and SAP, who are increasingly being sidelined into narrow functional areas — like manufacturing, and finance — or deriving more of their revenues from consulting services. The battle for the future is with Google, to a lesser extent Apple, and perhaps the rapid rise of upstart start-ups, like Dropbox. And in the weeks, months, and years to come, we will see that multidimensional, multiplayer game play on. This reorganization is a prelude, and not a finale.

To enlarge the discussion: Microsoft is the sort of place where the creative vision of an Elon Musk or a Jony Ive does not arise. It’s a collection of fiefdoms — Buick, Cadillac, Baojun — each pursuing market goals and design theories.

A week after assuming the CEO spot at Microsoft, I wonder if Nadella is thinking about how to get rid of some of these product lines, and forge the rest into a Tesla-like enterprise software and services business? Does he have a Ive in the wings who has a vision of what the family of products would be?

John Gruber thinks Nadella’s background in the Microsoft Server division positions him to be able to turn the corner:

Nadella’s Server division is the one part of Microsoft that seems designed for, and part of, the post-iOS, post-Android state of the industry. A division pushing toward the future, not the past.

[...]

Cloud computing is one potential path forward. The cloud is nascent, like the PC industry of 1980. In 30 years we’ll look back at our networked infrastructure of today and laugh, wondering how we got a damn thing done. The world is in need of high-quality, reliable, developer-friendly, trustworthy, privacy-guarding cloud computing platforms. Apple and Google each have glaring (and glaringly different) holes among that list of adjectives.

The three companies that really understand cloud-at-scale are Amazon, Google, and Microsoft (maybe IBM, too). So will Nadella pursue this new world, connecting the devices here in our hands, to the apps running there in the cloud, and connecting us, everywhere, through the information cascading across the world’s Internet nervous system? Can Microsoft become that foundational enterprise player in this here, there, everywhere world? Can he break this curse?

—–

Update: 9:45am ET, 10 Feb 2014 — An hour after writing this post I was reading What the Heck is Happening to Windows by Paul Thurrott, and he used the same characterization of Microsoft as a General Motors, although in his case he’s just talking about Windows and Office apps.

Windows 8.1 Update 1 again proves that design by committee never works, and that by not strictly adhering to a singular product vision, the solution that is extruded out to customers on the other side is messy, convoluted, and compromised. Say what you will about Sinofsky, but Windows 8 was his baby. I can assure you that no one in Microsoft is particularly eager to claim this mess as their own. And Sinofsky must be beside himself with rage at what they’ve done to destroy what he created. More isn’t always better. Sometimes, it’s just … more.

Ugh.

I do have some advice for the Windows team. And it’s as obvious as it is necessary.

I always accepted the messy bits of Windows in the past because the system addressed such a large audience. But given the way things are going, Windows should evolve into a system that is laser targeted to the customers who will in fact continue using it regularly. That’s mostly business users, but even when you look at the consumers who will use Windows, that usage is almost entirely productivity related. Windows should focus on that. On getting work done. On an audience of doers. Job one should be productivity.

Everyone likes to compare Apple or the Mac to BMW and, you know what? Fair enough, and if that’s true then Windows is obviously GM, the overly-big messy GM of a decade ago. But Microsoft can’t afford for Windows to be like GM anymore—just like GM couldn’t, for whatever that’s worth. Maybe Windows needs to be more like GMC, the part of GM that only makes trucks (and truck-based SUVs). After all, while many people choose to use a truck for basic transportation, they’re really designed and optimized for work. You know, as should be Windows.

You can’t please everybody, Microsoft. So stop trying. It’s time to double down on the people who actually use your products, not some mythical group of consumers who will never stop using their simpler Android and iOS devices just because you wish they would.

Relevant Analyst
Stowe Boyd

Stowe Boyd

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

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