How Microsoft's Lay Off Memo Should Have Looked Like

[solman]

Since taking over office, I have realized that we are fat and cannot run faster as Apple or Google. So I have resorted to an old American business archetype to downsize our workforce. I know downsizing, is often characterized by a strong focus on the organisation, self-preservation and a laissez-faire view that diminishes the importance of the individual worker. But let’s face it, whoever let anyone believe that a sound employer-employee relationship implies a more long term commitment where strong corporate cultures are encouraged and loyalty of employees expected lied. Of course, I encourage employees to view the future optimistically and take on long term financial commitments and employers provide insurance and benefits trusting that the organisation would thrive, until the inevitable where the employment relationship is terminable. We are at this cross roads now.

To answer the question as to 'Why are we downsizing?' Well, a study has been done to answer this sort of question and it established that 6% of companies cut jobs due to short-term business downturns, 44% laid off in anticipation of an economic downturn, 35% laid off to make better utilization of staff, 20% laid off due to automation or other new technology and 19% laid off to transfer work to other plants or abroad, (Berry, 1995).Though this was 20 Years ago the findings have remained applicable over the years but not to us.Our biggest driver of downsizing today is competition and the need for an organisation to remain competitive.

In fact, truth be told Microsoft's downsizing is a preference not a need. Shortly, the announcement that we will downsize 18,000 of our employees, our shares went up 1% to $44.53 on the Nasdaq Stock Market. The company’s revenue is growing, and analysts project the company generated $22.5 billion of net income in the year ended June 30. Furthermore, the company's stock has outperformed market indexes since i took over, and the recent turnaround in personal-computer sales is likely to prove a financial windfall for the company. The company's move to downsize therefore has very little to do with the reasons company's downsized back in the 1990's.Neither is it an alarm that Microsoft is in trouble; quite the opposite. Microsoft remains a very profitable company with billions in the bank, profitability is expected to rise too.

I summarize my reasons to downsize in three words; Apple, Google and Others. Let me explain;

We need to be agile than Apple and Google

We need make Microsoft relevant in fast-growing technology areas including mobile computing. There is fear the company's empire in corporate software could be at risk if we don't act decisively. Hence, my 'Mobile First, Cloud First' strategy? is the company's first step towards remaining relevant, the future is mobile and cloud. Investors and even some employees have said that we have grown too fat in recent years to compete with rivals like Google, Apple Inc. That is why we need to "flatten the organization and develop leaner business processes" what I am really saying is that we need to hit the gym.

We have low employee to turnover ratios than Apple and Google

The Full Time employee of Microsoft is reported as 99,000 (127,104,March 2014 if vendors and contract workers are included),while that of Google is 48,000-52,069 and Apple 80,000.The staff to turnover rations list Microsoft at US$ 77.85 billion,(2013) while that of Apple is US$ 170.91 billion,(2013) and Google 52,069,(Q2 2014) is US$ 59.825 billion,(2013).According to S&P Capital IQ the profit per employee for Microsoft is $220,800,Google is $270,500 while that of Apple is $ 461,200.Furthermore the revenue per employee number for Microsoft is $786,400 while that of Google is $1,252,700 and Apple is $ 2,128,400.From these figures it is easy to see why Microsoft would resort to letting go quite a number of their staff complement.

We have spent more in acquisitions than Apple and Google

Over the years we have acquired 146 companies with the largest being Skype and Nokia, Apples has acquired 59 companies with the latest and largest acquisition being that of Beats Electronics and Google has acquired over 150 companies, with its largest acquisition being the purchase of Motorola Mobility, a mobile device manufacturing company. Overall, we have spent over $20 billion in key acquisitions but if you look at the total spend it is more than Google and Apple yet we have not had much success. Now it is time to consolidate, re-align and recoup our investments. We all now have mobile devices, the strategy now lies on who will conquer the cloud.

We need to restore our identity

Since Microsoft was founded in April 4th 1975 as a software company we seem to have lost track of our core business. Since our establishment we have diversified into the video game industry with the Xbox, the Xbox 360 as well as into the consumer electronics and digital services market with Zune, MSN and the Windows Phone OS, if you think about it we are slowly losing our identity as a Software company and with Open Source gaining traction with Linux Systems this part of us will be lost. None the less, I want to correct this and say we are now a productivity and platform company just as Apple has always been an everyday electronics company and Google an information company. Though I must say that since Google has entered the scene in September 4, 1998 they have been 'disruptive' to say the least, from online advertising, cloud applications, Google Glass, self-driving autos, to acquiring some seven robotics companies or some other product, i mean i don't know what the heck these young lads are smocking but we have to keep up. With all this you can only conclude that Microsoft is not only defining its strategy but saving or redefining its identity. We need to be consistent as Apple has with its identity as a hardware and digital distribution company since April 1, 1976,Apple Inc. when it was birthed into the world.

We need to learn that smart people are IP just as good as patents

A brief look at Apple Inc. products released to the market the Mac, iPod, iPhone, iPad, iPad Mini, Apple TV,OS X, iLife, iWork, iOS all have been developed through in house or acquired talent with its ethos of developing everyday products at the core. This cannot be said of neither Microsoft nor Google when one looks at the product development journeys of the company's. Take a look at Microsoft for example, we have about 9 products which have either been developed by us, Integrated or flat out bought while Google has about 6 product which include; Android, Social, Chrome, YouTube, search and ads and Nexus for both Microsoft and Google not all of the products have been the brainchild of innovation and sweat of a talented in house teams.. It's like a lazy person being asked to do a hard job.

Thank you for your support as we start to take steps forward in competing with Google and Apple.

[puli_keka]

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