Lessons For Up-Starts & Start-ups: How Old Companies Like Microsoft & IBM Continue to Win.

Microsoft topped $500Bn in market cap 17 years after if crested that height. Pretty impressive to think that a 40-year-old tech company like Microsoft, competing on technology advancements since it went public in 1986, is still growing and competing with the best of them. This feat of revival and growth is even more remarkable considering that 9 out of Fortune 500 companies from 1955 have either died or merged with another company and that half of the S&P 500 will be replaced over the next 10 years. This Schumpterian creative destruction has consumed a lot of the companies that went public in the same year as Microsoft; including Comverse (acquired by Verint, market cap $2.3Bn) and Harman International, two companies that did well but never quite captured the market like Microsoft.

The same applies to IBM. The company is still competing with younger and flashier tech companies like Google and Apple (respectively) in the march towards Artificial Intelligence as a core part of its future of business. In 2015, if IBM’s software division were a standalone company, it would have been the 3rd largest of its kind. In 2014, before the noise of Artificial Intelligence (AI) became as deafening as it is now, Ginni Rometty (IBM’s CEO) committed $1Bn to AI under the Waston brand. IBM is 105 years old!

How do these old companies maintain their competitive edge and winning ways?

In tandem with technological landscape changes, one thing IBM has managed to do (and I discuss this in the ‘how’ below) is maintain clarity about ‘who IBM is’, ‘what IBM does’ and ‘whom IBM does it for’.

So what do these companies do differently from upstarts and start-ups to stay relevant? The common thread through these old, but constantly evolving and innovative companies, is their relentless focus on what the customer wants and ability to find cutting edge technology to serve that customer need. This focus on the customer is channelled by doing 3 things:

  1. Leading with an eye to the future
  2. A clear strategic direction
  3. Every employee does sales and marketing

Let’s dive in…

  1. These companies have a leader with a clear vision for the future of the company: Satya Nadella brought a renewed clarity to what Microsoft is. Everyone agrees Microsoft had stalled under the co-founder (Steve Ballmer) due to his reliance on what had always worked at the expense of the future. Satya Nadella changed that. Visionary leaders focus on the future.
  2. A clear strategy towards achieving the vision.The visionary leaders in these organizations develop a future cast for where their industry is going and also a strategic path towards achieving this. In some cases, breaking away from the old business model makes a company successful. Ginni Rometty made a big bet on an AI future before some of her nimbler competitors had gotten their strategy together. Google is now AI first.
  3. Every employee is in marketing and sales: Another way these companies excel is by the types of employees they hire, the passion they show and (very importantly) the knowledge that the employees are provided towards achieving the vision set by the leader. These companies hire or develop employees who only require a map. And they have what it takes to get to this Promised Land.

Using strategic narratives to stay innovative

  1. The CEO and company leadership use the strategic narratives to constantly communicate the strategic direction and initiatives within the company. It’s a strategic narrative that also serves as a newsletter for the whole company. It’s a living and breathing reference point of where the company is going, summarized and curated in one document.
  2. It enables team leads to communicate what their team is working to the entire organization. This ensures that everyone within the organization is equipped to sell any product that the company offers in the market because everyone on the team has access to product knowledge and whom to direct a prospective client to. IBM does this well.
  3. It provides employees the strategic thinking behind the day-to-day tasks that they have to perform. In low-performing organizations, employees are not given a reason why they are doing what they are doing. This gap in knowledge frustrates employees and limits their ability to be a brand ambassador and salesperson for the organization.

Some companies choose not to use the strategic narrative approach and go for the all-hands or weekly company meeting approach. What gets lost using these more informal approaches is the ability of the employees to reference the information at points of inspiration. An employee who sees a market opportunity can use the strategic narrative to engage the prospective client and catalyse the relevant team to possibly open up a new market for an old product or develop a new product aligned with the strategic vision of company leadership. Why wouldn’t you want that?

The leaders within these companies share the vision and properly equip the implementers of that vision. Because, at the core, the real reason why these old companies are still thriving and growing despite the inevitable march of technology is because they empower and educate their employees. Are you educating and empowering your employees? Do they know where the company is going? Because once they do, everyone on the team becomes a knowledgeable sales and marketing engine.

Because that’s how you stay winning.

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