So it turns out Microsoft’s river of gold with productivity software was a transition effect with the company now offering the product essentially free on iOS and Android devices.
While the profits in that product line were nice while they lasted we may start seeing Microsoft’s revenues, which have stood up pretty well in a changing marketplace, start to decline rapidly.
A great interview with Uber CEO Travis Kalanick by Kara Switzer in Vanity Fair touches on the mental difficulties facing startup founders.
He was depressed after his first start-up failed badly and his second went largely sideways. He was, as he recalls, deeply afraid of failure. “I had gone through eight years of real hard entrepreneuring. I was burned. So, I just wasn’t ready yet,” says Kalanick. In fact, he had been living at home with his parents in his childhood bedroom not long before his trip to Paris, after those two start-ups had failed to flourish.
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Two of the key indicators that your business model, and industry, is being threatened is declining sales and margins.
A good example of this is the story Microsoft are urging their Chinese resellers to use Office 365 as a loss leader to get their foot in the door with customers.
Not so long ago Microsoft Office was a huge cash generator for the business; now it’s a loss leader.
If anything this shows how the margins in the software business are being eroded by cloud computing. Businesses like Microsoft and its resellers that have grown fat on big margins now have to evolve to a very different marketplace.
This means a very different way of doing business, a different way of delivering products and much more streamlined operation that doesn’t need battalions of highly paid salespeople and managers. In fact those managers and salespeople become a very expensive legacy item in a cloud computing world.
Microsoft are by no means the only company to find themselves giving away once profitable products in order to maintain their market position but when that starts happening it’s clear the time has arrived to find a new line of business.
In Microsoft’s case that’s been a pivot to the cloud, however the company will never find things as lucrative as the good old days when software was sold in boxes or licensed out with impossible to read agreements.
Funnily, the same thing is happening in the telcommunications world. It’s an interesting time to be in business.
For three months in 2007 Joe Fernandez had his jaw wired shut following surgery and found himself relying on social media for news and companionship.
Over that three months of sitting on the net Fernandez found he had become a social media influencer and the idea for Klout was born.
In many respects Klout is the classic startup in that Fernandez started with a series of spreadsheets with the algorithm being an Excel formula, something he now calls a ‘Minimal Minimum Viable Product’.
“It was super minimal,” Fernandez remembers. “When people would register for Klout, it would send me an email and I would manually download their social media data into Excel and run the algorithm and then I’d manually update their page.”
Today Klout processes fifteen billion accounts every day with data pulled from four hundred data points including 15 social media services.
Like all tools, Klout does have some limitations and Fernandez admits he gets frustrated with businesses giving priority to users with high scores, another area that concerns him is marketers who don’t examine the relevance of individuals to the business before making judgments on that person’s influence.
One of the key things that Fernandez is proud of is how Klout is spawning its own alumni in a similar way to the PayPal mafia that developed out of the payment service at the beginning of the Century.
“It’s really awesome to see people go on and take on big challenges and do different things.”
As social media develops, tools like Klout are going to become more important for businesses trying to understand how
“Technology is part of the solution, but it’s also part of the problem,” says Brian Solis, the
Brian Solis describes himself as a digital anthropologist who looks for how businesses are being disrupted. We talk about digital darwinism, how businesses can approach change and the role of individual changemakers within organisations.
“My primary responsibility is to study disruptive technology and its impacts on business,” says Solis. “I look at emerging technology and try to determine which one is going to become disruptive.”
To identify what technologies are likely to disrupt businesses it’s necessary to understand the human factors, Solis believes.
One of the problems Solis sees is the magnitude of change required within organisations and particularly the load this puts on individuals, citing the story of one pharmaceutical worker who tried to change her employer.
“Her mistake was thinking this was a short race, she thought everyone could see the opportunity inherent in innovation and change when in fact it was a marathon. She burned herself out”
“What that means is to bring about change you really have to dig yourself in because you’re ready to do your part. You can’t do it alone, you have to do change in small portions and win over the right people.”