Since its conception Microsoft has seen a meteoric rise in the technology industry. Currently
15th on the Fortune 500 list, the company is focused around their customers and empowering
them to recognise their potential. In 2014, Satya Nadella became CEO of Microsoft and with his
leadership came multiple changes. Microsoft’s need for change is explored by conducting a SWOT
analysis, whereby the weaknesses and threats present the major cases for change. Most notably, Microsoft
has a need for change in their cybersecurity, acquisitions, and innovation skills. Two change management
models, Prosci ADKAR and the Kaizen continuous cycle, are presented aligning each model to a case for
change, respectively in changing the organisation culture and performance management; and addressing the
cybersecurity issues. Three major changes are discussed in recent times with their barriers or supposed
barriers to change being discussed. Lastly, recommendations are given for addressing Microsoft’s
weaknesses such as lack of innovation and cybersecurity issues.
1. Introduction
Microsoft is one of the world’s most recognised brands, a leader in the technological industry,
with a deep-rooted history in adapting to changing technology and times, the company has seen a meteoric
rise placing it 15th in the Fortune 500 list. The company’s vision and mission are
focused around people and businesses and empowering them to realise their potential, ultimately helping
them achieve their potential. Microsoft’s mission is “to empower every person and every
organization on the planet to achieve more”, with their vision being “to help people and
businesses throughout the world realise their full potential” (Microsoft Corporation,
2021) (Gregory, 2019).
Since its inception, Microsoft rapidly developed their operating systems and programs that allowed them
to outperform their current rivals at the time. As the Internet began to evolve, Microsoft created their
landmark program Windows NT, quickly taking over the majority of the market share from then leader
Novell NetWare. Although the company tried to maintain a monopoly on the industry, Microsoft’s
ability to adapt to its ever-increasing challenges were seamless and allowed them to maintain market
share (Hall, 2020).
As the 21st century began, Microsoft branched their offerings into the gaming and mobile
phones industry. As the Xbox was developed and introduced to the industry, Microsoft has quickly risen
to become market leader in the gaming industry constantly competing with current rivals Sony and
Nintendo. With the rise of Google, Microsoft looked at adapting the company and purchasing Yahoo! and
subsequent subsidiaries to improve their search engine to compete with the likes of Google. Furthermore,
as technology advanced and cloud computing has become the forefront of the industry, Microsoft adapted
and built their own service Azure to compete with Google and Amazon who are the market leaders in the
cloud computing and infrastructure space. Subsequently, as the company was taken into the Fourth
Industrial Revolution, the leadership of the company changed, with Microsoft’s current CEO, Satya
Nadella, being appointed as CEO in 2010 (Hall, 2020).
With each advancement and change seen in Microsoft, whether it was an internal change, or change to
business strategy, the company has seen drastic increase in revenue, market share, and industry
ownership, ultimately becoming a market leader within that sector itself. Microsoft is not scared to
adapt and change as technology and time does to ensure that they remain competitive, and a market
leader. Most notably, after Satya Nadella’s appointment, in 2014, Microsoft’s future seemed
to be on a downward trend with sales and services becoming outdated and old. Nadella’s approach
and change focused around digital transformation affected the company in a drastically positive manner,
resulting in a trillion-dollar gain (Denning, 2021).
The consistent changes in the company has allowed Microsoft to break through financial predictions and
navigate the COVID-19 pandemic successfully by adapting to the circumstances. This was done through
increasing current capabilities to provide real-time response for hospitals, using technology to reduce
transmission of the virus, supporting education through their programs and partners, and further
supporting global communities through donations and connections (Edmond, 2020).
2. Need for Change
In order to understand the need for change in Microsoft, a SWOT analysis can be undertaken to identify
the various factors to assist in strategic decisions for the future of the company. The strengths
identified will be the factors Microsoft can continue to capitalise on to ensure sustainable
growth, whereas the weaknesses identified will be contributing factors to the case for change.
Subsequently, the opportunities will contribute to the case for change as this will identify
areas where Microsoft can implement something new or alter ways of working to benefit the company.
Lastly, the threats identified will be a deciding factor on the case for change to see if any
changes implemented will assist in minimising or eliminating the factors identified. Figure 1 presents a
high-level SWOT analysis of Microsoft in recent history and currently.
Based on the SWOT analysis done in Figure 1, Microsoft has a multitude of opportunities to strive
towards, and a strong foundational set of strengths that they can continue to build on. However, the
identified weaknesses and threats present to them outweigh the company’s current strengths.
Microsoft’s need for change stems from the identified weaknesses and some identified
opportunities.
The high-price point combined with the threat of open source projects presents Microsoft with a major
case for change. Although the Windows operating system and the Microsoft Office suite are widely
preferred and used; there are multiple open-source options available and becoming increasingly popular
such as Linux’s operating system and Google suite (Bush, 2016). Furthermore, the hyper-competitive
technology industry is a constant threat to Microsoft, with major tech giants such as Apple and Google
having just as much of a global reach, impact, and influence. Combined with rival companies, open source
software produces provide many alternatives to Microsoft and their offerings (Parker, 2021).
Microsoft has seen substantial growth through successful acquisitions such as that of LinkedIn, however
not all acquisitions are as successful. This is one of Microsoft’s biggest weaknesses, by
investing and making poor decisions in acquisitions like LinkExchange, Massive, Danger, and WebTV, the
company is forced to re-evaluate these decisions resulting in divestitures (Parker, 2021).
The Windows operating system is majorly criticised for its weakness against various virus attacks,
currently being the least protected when compared to competitor operating systems (Jurevicius, 2021).
This extends to scam calls and such increasing the cybercrime cases against Microsoft and the operating
system. With an increase in the number of cybercrimes, Microsoft needs to change their way of developing
security measures for their customers to ensure that users’ privacy is kept. Should this not be
attended to, it can increase the number of legal proceedings that Microsoft already face.
The company is many and constant legal battles based on unfair practices such as attempting to monopolise
the industry in certain regions, or infringing on certain patents (Parker, 2021). Over the last two
years, 3% of Microsoft’s revenue is dedicated to “General and Administrative” expenses
which include that of legal fees (Microsoft Corporation, 2021). Given that Microsoft has faced many
legal battles and lost various large-scale lawsuits, this poses a major case for change in the
organisation, as this can form part of a strategic initiative to alter the way of operating to reduce
the probability of future expensive lawsuits (Jurevicius, 2021).
In addition to this, Microsoft is slow to innovate, for example, the company had the necessary technology
and resources to enter the mobile phone industry in a timely manner. However, due to the lack of
innovation from the organisation, the industry is now dominated by Google and Apple, leaving little room
for any new entrants given their constant innovation in the industry (Jurevicius, 2021). This does
provide Microsoft for a case for change as it will allow the company to analyse, understand, and
strategically plan for ways to improve their innovation techniques and find ways of disrupting currently
dominated industries and markets.
Lastly, there is a need for change in Microsoft’s current workforce due to its imbalance in
diversity from a women and minority perspective. This extends to HR policies that may need to be changed
and updated to cater for a less criticised workforce (Parker, 2021).
3. Change Management Models
3.1. Prosci ADKAR Change Management Model
In an attempt to improve the way Microsoft tracked their sales and operations across various regions and
roles, various teams within the company created, delivered, and drove the adoption of MSX Insights
(MSXi). MSXi is a modernised business intelligence reporting solution that is used by various roles and
teams within Microsoft such as salespeople, company leaders, managers, finance and operations teams
(Delaini, 2021).
The Prosci ADKAR model was the perfect change management model for Microsoft to use in this
implementation as it focuses on people of all levels in order for the change to be effective. Microsoft
had engaged the project with identifying the different needs of leaders, managers, front-line sellers.
Figure 2 presents the definition of the ADKAR model and how it was used on a high-level within
Microsoft. The benefit of using this model was that it allowed the change management team to gain
valuable insights on the resources and behaviours of the employees, and where to focus the resources to
encourage the shift. This was further accompanied by structured feedback channels (Delaini, 2021).
Fig.2 - Prosci ADKAR Model used by Microsoft
The ADKAR model was followed each time the change was introduced to a new level or department. Having
identified the need for the change and making senior management and all levels aware of the change, to
identifying the benefits of the proposed change building the desire in each person. This further
extended to creating a close partnership between Microsoft Digital, engineering teams, and adoption and
landing teams to assist in making the effective change, implementing it seamlessly and now reinforcing
the change throughout the company is all regions (Delaini, 2021).
3.2. Kaizen Change Management Model
As one of their biggest weaknesses, Microsoft must look to improving their cybersecurity with regards to
the software and operating systems. As digital transformation is being experienced in most businesses,
cybersecurity has become one of the key capabilities. Although cybersecurity can be implemented through
various frameworks and technologies, human error can still cause a breach in the system, which is why
clear communication and recurrent training on the most recent and prevalent practices is key to ensuring
a strong cybersecurity capability (Panorama Consulting Group, 2020).
Emma Ryttare identifies two change management models that can be used and implemented with cybersecurity
implementations, which are: Kotter’s theory of change management; and Lewin’s change
management model. It is highlighted that within these models there are core aspects of effective change
management which look at how to engage with employees of all levels, understanding the behaviour towards
the change (Ryttare, 2019). Danial Beck further confirms these core aspects by stating that for
effective cybersecurity change, understanding and engaging with various e-consumers on the initiatives
is needed, as well as instilling a cybersecurity purpose and value system. Ultimately, ensuring that
there is effective employee buy-in and constant feedback in the implementations (Beck, 2019).
Understanding the core aspects of effective change management, it can be argued that Kaizen’s cycle
for continuous improvement would be an effective change management model for Microsoft. This model will
allow the organisation to implement cybersecurity as a continuous process rather than a one-time
transition. Furthermore, it gives employees more control over changes, building more trust. Figure 3
shows the steps of the Kaizen model for continuous improvement.
Fig.3 - Kaizen Change Management Model: Cycle for Continuous Improvement
The Kaizen model would be a great choice for Microsoft’s cybersecurity
implementation as it’s 10 principles identify ways for turning this weakness into a potential
strength for the organisation. By being proactive about problem solving, looking for adaptive
change, identifying root causes, and gathering information from multiple sources, making low-cost,
small improvements, and identifying solutions as mistakes are uncovered; the model is synonymous
with the changing world of digital transformation and threats to cybersecurity.
4. Major Types of Change
4.1. Organisational Performance Management and Culture
As Satya Nadella took over Microsoft, he saw how and where the company could improve. The first email he
had sent highlighted where the company should be focusing their energy and efforts. Furthermore, Nadella
saw a way to drastically impact the employees and teams of Microsoft by changing the company’s
current performance review methodology and culture. The performance management was restructured within
the company from making internal teams compete with one another, also known as stack ranking,
to performance reviews focused on constructive conversations. This drastically changed the mindset of
employees to having one of a growth mindset (McLaren, 2019) (Chaudhary, 2021) (London, 2018).
The impact of changing the mindset of the organisation as well as the performance management of the teams
resulted in Microsoft being able to align better with their customers, improving their products, and
seeing the success that it brought (London, 2018). This impact of the culture change coupled with the
new strategic plan, was further seen in Microsoft’s valuation reaching the $1 trillion mark after
5 years of Nadella’s appointment as CEO. Nadella understood that in order for Microsoft to further
succeed in the ever-changing industry, a culture built around collaboration, learning, growth, and the
customer, which was further instilled from the top level down (Chaudhary, 2021).
4.2. Intelligence Driven Organisation
As cloud computing and AI became the focus of the Fourth Industrial Revolution, Microsoft adapted their
way of approaching the market and industry from a different perspective. Similar to the culture and
performance management change, Nadella implemented a change in focus and strategy in Microsoft, stating
the company should focus on mobile and cloud as it will allow the company to maximise the value of
technology, enabling Microsoft to empower their customers, ultimately finding the balance between using
the data to create personal, intelligent experiences while maintaining privacy and security of their
customers (Fried, 2014).
The growth mindset was the foundation of transforming the company into an intelligence driven
organisation. Through the Microsoft Consulting Services (MCS), the company was able to utilise the long
list of global companies to unlock powerful insights, enhance security, and empower the teams with
organisational agility ultimately leaving these clients with the competitive edge. This led Microsoft to
developing the Intelligent Driven Organisation (IDO) Model, a framework that allows businesses to
utilise digital feedback loops in developing executive strategies, building and ensuring the correct
technical capabilities are in place, improving the day-to-day task execution, leading the organisation
to achieving their desired outcomes (Chavatte, 2020).
Leveraging the data of the customers, Microsoft is able to turn their implementation of AI into value.
The benefit of utilising the IDO framework, and the capabilities of the company, Microsoft was able to
complete two years’ worth of digital transformation within two months. Furthermore, as Microsoft
is able to offer this as a service to their clients through their own platforms of Azure, machine
learning, AI, and other technical capabilities; Microsoft is able to be increasingly competitive in the
market and a leader in the industry (Forbes Technology Council, 2018) (Walden, 2021).
4.3. Implementation of Microsoft Teams
COVID-19 impacted the global economy and every industry in some way or the other, with majority of the
workforce beginning to work remotely. Products like Zoom, Google Meetings, Cisco Webex, and TeamViewer
were beginning to see an increase in usage to aid in remote working. Although Microsoft Skype and Skype
for Business was readily available and in use, Microsoft saw an opportunity to combine the capabilities
of cloud and cloud collaboration, chat applications, and video conferencing with a user-friendly
interface, which led to the creation of Microsoft Teams (Protalinski, 2020).
The usage of Teams has seen a drastic increase during the pandemic, becoming the preferred choice for
communication in businesses across the world. In 2020, 95 million users were added to Teams, having
grown exponentially since its creation. While Teams is not a standalone product but rather part of the
Office 365 offerings, it can be said to contribute to the increase in revenue of the product for
Microsoft, with $6.8 million being generated by Office 365 in 2020 (Curry, 2021).
5. Barriers to Change
Prior to the appointment of Satya Nadella, Microsoft was heading for turmoil as a company. In 2014, as
the company had acquired Nokia, Microsoft had realised a major mistake in the acquisition, as due to the
lack of innovation, the investment seemed to be one that conformed to previous unsuccessful investments.
This resulted in 13000 employees being laid off in 2014 due to the current organisational change at the
time. After Nadella’s appointment as CEO, the changes he had suggested were met with minimal
resistance, however given the drastic change proposed, there would multiple barriers, mainly a cultural
change barrier, as this impacts employees’ beliefs, thoughts, and assumptions (S, n.d.).
One of the strategies used by Microsoft was Lewin’s Change Management Model, of unfreezing,
changing and refreezing. Coca-Cola has seen multiple changes to the company over its history and has
utilised the Lewin model multiple times in order to better engage with their employees (UK Essays,
2021). Nadella engaged with the employees of all levels very closely in various ways such as focus
groups, individually, or anonymously (Chaudhary, 2021).
With the focus of digital transformation being around security and privacy matters, there are multiple
challenges that CSOs face when improving their cybersecurity. As technology improves and more innovation
is introduced, so does the dangers of cybersecurity, leading to a major change barrier of information
overload. Although companies such as Microsoft are able to store the data, utilising it to its full
potential may be a challenge. Furthermore, while Microsoft may provide the tools to allow other
companies to improve their cybersecurity, given the state and vulnerability of Windows, there may be a
change barrier due to insufficient integration, human bottlenecks, credential trusts, and soft targets
(Vanderburg, 2019).
Microsoft’s funding into approaching these barriers related to cybersecurity by increasing spending
in the capability by $20 billion over the next 5 years. This tactic will allow Microsoft in identifying
the relevant talent for the job; addressing major government flaws; and finding new ways of sourcing
talent in the technological field (Rosenbaum, 2021). While no technology company has flawless
cybersecurity, Microsoft’s investment into the field to improve it is an innovative way to
overcome the change barriers.
Microsoft’s current challenges include mobile, cloud ecosystem, and newer business offerings. While
mobile and cloud challenges can be managed and effectively executed through innovation and designated
change management plan such as LaMarsh’s change model or Kazien’s cycle for improvement; it
is Microsoft’s new offerings such as Power Platform that can present many change barriers. Given
it is utilising AI and elements of a new digital transformation; procedural barriers such as the lack of
expertise to implement the change, or lack of customer focus can cause problems for Microsoft.
Once again, through the cultural and organisational change undertaken by Microsoft over the last 5 years
will allow the company to mitigate risks and overcome the various change barriers. By working in a more
collaborative way and including the customer feedback at various stages, Microsoft will be able to
overcome many barriers they are faced with when introducing new products or platforms into the market.
6. Recommendations and Conclusions
6.1. Recommendations
Microsoft is a leader in the technology industry, and a constant threat in any market that they enter.
Although the company has many phenomenal strengths and an ever growing customer base and revenue, the
threats and weaknesses that are present to the company must be addressed constantly and consistently to
maintain the company’s reputation, valuation, and customer support.
Given that cybersecurity is one of Microsoft’s major weaknesses and threats, it can be recommended
that going forward, focus on continuous improvements in the area. By implementing cybersecurity
improvements as change management, Microsoft will be able to potentially turn this weakness into one of
their strengths. Furthermore, by addressing the customer concern of cybersecurity, Microsoft may be able
to improve and gain a larger customer base due to this.
It can also be recommended to address Microsoft’s ability to acquire various subsidiary companies.
Given that unsuccessful acquisitions are one of Microsoft’s weaknesses, if not their greatest
weakness, using various change management principles, Microsoft could invest the money within their own
research and development teams, to build and improve their innovation. Microsoft has been known to have
missed various opportunities in the mobile phone and cloud regardless of having the technology to be a
major competitor and market leader. However, dedicating some investment and building a culture around
innovation similar to that seen in Tesla, will allow Microsoft to identify new markets to enter and
rapidly become a market and industry leader.
6.2. Conclusion
Microsoft is a leader in the technology industry, and has consistently been a leader since its
conception. As the Fourth Industrial Revolution ushered in the internet and the digital transformation,
Microsoft too adapted, albeit in a slow manner. The company seemed to lack innovation after Bill Gates
had stepped away as CEO, however in 2014, when Satya Nadella was appointed, he brought with him a world
of change.
Within 5 years, under Nadella’s leadership, Microsoft was able to become more innovative,
respected, and reach a $1 trillion valuation. The need for change at Microsoft was identified through
the use of the SWOT analysis with the focus being on Microsoft’s operating system and software
being vulnerable and having weak cybersecurity management. Subsequently, Microsoft’s lack of
innovation or ability to be slow to innovate presented another need for change in the company. Two
change management models, Prosci ADKAR and the Kaizen continuous cycle, were presented to their
applications in changing Microsoft into an intelligence-driven organisation and cybersecurity matters
respectively. Furthermore, three major changes were explored in the company and their impacts defined as
well as various barriers to change to the major changes. Laslty, recommendations are given on how to
assist Microsoft in improving their cybersecurity and become more innovative.
Ryttare, E. (2019). “Change Management: A Key in Achieving Successful Cyber Security: A
Multiple Case Study of Organizations in Sweden”, Independent thesis Advanced level
(professional degree), Luleå University of Technology, Luleå, Sweden
S, S. (n.d). Overcoming resistance to change at Microsoft | 15 Writers. [Online] .
