Asymmetric Marketing

Part 7:Asymmetric Marketing, Microsoft Style: Tribal Leadership

This is the seventh installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.

7. Tribal Leadership

Great tech companies who practice asymmetric marketing are like tribes. Microsoft is clearly a company with a tribal leadership model. Tribal leadership is a form of leadership where the leader is not just an ‘executive’ or manager, but a doer with ‘reputation equity’ within the organization, i.e. someone who actually has a role in the value creation of the business in a very hands-on way. When Bill Gates re-assigned himself to Chief Software Architect this was a revalidation of the tribal culture of Microsoft. Ellison, Dell and McNealy are also tribal leaders in the best sense, founders who have grown along with the companies they lead.

Tribalism was the norm in the growth of Silicon Valley but was severely damaged as a concept during the bubble when many leadership teams were hand-picked by VCs to take companies into a rapid IPO environment. I believe that the culture of entrepreneurism in general was damaged by the entire period of the bubble because of this departure from tribal leadership models in tech companies. Today's VC environment is more attuned to investing in experienced leaders as a result.

Tribal leadership tends to be a function of a founder or co-founder who carries the mythology of the company and inspires higher levels of performance throughout the organization. They lay out the religion. They become the message, in the words of Roger Ailes, CEO of the Fox News Network and former Reagan speech writer.

Tribal leaders like to lead through thought leadership and corporate evangelism. Check out the Bill Gates Home Page to see what I’m referring to. The Bill Gates Home Page contains speeches and essays that don’t just resonate outside of Microsoft with customers and partners, but inside the company as people ‘self-organize’ around the direction set by the chieftan.

Any company can learn from Microsoft and implement a tribal leadership model if the ‘leader’ actually gets it. Gerstner at IBM was a tribal leader who came in from the outside and restored a sense of excellence at IBM. Ed Zander, formerly of Sun, is now providing a more tribal leadership at Motorola leading to a business turnaround.

Tribal leadership is hands-on leadership by example so there is room for more than one tribal leader within a tech company, e.g. Steve Ballmer at Microsoft. Here's a link to a news story on Ballmer inserting himself directly into the leadership of one Microsoft division that is not meeting management expectations.

But tribal leadership has not been a characteristic of marketing executives in the tech industry, which is why there is so much fragmentation of the marketing, sales and business development leadership functions in many companies. In fact 83% of tech companies do not have Chief Marketing Officers integrating both sales and marketing functions in a single go-to-market leader according to an online survey on the AlwaysOn Network dated 12/01/03.

Today's startups are going back to a more tribal leadership model including learning how to bootstrap their businesses. Here's a link to a conference that includes bootstrapping on the agenda.

Part 6: Asymmetric Marketing, Microsoft Style:Ecosystem Management

This is the sixth installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.

6. Ecosystem Management

Microsoft gets the whole notion of market ecosystems. They are at the center of multiple ecosystems. But before I get ahead of myself, let me define ‘ecosystem’ from the point of view of an asymmetric marketer. It’s not an abstract construct like a ‘value chain’. It’s a living base of customers, partners, and co-evolutionary stakeholders clustered around a center, usually a dominant vendor or natural monopoly. Here’s 3 examples of highly evolved Microsoft-centric ecosystems.

The PC OEM Ecosystem: Microsoft’s first. It includes branded PC suppliers who license the Windows OS, as well as silicon and platform technology partners, e.g. Intel, AMD, and others. This ecosystem has grown up and evolved around Microsoft’s natural monopoly in PC markets. But even before Microsoft fostered it’s own ecosystem, it had joined the IBM ecosystem as a software partner to create the original IBM PC, and learned the importance of cultivating these co-evolutionary networks.

The Microsoft Developer & ISV Networks: Microsoft is at the center of tens of thousands of independent software vendors (ISVs) who make money selling applications on Windows. These partners have been the key to Microsoft’s ability to evolve out of it’s original PC focus into the enterprise software business. This developer network is key to Microsoft revenue growth, as it moves up the fitness landscape to take on Oracle, the world’s largest enterprise software company and an asymmetric marketer in it’s own right.

The MSN Network of Content, Media & Commerce Partners: Microsoft has been steadily building up the MSN properties by attracting a web of ecosystem partners in content, media and commerce. This ecosystem is critical to Microsoft’s future as web services company. In fact, in the wake of the European Union’s ruling forcing Microsoft to un-bundle Windows Media Player from the OS, their emerging media ecosystem is serving as an alternative engine of distribution, effectively allowing Microsoft to continue to make Media Player ubiquitous.

Asymmetric marketers seeking to leverage these ecosystems can do so along 3 basic strategies.

Attachment: Tech companies should not just have a Microsoft-focused biz dev executive, they should have comprehensive strategies in place to infiltrate and attach to Microsoft ecosystems. For startups, this can be the difference between years of ‘chasm crossing’ or rapid momentum. Join every relevant Microsoft partner program and network to the max.

Gap Filling: Gaps exist between competitive ecosystems, e.g. the Sun Java and Microsoft .NET ecosystems. IBM has been targeting this gap for a while and has invested in it’s professional services business in a big way to capitalize on this opportunity. BEA Systems is also positioned in the gap between Sun and Microsoft’s various web services visions, as is emerging player WebMethods. The newly announced 10 year technology agreement between Sun and Microsoft is their attempt to better serve this gap themselves.

Overlap Mining: Overlap also occurs between warring ecosystems, e.g Microsoft and Oracle, and occurs naturally as global companies engage in mergers and acquisitions of companies with disparate IT infrastructure. Security companies like Symantec, McAfee and Internet Security Systems mine the overlap between competing ecosystems as this overlap is often a source of network and applications vulnerability.

In summary Microsoft began by attaching to the dominant ecosystem of it’s day, IBM. Later it became adept at organizing it’s own. Asymmetric marketers need to follow their lead and apply the attachment, gap and overlap approaches described above.

Part 5: Asymmetric Marketing, Microsoft Style: Market Freezing

This is the fifth installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.

5. Market Freezing

Equally important to asymmetric marketers is the concept of market freezing. Think of market ‘freezing’ as keeping an emerging market in a state of arrested development (a non-adoption driven ‘pseudo-chasm’) until you are ready to capitalize on it’s emergence. It’s kind of like barrier management, only it’s a lock-out of other players from a small, even non-existent, but ‘destined-to-be-big’ market. Let’s examine the so-called ‘trusted computing’ movement as a good example of how Microsoft has ‘frozen’ much of the action in this emerging market until it’s release of it’s next generation ‘Longhorn’ Windows OS in 2006.

Trusted computing is a set of ideas that roll up into the simple proposition that enterprise IT administrators and network operators need to know what devices are attached to their networks. In other words, user authentication directories become augmented with device authentication directories that more effectively eliminate identity theft and hostile access to the network, from both outsiders and insiders. In order for the trusted computing vision to become a reality, hardware and software providers are collaborating to build open standards that any vendor can incorporate into their products.

While an industry organization has been formed to manage the trusted computing initiative, very little has actually been accomplished, with the exception that some notebook PCs from IBM and others now contain ‘embedded security subsystems’ built using chips that conform to the standard.

While Microsoft is a founding member of this group, it has also popularized a competing vision it calls the NGSCB (next generation secure computing base) and previously referred to as Palladium. It’s ‘competing’ because it has set for itself a wide range of applications beyond device authentication, including DRM, a capability both Hollywood and the music industry really need to fight off the file-sharing crowd and develop real online business models, e.g. superdistribution. NGSCB/Palladium is not scheduled for delivery into the market for another few years but the DRM space is very active now. Since Palladium/NGSCB is described as an offering that will support DRM by allowing DRM to run in a ‘trusted environment on trustworthy machines’, the implication is that no ‘real’ DRM solutions exist because they are not running on ‘trustworthy’ machines. By this logic the entire installed base of PCs worldwide are untrustworthy machines. Microsoft has recently opened the door to a course correction on NGSCB, under pressure from software developers tired of waiting.

This is an example of very clever market freezing on the part of Microsoft. It will allow Microsoft at least 2 more years for the DRM market to evolve while it develops it’s NGSCB solution. So far, none of Microsoft’s competitors have effectively dealt with this strategy and offered a different vision on how really enable DRM on legacy PCs and are in fact lining up behind the Microsoft message. A smart startup or emerging player would counter this market freezing initiative with a loud, brass-knuckles announcement of a ‘virtual NGSCB’ solution that would get you part of the way there today.

I say this because you literally have the media industry issuing hundreds of John Doe warrants for music downloaders, instead of working with tech companies to solve the problem so any announcement would be welcome. I call this ‘overhang’ communications. In other words, what Microsoft has done is to aggressively communicate a ‘vaporware’ or stealth roadmap to the marketplace.

Every company (and their agency of record) who is engaged in a market that Microsoft may annex or freeze should become adept at overhang communications.

Part 4: Asymmetric Marketing, Microsoft Style: Market Creation

This is the fourth installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.

4. Market Creation

Like a startup company focused on 'disruptive innovation', Microsoft's enables new markets to emerge. The clone revolution itself was brought about by the perfect storm of easy to integrate PC chipsets, Taiwan-built motherboards and Windows. Hundreds upon hundreds of companies were born and made money for their investors during the upsurge in clone markets in the early 90’s. But here’s a few more markets that Microsoft is helping to create by doing one of the things that successful asymmetric marketers are able to do….think long term.

Tablet PCs: Microsoft has spent more than a decade working on pen-based computing culminating in the launch of Windows XP Tablet Edition. While tablets are still mainly focused on vertical market segments for early adoption, one analyst firm estimates that they will account for up to 3.5% of all notebooks shipped in 2005. My bet is that ‘tablet functionality’ will go mainstream within a few years and become a must-have feature of notebook and small form factor 'ultraPC' systems even if the functionality is only used part of the time. This will create a very big market for pen based software and Microsoft will not be the only beneficiary.

X-box multiplayer gaming: Microsoft’s Xbox is another example of their market creation activity, particularly as it applies to multiplayer gaming over broadband networks. While Xbox is still a market share follower to Sony Playstation, it has already leapfrogged them in online multiplayer gaming. Microsoft sees it as strategic to their long term broadband internet strategy and has already signed up half a million subscribers, many of whom participate in online communities that make the whole gaming business model more viral.

Wearable Computing: Watches from Microsoft? No.... who woulda thunk it. But here they are, complete with a wireless service for personalized information direct to the user’s wrist. This initiative, like the tablet’s pen computing, and the Xbox multiplayer gaming are all about laying the foundation for whole new market segments to emerge over time.

The bottom line is that Microsoft spent about 6.5 billion dollars in R&D in fiscal 2003, and creating new markets is a significant part of that investment. Future asymmetric market leaders reading this weblog should see the above 3 Microsoft market creation initiatives as opportunities for co-evolution and business building. There will no doubt be many more opportunities for entrepreneurism created as the Microsoft .NET web services strategy rolls out over the next few years and new .NET developers come to market.