Just this Morning, Microsoft announced that it was going to layoff 5000 employees. This is the first time in history that Microsoft has ever had a layoff and it really shows the depth of the economic problems that we are facing right now. I left Microsoft over a year ago for numerous reasons. One of the reasons was because I thought Microsoft was sorely in need of a culture shock. When companies get as big as Microsoft has become, inertia sets in. It can be extremely difficult to get the organization moving. And once moving, it can be extremely hard to make it change course. I became frustrated on a daily basis just trying to get basic things done. This is in direct contrast to my current job where I think people often move too fast for their own good.
I have nothing but good wishes for Microsoft going forward. While I did not leave on the best of terms, I think that this was a situation very specific to me and not at all to do with the type of company that Microsoft is. I still have a lot of friends there and hope that they are unaffected by any of this.
From the outside looking in, I think this is a good thing for Microsoft. I think they needed to get smaller. It is sad that there had to be an economic crisis for it to happen, but at least it is happening. As someone whose job is to plan for the unexpected, as someone whose job it is to be proactive and not reactive, and as somone who developed this skill at Microsoft, I find it somewhat ironic that Microsoft is handling their headcount reduction this way. They should have done this well before this. They should not have waited for the economy to dictate their actions. But again, maybe that just says something about the company that Microsoft is.
Not sure where most of the cuts will come. My guess is that there needs to be hard looks at divisions which are not profitable and have no near term possibility of becoming profitable. Near term being within a year or two. This is not the environment where you want to be throwing money at things "hoping" they become profitable soon. Shareholders get restless. They do not like to see declining revenue AND declining earnings. When revenues are near flat, your only recourse is to cut expenses. The #1 expense at any technology driven company is headcount. The first people to go need to be the people who do not bring in revenue commensurate to what they are paid. Cash cows like Windows and Office are probably safe. Products like my old one are not (it has already been announced that this product will be discontinued).
I am dealing with my own company having layoffs. While I was personally unaffected, I think that that layoffs can be a very positive thing (I promise to write more about this in the next few days). I've been part of several layoffs in my career. It is almost always a good thing in the long term for both those who are let go and those who stay behind. I have had some of my best career growth because of layoffs. I am the type of person who always tries to see the bright side of things, even when they are at their most dire, and this is no exception. I think Microsoft will become stronger for this if they can execute it correctly. But that's the big question, can they? I have my doubts.
They have already made one mistake. They announced that there will be 5000 layoffs, but on about 1500 of those will be today. Umm, that's just dumb. Layoffs should happen once and only once. Doing a slow bleed is very hard for all those involved as people are always looking over their shoulder rather than looking forward. Looking forward is extremely important when there is more work to do and less people to do it. You add that to the news that Apple had a fantastic quarter, and you have to wonder if Microsoft even has a coherent strategy to handle all of this.