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What We Can Learn from the Apple and Microsoft Ousters

Ousted
Written by Stefan Dietrich | January 11, 2013 | 0 comments

Last year, on October 29, Apple announced that Scott Forstall, SVP of iOS Software, will leave the company effective immediately. Less than two weeks later, on November 12, Microsoft made a similar announcement, stating that the head of Microsoft’s Windows division, Steven Sinofsky, would be leaving Microsoft.

For people that followed Apple and Microsoft closely, this was long expected. Both were known for their brilliant talent but also for being difficult to work with. It’s an indication of the increasing competitiveness in the industry in which collaboration and the ability to function well in a team is becoming more important than technical talent. One could argue that even Steve Jobs or Bill Gates, despite their iconic status, could be at risk of being ousted today. However, they both focused their energy on the end-to-end value chain, adding major business insights, which made their personal traits tolerable for the people around them.

Realigning for the Future

Apple did more than just oust one of Steve Jobs’ former protégés. It also realigned the senior leadership so that in the future, hardware, software, services, user experience, and design have to go hand-in-hand. No longer is the company organized by product groups; it is now structured to ensure close collaboration at the highest level. Individual products are now the responsibility of the top management working together. It’s a company structure that is similar to the Apple products itself, highly simplified, with a deep understanding of how tight integration of all components creates something that makes a user and a company tick.

What's Behind the Shift?

What’s behind this underlying shift is the way that companies no longer make much money by simply building and selling specific components of solutions, such as hardware and software, but instead design fully integrated solutions, generalized products and services that work for millions of people. A new breed of executives is needed who can think across all domains, handle enormous scales, and work well with each other.

The same is true for enterprise IT departments. For the last 20 years or more, IT provided value to the business by integrating purchased components into a custom service model. In the last few years, this model has faced pricing pressures, especially for highly commoditized services such as email or simple computing and storage needs. Given specific security, privacy, and regulatory compliance concerns, enterprise IT departments could at most outsource these functions to the likes of IBM or HP, who would install and maintain such systems on customer premises using their highly skilled experts. But as large cloud service providers are catching up, enterprise IT has to be prepared that business units will buy these services straight from the likes of Google and Amazon.

How end-user hardware is being serviced is also changing. Replacing devices is often more cost efficient than trying to diagnose a problem. And users can call their manufacturer’s or carrier’s help desk or go to locations such as Apple’s Genius Bar to get help with their devices.

Making Agile Decisions

Many enterprise IT departments still continue as usual and insist that they can deliver value. They promise to provide the same service cheaper, with higher reliability and security or better customization to business needs. However, how much business value is IT still adding to the business? The classical IT department is operating with diminishing value while outside vendors continue to rev up their offering in those critical areas, and including reliability and customization. In the realm of end-user devices and associated infrastructure, enterprise IT departments are at risk of becoming obsolete fast.

If enterprise IT departments don’t shift their focus, they may build infrastructure designed for the next five years, but quickly become price prohibitive compared to progressive cloud solutions. In fact, enterprise IT departments shouldn’t invest in building any commodity services under the premise that only they can address specific business concerns. Such projects may turn out to be an expensive undertaking and create lock-in to systems that will very soon become expensive legacy technology.

The New Breed of IT Leadership

It takes a new breed of IT leadership to boldly address these issues today. Classical organizational structures, that combine strategic and operational functions in roles such as the CIO or CTO, are becoming obsolete. Strategic decisions must be separated from operational concerns as they are fundamentally at odds. While operations targets minimizing risk, strategy seeks to maximize future revenue potential while taking on a greater level of risk. Clearly, putting both functions in the hand of one executive will just maintain the status quo. For more details, see the white paper “New Mobile Technology Requires a New Breed of IT Leadership.”

What we learn from the Apple and Microsoft ousters is that companies need to re-align their IT leadership to focus on services that provide clear business benefits while outsourcing commodity services as specific business concerns are being addressed by vendors. Enterprise IT has been taking care of their business customers for years and knows the right service level for their organization. At this point in time, enterprise IT departments need to rethink their approach. Instead of trying to sell their in-house solutions to the business, they may want to work closely with the likes of Google and Amazon to help them learn about specific security, privacy, reliability and compliance concerns that these companies have barely encountered in their consumer-based oriented world. Few of these vendors really understand the struggles enterprise IT departments are going through. And IT departments need to understand that vendors will eventually address all of these issues within a timeframe that is shorter than anything they could build competitively in-house today.

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