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July 12, 2012

Microsoft and the 7 classic management mistakes

Like many of you, I closely follow the frequent news from the tech world. Maybe it’s a byproduct of working out of San Diego, but I’m constantly watching the competition that brews in Silicon Valley and how companies respond to one another.

Take Microsoft, for example. It’s been a busy summer for the tech giant. First, the company received some positive press with the announcement of its first tablet, Surface. It garnered overwhelmingly warm reviews and generated excitement among many techies.

But on the heels of the Surface announcement, Microsoft disclosed a $6.2 billion write-down within its Online Services Division (Bing and online ads). To add insult to injury, just days later, Vanity Fair published a scathing article on Microsoft’s management shortcomings and poor decisions. It’s like one step forward and two steps back for Microsoft.

Microsoft’s current situation reminds me of the factors leading up to GM declaring bankruptcy -- it fell into several classic business management mistake traps, a topic I authored a column about in The Orange County Register.

So what are those seven classic business management mistakes?

1. Failure to develop a sense of leading indicators
2. Failure to manage cash flow
3. Failure to communicate the core mission
4. Failure to act quickly
5. Failure to have a viable plan B
6. Failure to play offense instead of defense
7. Failure to pay attention to competitor changes

As you can see, many of these classic management mistakes are firmly rooted in common sense, yet many businesses still fall victim to them -- even the best and brightest like Microsoft. In fact, here are the three Microsoft is especially guilty of failing to do:

Failure to develop a sense of leading indicators

What have been the trends within the tech industry? Chances are, most people -- even those not in the industry -- would say mobility. It’s all about getting your technology on the go, and Microsoft seems to be playing catch-up.

You can find insight into what lies ahead for your business by identifying the trends and what your suppliers, customers, even competitors are doing. Spot the trends early to position your business to take advantage of the better margins and profits associated with earlier stages of new innovations.

Failure to communicate the core mission

What exactly is Microsoft’s core mission? Does it exist to make software for PCs? To develop tablets? To build a powerful search engine? Or something else?

Open communication is the foundation of effectively running any business, regardless of the industry. It starts with understanding what your business’ core mission is -- why did you start the company, what is its purpose, and do your employees know where you want it to go?

Make sure you’re being open with employees and key customers about actions your business is taking, how those actions relate to your core mission, and how they enhance the company’s competitive and financial position.

Failure to act quickly

Apple is already rolling out iPad 3 while Microsoft has only recently unveiled its first tablet, Surface. Paralysis by analysis is painful.

This happens when management pours excessive time into analyzing a problem, rather than taking action toward fixing the problem or finding an alternative strategy. If something goes wrong, rectify the situation immediately. The time to figure out why the problem occurred is later.

Can you think of other companies making these classic management mistakes? Please share your examples in the comment section.

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