Friday, October 7, 2011

The impact of Microsoft Office

Some key lessons that could be derived from Microsoft are about the impact of the Office suite of products. Microsoft didn’t invent the business software industry, but they became the leading player by bundling their products and creating lock-in with their customers. Today, Office remains the dominant choice for word processing, spreadsheets, presentations, and other applications. As the products are updated every few years, all companies feel pressured by the market to keep up with the updates or risk feeling left behind. If any of us were to join a company now and see that they were using Office 2003, we would probably see that as a serious red flag. Even Macbooks, for all their usability advantages, are still dependent on a product from Microsoft, their great rival, to compete in business and academia.

Aside from being a good moneymaker for Microsoft, Office has transformed what it means to be an office worker. It is almost mandatory that all employees, at least at the managerial level, be skilled in Word, Excel, and Powerpoint. And the fact that Office is so ubiquitous in the business world means that those skills seamlessly transfer from company to the next. A company that spends less time training their employees on new business software applications has more time to devote to developing its primary capabilities.

So I believe there are a couple lessons here. The first is the “IS710” lesson about creating a standard and bundling products. The second lesson is about a dynamic set of tools that represent a kind of jumping-off point for companies and employees. When it’s easy to create documents, spreadsheet, and presentations, the bar is raised as far as what value a company can bring to the market.

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