Microsoft's growth and organizational control problems

¶ … Microsoft's Growth Led to Control Problems

The objective of this work in writing is to relate Microsoft's problems with its control and evaluation systems to each of the stages of growth in Greiner's model and to consider with Microsoft being most likely in the growth through collaboration stage how it could be recommended to changes in its structure, culture, and control systems to solve its problems at this stage.

Greiner's Model for Organizational Development

The work of Greiner holds that there are five key dimensions that are essential for constructing a model of organizational development. Those five key dimensions are: (1) the organization's age; (2) the organization's size; (3) stages of evolution; (4) stages of revolution; and (5) growth rate of the industry. (Mainiero and Tromley, 1994, p. 1) According to Greiner, there are also five phases of growth: (1) creativity; (2) direction; (3) delegation; (4) coordination; and (5) collaboration. (Mainiero and Tromley, 1994, p.2-7)

Microsoft's Growth and Control Problems

The software engineers at Microsoft were organized from the start into small groups and teams to enable cooperation, learning and assisting one another and to drive the pace in developing innovative software. In the first ten years, the reward system of Microsoft was based on the performance of teams although there were rewards for individuals who performed exceptionally. By 2006, Microsoft experienced problems developing Vista, which experienced delays that had not been foreseen, and this was blamed by some of the new focus on performance of individuals since individuals were watching out for themselves rather than for the team as a whole. Not only were salaries a secret in the organization the evaluation methods used by team managers was kept secret. This resulted in high team evaluations for those who were liked by their managers. What had begun as a collaborative system became instead, a very political system. This has resulted in a decline in performance across the organization.

Use of Greiner's Model in Microsoft Organization

Greiner's model for organizational development offers a method that can be utilized by Microsoft Corporation to manage its organizational growth. The first phase, or that of creativity is the stage when the organization is born and the emphasis is on the creation of the product and a market for that product. During this phase, there is only frequent and informal communication among the organization's employees and long hours of hard work result in the receipt of salaries that are of a modest nature and the promise of the benefits of shared ownership in the organization. Immediate feedback from the marketplace controls activities and management acts upon the reaction of customers. During this phase those who have founded the company find that responsibilities of management are becoming burdensome so a strong business manager is sought who is able to pull the organization together. During phase two, or that of 'Direction' the business manager is installed and a period marked by sustained growth ensues. This phase is characterized by a functional organizational structure being introduced that separates manufacturing and marketing and specialized job assignments are formulated. During this phase, Accounting systems for inventory and purchasing are introduced and there is adoption of incentives, budgets and work standards. Communication, during this phase, becomes more formal in nature as well as becoming more impersonal. The new manager and the key supervisors hold the responsibility for bringing about organizational direction and lower-level supervisors are viewed as "functional specialists." (Mainiero and Tromley, 1994, p.4) The third phase or that of 'Delegation' is characterized by more responsibility being given to the plant managers and managers of market territories. During this phase, profits and bonuses are used to motivate employees and the company's top executives are reported to "restrain themselves to managing by exception, based on periodic reports from the field." (Mainiero and Tromley, 1994, p.5) During this phase, management is focused on new acquisitions. Communication is infrequent from the top of the organization and is usually in the form of correspondence, telephone or field location visits. The fourth phase or that of Grenier's model is that of 'Coordination', which is characterized by the merging of decentralized units, merging into product groups. Formal planning and procedures evolve during this phase and there is hiring of staff and personal for the initiation of companywide program control and line manager review. During this phase, there is careful weighing of capital expenditures and each product group is reported to be "treated as an investment center where return on invested capital is an important criterion used in allocating funds." (Mainiero and Tromley, 1994, p.6) This phase involves technical functions including data processing being centralized at headquarters with decisions on daily operations being decentralized. The company uses stock options and company-wide profit sharing to encourage identity with the firm. Phase five is the phase of 'Collaboration', which is characterized by a focus on problem-solving using the team with teams combined "across functions for task-group activity." (Mainiero and Tromley, 1994, p.7) During this phase, there is a reduction in headquarters staff experts and with these being combined into interdisciplinary teams to consult with field units. A matrix-type structure is reported to be used frequently in assembling the "right teams for the appropriate problems." (Mainiero and Tromley, 1994, p.7) There is simplification of formalized systems with these being combined into "single multipurpose systems." (Mainiero and Tromley, 1994, p.7) Key managers are present at conferences quite often so that major problems issues can be focused upon and there is use of educational programs for manager training in the area of behavioral skills to enable teamwork and conflict resolution. During this phase, daily decision-making integrates real-time information systems. Team performance is the focus of economic rewards and new practice experiments are supported throughout the organization.