Everyone is aware that Microsoft has fallen behind once again and is forced to play catchup in the adoption of the Software as a Service model (Web 2.0), even though they helped in its conception many years ago.

As companies like Google and Yahoo are swiping up entrepreneurs who are building web companies and continually pumping out new products Microsoft has been sitting back watching. Today I realized that the old giant is not slow moving. They haven’t lost their agility in their old age. Using wisdom through experience and knowledge through observation they have created a unique niche that is perfect for them.

For the last year I have been watching them wondering if they were content as the old fogey hasbeen watching themselves in these agile young startups and wishing they were young again. No longer in the business world can you correlate success with size and age. For a long time you could sit back and say, ‘Well, it’s Microsoft. No matter what happens they’ll stick it out on top.’ But as behemoth companies the likes of GM have been ousted from their perches Microsoft has waned in my eyes.

I watched my idol Bill Gates be replaced with two guys who appeared in a Playboy article. Granted, every young entrepreneur or technologist had their dreams of being the Microsoft killer and Sergey and Larry beat everyone to it. Although I’m not one for sports analogies, it’s like watching Lebron James take the torch from Michael Jordan. Every young basketball player wanted that.

Microsoft was no longer the hip young technology company. In an industry that’s as rapid changing as any it had become the old man the family wanted to leave on the porch in a span of twenty years. People, including me, have written them off in favor of younger, faster, more agile companies. Microsoft is slow, stubborn, and old.

I was disappointed as they fell behind in the ‘Web 2.0′ shopping spree. I was disappointed as Google’s stock outshadowed anything Microsoft’s had ever done on the market. I was disappointed when I saw their lack of embrace to new technology.

Then a couple weeks ago I happened upon an article from CIO Insight that discussed Robert I. Sutton’s approach to management: Evidence-based management. Essentially the idea is to evaluate management ideas and business knowledge that’s based on evidence.

According to him you should adopt the following principles (there are more in the article):

• Treat old ideas like old ideas.
• Be suspicious of breakthrough ideas and studies — they almost never happen.
• Use success and failure stories to illustrate practices supported by other evidence, not necessarily as valid evidence.
• Take a neutral approach to ideologies and theories. Base management practices on the best evidence, not what is in vogue.

Apply these ideas to what I think is evidence of Microsoft’s strategy. Just wait and see. They no longer need to be bleeding edge. They no longer need to be the ones expanding the frontier. Microsoft is using evidence based management to define their direction not only in business but technology. Evidence of this came across the AP Wire today with an announcement from Microsoft from their Mix ‘06 conference.

“Microsoft Corp. wants to sell smaller businesses on the idea that its products can offer the traditional benefits of desktop computer software while taking advantage of growing Web-based tools.” (AP Wire)

By sitting back and watching the Software as Service (Web 2.0) wave build up they saw a niche for themselves and their cash-cow products. They saw the drawbacks of service based software as two-fold. The migration from desktop based software will be difficult for 80% of their users (which in Microsoft’s case is 80% of all users). As I discussed in ‘Office 2.0 in a Web 2.0 World‘, the successful adoption of the Web 2.0 platform will only be evident by the adoption of the 80%. A majority of that percentile is the enterprise. The second drawback is the transparency of data ownership. Sure my email in GMail is my email but is it Google’s too?

So, Microsoft in regular fashion, sat back and watched. They found that something needed to connect the two extremes: Sofware as Service and Desktop Software. They came up with a hybrid. Their answer: integration. So, Microsoft may not be on the bleeding edge. They aren’t the hot shot company anymore. But Microsoft is wise, they’ve done it all before. While Google, Yahoo, and the flood of entrepreneurs lead the charge into the Web 2.0 landscape Microsoft will bring it to fruition by acting as the vehicle for mass adoption.

Don’t count them out yet.

Microsoft touts products for businesses from Newsvine and the AP Wire

Robert Sutton’s Road to Wisdom | CIO Insight | February 2006 | Number 64
Read excerpt here.

tags: business, internet, microsoft technology web 2.0