Open Innovation and Microsoft

The assignment delves into the topic of open innovation and its application within Microsoft. It examines various aspects of Microsoft's open innovation strategies, including collaboration, co-creation, and the use of external resources. Students are expected to analyze how these strategies have influenced Microsoft's product development processes and contributed to their competitive advantage in the technology market. The analysis should draw upon relevant academic literature and real-world examples of Microsoft's open innovation initiatives.

Running head: MICROSOFT
Microsoft in its innovation
Name of the Student:
Name of the University:
Author note:

1
MICROSOFT
Executive summary
This text is based on the Microsoft company innovation framework and kind of innovation
strategy they uses. Theoretical underpinnings of their innovation process and the absorption
capacity in regard of their innovation are discussed broadly. There is also discussion about the
partners of Microsoft and how they help the company in their business processes. There is also
discussion about the company’s competitor in the global as well as in regional sections. The
discussions about the company’s product curve and what are the innovation in the internal
structure of the management is given in the text. The current state and future innovation in the
product and services is given. The product curve of their one of many products is also discussed
in the following chapter. The associative company, which have entered in joint ventures, are also
discussed in the text.

2
MICROSOFT
Table of Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................3
Company history..........................................................................................................................3
Current state.................................................................................................................................4
Information about the company...................................................................................................4
Identification of the competitors..................................................................................................5
Description of the innovation in company’s management processes..............................................6
The development innovations in products...................................................................................6
The development of innovations in process and services in management..................................8
Theoretical underpinnings of framework of innovation in Microsoft.........................................9
Management and innovation......................................................................................................10
Internal management structure..................................................................................................11
Management process Microsoft follows....................................................................................11
Product S curve..........................................................................................................................12
Promotion of innovation............................................................................................................13
Absorptive capacity of Microsoft..............................................................................................14
Social perspective of Microsoft in market.................................................................................15

3
MICROSOFT
Ventures of Microsoft................................................................................................................16
The impact of future innovation platform of Microsoft................................................................18
Reference.......................................................................................................................................19

4
MICROSOFT
Introduction
Company history
Paul Allen and Bill Gates founded Microsoft. The initial operation was on computer
programming and named their company as Traf-O-Data in 1972. The rudimentary program work
was to analyse and track automobile data traffic. The first and foremost product was a basic
interpreter and named Altair BASIC.
The first operating system invented in 1980 and its first own version was Unix and
Xenix. With the dominance in MS-Dos operating system, they became the leading Personal
Computer operating vendor in market. Microsoft released Microsoft windows and OS 2 with
graphical extension and in 1985, they went public with the rise in stock. From 1985 to 1994, they
expanded their product program in 32 bit OS and Microsoft Windows NT. It also started
expanding the World Wide Web to in computer networking. Online services were also given
with the product offerings (Zhang, 2012). Like other companies they also formed Trusted
Computing Platform Alliance and started protecting its
Current state
Microsoft is a technology exclusive company whose mission is to empower every
person’s personal computing experience. The platforms and productivity innovation in their field
of service, mobile software’s and cloud computing also comes under their product service area.
Some of the highlighted area for discussion of present state of the organisation operating from it
is headquarter in United States capital Redmond, Washington is below. Commercial cloud
revenue rate was around $12.1 billion. Office 365 consumer subscription has increased.
Microsoft dynamics CRM online seat additions also increased. Microsoft Azure and SQL

5
MICROSOFT
databases Customer relationship management program solution doubled over the year. Windows
10 upgradation. Xbox active users also increased.
Information about the company
Microsoft is headquartered in Washington and John W. Thomson is the independent
chairman of Microsoft Corporation, CEO is Satya Nadella , Charles W. Scharf is the Chief
Executive, Visa Inc. William H. Gates 111 is co-chair and Trustee. The products and services
offerings of the company in current market are listed below.
 Microsoft Windows
 Microsoft Servers
 Microsoft Azure
 Microsoft office products
 Artificial intelligence and enterprise division
 Business Networking is also a future division in the Microsoft co-operation.
The number of employees as of 2015 is 120,849. The flagship store all around the world
are situated in the new York city and the storefront is of 22,270 square feet
The logo of this company was adapted from Pac-Man and the new logo is in Helvetica
italic typeface.
Identification of the competitors
The major competitor of the Microsoft is Apple Inc. This is the most prominent
Information Technological Company. Apple competes with Microsoft in operating system and
software development for different interface and devices. The other competitors are Google,
SAP, IBM (once a partner), and Oracle. In the area open source software Red Hat is the major

6
MICROSOFT
competitor of Microsoft as there operating system is also famous and have more protection like
Linux. In device, manufacturing services Microsoft have competition with Logitech (Pisano,
2015).

7
MICROSOFT
Description of the innovation in company’s management processes
The development innovations in products
Over the last three decades, the company has been in the attention of whole information
technology. However, some of the major innovation in the products has caught eyes of many
critics of the industry.
The following is the discussion of the products and its divisional innovation
 Microsoft Windows:
In this product division windows has developed many range of products like mobile,
tablets, windows surface, Windows personal computers and interactive whiteboards like
Microsoft HoloLens, which is a set of virtual reality smart glasses and gaming brands. In
addition they also provide various accessories like mices, keyboards, webcams, headsets
and game controllers and MSN web portals (Aramburu, Sáenz & Blanco, 2013, April).
 Microsoft Servers:
This includes the new range of servers products like Windows servers, Exchange servers,
Skype business servers and SQL servers
 Microsoft Azure:
Microsoft Azure is a cloud-computing platform developing from 2007 for servers and
other products are Microsoft Visual Studio known as compilers. Another product of
Microsoft is Microsoft Dynamics which is a ERP system solution for Customer
Relationship Management software application software.
 Microsoft office products:

8
MICROSOFT
This is a bunch of software solution for Windows PC and Macs applicable to mobiles too.
Other Web apps of Windows are Windows Live, Skype, an application for video chat and
call services.
 Artificial intelligence and enterprise division:
In this division of Microsoft, they have developed Bing; a web browser in User Interface
also works as a decision engine. Microsoft research was created with the intent to
advance state and art of computing advancements and technological collaboration with
academic and government industry researchers.
 Business Networking is also a future division in the Microsoft co-operation.
Further development of different product in recent years
 Machine learning innovation is known to be the foundation of future base of the IT
industry and they are supposed to be the initiator in the field.
 Hololens is virtual interface for people to interact with computers projected in the third
dimension in front of one’s eye (Lee, Olson & Trimi, 2012).
 Universal apps in latest version of Windows
 Surface hub and surface book for people in using conference room equipment
presentation and collaboration. Human computer interaction and information
protection(Lee, Olson & Trimi, 2012).
 Social computing system architecture and cloud computing surface design
The development of innovations in process and services in management
The process and service innovation for the company is dependent on the organisation
culture. Overcoming barriers for innovation is certainly dependent upon the culture development

9
MICROSOFT
and structure of the organisation. Developing framework for initiating innovation was the first
stage to enabling the organisation to incorporate innovation in their process and services. The
process of innovation management was followed by the five stages in Microsoft. They are
Envision, Engage, Evolve, Evaluate, and Execute.
The business goal of the company is planning process to drive acquisition of IT programs
and products strategies. The process also involved co-creation within the company products.
Next stage was to engage the employee in the innovation process, focusing, and formalizing
transformation and business strategy innovation (Lee, Olson & Trimi, 2012). Developing digital
innovation platform, collect the collaborative ideas and evaluate the opportunity to gather key
people for brainstorming, collaborating the big data and social media to gain insight in the
innovation. Evolving and evaluating the ideas and then planning a evidence based plan to
develop it (Wonglimpiyarat, 2012).
Theoretical underpinnings of framework of innovation in Microsoft
Innovation includes development and implementation of something new. The concepts of
radical and incremental innovation are quite opposite of each other. Radical innovation is a
discontinuous innovation and incremental innovation implies the small adaption of characterised
changes systematically (Eisenach & Lenard, 2012). The innovation service is characterised as
being intertwined part of characterised changes. The evolutionary nature towards radical change
is a strategy and significant to process innovation. Innovation is dependent upon the multiple
factors of a company (Pisano, 2015). The two internal drivers of innovation are – employees and
management, another is strategy.

10
MICROSOFT
The relevant antecedents of innovation are one is Research and development based
competence. This factor is favourable for Microsoft. Second is Employee based competence,
which is dependent upon the two factors in a company (Eisenach & Lenard, 2012). The idea
collaboration and development of knowledge are the two factors, which are also favourable
factor as long as innovation novelty is checked. Third is customer’s base competence, which is
backed by customer information and cooperation. As for Microsoft the Online CRM system
takes care of their company-customer loyalty and reputation (Meijer et al., 2012).
Management and innovation
Microsoft has different framework for innovation management known as DIRA
framework (Discrete Industry Reference Architecture) for manufacturing technology. To support
and innovate three imperatives are Innovate, perform and grow strategy (Wonglimpiyarat, 2012).
The five-core pillars innovation of framework is
 Collaborative product design as Natural user experience
 Rule based productivity
 Social business
 Smart connected device
 Dynamic business networks.
Microsoft and Microsoft partners solution goes by the same innovation processes and
integrated technology and real-time collaboration supports innovation management. SharePoint
server and office 365 for comprehensive insights and reports enable this process (Meijer et al.,
2012). The Project server and Project online is for market based business intelligence. Office
Professional is for developing materials of content, media and voice and messaging. Natural user

11
MICROSOFT
interface like Windows 8 Kinect for Windows and scalable infrastructure office 365 and
Windows Azure is to measure the high performance and accessibility of idea communities and of
associated application (Lendel, Hittmár & Siantová, 2015).
Internal management structure
Going by the industry trends and aligning the resources with the public
Interests and trends with demand also come under the value of competitive forces. The company
is highly competitive and have more contributions to the economic development and influence in
Information technology influence (Chesbrough, Vanhaverbek & West, 2014). They also adapted
a change in the organisational structure during the last financial year and the CEO Satya Nadella
reported a significant rise in performance of the company in financial terms. The revenue
according the financial report of Microsoft is $85,320 million, a decrease of 9%. Gross margin $
52,5240 million and earnings per share $ 2.10 percentage change of 42%. The revenue decrease
was net deferral from form Windows 10 and unfavourable foreign currency impact (Lendel,
Hittmár & Siantová, 2015).
Management process Microsoft follows – the company is public limited company listed in
NASDAQ as MSFT. The company shareholders are major part of the Microsoft Co-
operation("Microsoft 2016 Annual Report", 2017).
Product S curve – The organisation innovates many hardware and software as discussed above.
One of the best-known software is Microsoft office. This included the excel, word, access, notes,
PowerPoint and others. Microsoft office was first introduced in 1988 and then the company

12
MICROSOFT
innovated and upgraded the product in the recent years in 2007, 2010, 2013, 2016(Chao, Parker
& Davey, 2013, July). Therefore, though this product was introduction and growth stage at first,
it reached its stagnant stage in the upgradation years because of the competition with Google and
their innovation with the same category of same products. It is still in its stagnant stage in the last
two years.
Promotion of innovation
The company Microsoft Partner solutions also takes part in enabling innovation management and
the partners also provide solution to support sub processes of innovation management.
 NewsGator improves productivity of Microsoft and employee engagement through the
advanced social computing capabilities. Millions from the users of organisation depends
on NewsGator to discover, drive and energise business processes. They are compatible
with the Windows Phone, Lync office Dynamics. This is one among the Microsoft Gold
Certified partner.
 PTC is program portfolio management manufacturer and integrate the management and
transforms the product data. The company also provides consultancies in product
development solutions (Amit & Zott, 2012).
 QuantumPM is an innovation director and gives information about the competitive
advantage. This also provides the creativity factor for business excellence.
 Siemens PLM Software is global giant in Product Lifecycle management software. They
also provide solution for 3D computer aided design
 Sopheon Co-operation is end to end global solution for enterprise innovation
Performance and known to be best domain expertise (Chao, Parker & Davey, 2013, July).

13
MICROSOFT
 Avande is a Microsoft innovation implementing partner which empowers the people
with social computing brilliancy and change management (McGrath, 2013).
 Capgemini brings all necessary techniques and tools in supporting the managed service of
Microsoft. Managing their Target market subject matter expertise to support market and
projects server and development also align the portfolio management is known as the key
supporting feature of management(Amit & Zott, 2012).
 Pcubed is a Innovation and Portfolio management(IPM) partner of Microsoft. IPM
services provide the toolkit to enhance the execution capability of their client("Microsoft
2016 Annual Report", 2017)
Absorptive capacity of Microsoft
Absorptive capacity, as defined as the assimilation, utility and exploitation of knowledge
of firms are large. Microsoft’s absorptive capacity is potentially threatening as the use and
exploitation of the accumulated knowledge and implementing that in innovation is done to
greater extent (Saebi & Foss, 2015). The aggressive innovation strategy and winning the battle
with Netscape is quite a spectacular step. Incumbents of pre-emptive innovation strategy are
known to create a monopoly market for firms aggressive in innovation and that is what have
been done my Microsoft.
Social perspective of Microsoft in market
The company came into existence in the late seventies but constant development of its
products and services are made it a leader as well as a challenger in the latest market. The
different operating system for personal computer has captured and remained in business for long

14
MICROSOFT
and adopted by every desk and person known to exist. In addition, they also remained
competitive in the pricing factors. Before android software, application came into existence
Microsoft and Apple was only the two big competitors in the IT market(Aramburu, Sáenz &
Blanco, 2013, April). In addition, the backward compatibility of their products are has also given
them an immense advantage in the software application business. The Investment in upgradation
of new trends also worked in favour of the company. Being the first mover and maintaining a
smooth as well as different operating system has increased its visibility in application.
Introducing new and innovative user interface and every time it came into market, they provided
new support to the programming interface. Some of the major factors that contributed to its
success are discussed.
Providing the market with according the customer preference is one of the major strength
of Microsoft. The variety of business and office franchises made them monopoly in the certain
years("Microsoft 2016 Annual Report", 2017).
The Windows dominant operating system remains dominant in the years.
Xbox invention and evolved strong interactive TV platform added division has grown to
impress the user too much(Norman & Verganti, 2014).
The first mover of cloud computing service Microsoft Azure is predicted to be the
operating system of Future.
Ventures of Microsoft
A different division of Microsoft known as Microsoft ventures which focuses on the
start-up investments and Microsoft enablers and Microsoft Accelerator. Israel (Reuters), which is
a Airobotics product development company got into a venture with Blue Run ventures China,

15
MICROSOFT
Microsoft Ventures and OurCrowd.com. The venture is of $32.5 million. In addition but the
company is always willing to help the start-ups and joins a venture with them. Recently they are
investing in the area of building Data Centre and cloud, Cyber Security, Mobile and Wireless
services, New Media, Digital Home. Their recent ventures are in Partnership with OpenAI is to
empower people and help people in machine wok, improve capabilities of workforce. Other
ventures are i3 Equity partners with Israeli IoT, Zipwhip- a SaaS provider, Paxata, xAD,
Dynamic Signal, Tact, which is sales experience platform.
Ability to venture with the right people at the right time and chose partner effectively,
which is a outcome of efficient leadership and effectiveness from employee part. The strong
technology partner is having always backed up their future prospective (Norman & Verganti,
2014)..

16
MICROSOFT
The impact of future innovation platform of Microsoft
Future innovation vision of the company is ambitious and focussed on the driving more
productivity, building a intelligent cloud system, also creating more personal computing
experience. Application of machine learning to make the technology platform more intuitive.
Building and including more augmented reality system(McGrath, 2013). Developing new
devices and application to develop more natural way of communication. Increasing the
holograms advance tech for more augmented reality. Microsoft most awaited innovation is in the
field of machine learning capability of microcomputers and building the dynamic solution for
financial management of companies and information workers (Von Schomberg, 2013).

17
MICROSOFT
Reference
Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan
Management Review, 53(3), 41.
Aramburu, N., Sáenz, J., & Blanco, C. (2013, April). Structural capital, innovation capability,
and company performance in technology-based colombian firms. In Proceedings of the
International Conference on Intellectual Capital, Knowledge Management &
Organizational Learning (pp. 20-29).
Boudreau, K. J., & Lakhani, K. R. (2013). Using the crowd as an innovation partner. Harvard
business review, 91(4), 60-69.
Briggs, A., King, C. T., & Smith, T. (2015). Sustaining Two-Generation strategies: A Case study
of Tulsa’s CareerAdvance® Program.
Chao, J., Parker, K., & Davey, B. (2013, July). Navigating the framework jungle for teaching
web application development. In Proceedings of the Informing Science and Information
Technology Education Conference. Informing Science Institute.
Chesbrough, H., Vanhaverbeke, W., & West, J. (Eds.). (2014). New frontiers in open innovation.
Oup Oxford.
Eisenach, J., & Lenard, T. M. (Eds.). (2012). Competition, Innovation and the Microsoft
Monopoly: Antitrust in the Digital Marketplace: Proceedings of a conference held by The
Progress & Freedom Foundation in Washington, DC February 5, 1998. Springer Science
& Business Media.

18
MICROSOFT
Hojjat, H., Iosif, R., Konečný, F., Kuncak, V., & Rümmer, P. (2012). Accelerating
interpolants. Automated Technology for Verification and Analysis, 187-202.
Hojjat, H., Konečný, F., Garnier, F., Iosif, R., Kuncak, V., & Rümmer, P. (2012, August). A
verification toolkit for numerical transition systems. In International Symposium on
Formal Methods (pp. 247-251). Springer, Berlin, Heidelberg.
Lee, S. M., Olson, D. L., & Trimi, S. (2012). Co-innovation: convergenomics, collaboration, and
co-creation for organizational values. Management Decision, 50(5), 817-831.
Lendel, V., Hittmár, Š., & Siantová, E. (2015). Management of innovation processes in
company. Procedia Economics and Finance, 23, 861-866.
McGrath, R. G. (2013). Transient advantage. Harvard Business Review, 91(6), 62-70.
Meijer, H. J. M., Beckman, B. C., Brumme, C. W., Shields, M. B., & Zhu, W. (2012). U.S.
Patent No. 8,209,674. Washington, DC: U.S. Patent and Trademark Office.
Microsoft 2016 Annual Report. (2017). Microsoft.com. Retrieved 6 September 2017, from
https://www.microsoft.com/investor/reports/ar16/index.html
Norman, D. A., & Verganti, R. (2014). Incremental and radical innovation: Design research vs.
technology and meaning change. Design issues, 30(1), 78-96.
Pisano, G. P. (2015). You need an innovation strategy. Harvard Business Review, 93(6), 44-54.
Saebi, T., & Foss, N. J. (2015). Business models for open innovation: Matching heterogeneous
open innovation strategies with business model dimensions. European Management
Journal, 33(3), 201-213.

19
MICROSOFT
Von Schomberg, R. (2013). A vision of responsible innovation.
Wonglimpiyarat, J. (2012). Technology strategies and standard competition—Comparative
innovation cases of Apple and Microsoft. The Journal of High Technology Management
Research, 23(2), 90-102.
Zhang, Z. (2012). Microsoft kinect sensor and its effect. IEEE multimedia, 19(2), 4-10.