How Microsoft Growth Led to Control Problems
Critical Thinking Issue 1: Relate Microsoft’s problems with its control and evaluation systems to each of the stages of growth in the Greiner’s model. Organizational growth is similar to the life cycle of any living entity. The organization is birthed in an entrepreneur’s head and then goes through the growth cycles to create its own version of becoming a legitimate entity that the stakeholders find dependable, responsible, and having the ability to create value (Jones, 2010).
As the organization grows it must develop skills and competences to create value that in turn make the organization attractive to investors thus allowing it to acquire additional resources to grow even more. Resulting growth generates more revenue it creates the freedom to generate surplus resources thereby allowing for even more growth. Over time as the organization continues the growth process it eventually becomes a mature organization that may be completely different from what it started out as (Jones, 2010, p. 312-313).
The entrepreneur that originally started the organization must learn to choose employees wisely and then trust others that are able to guide the business side of the organization. All this combines together to grow his baby business into a teen-ager and eventually on into adulthood. This change and growth process can be marked by various stages as represented in the Greiner’s Model of Organizational Growth. This Model of Organizational Growth includes five stages of growth as an organization moves from a small, young organization, up to a large, mature one. Each stage has a growth stage followed by a crisis.
How the organization handles the various crisis states determines if the organization will continue to change, grow, and survive, or if it will not (Jones, 2010). According to the Greiner’s Model of Organizational Growth the first stage in the life cycle of an organization is Growth Through Creativity. In this stage the entrepreneurs are birthing or creating their new products and introducing them into various niche markets. During this phase the entrepreneurs learn what products sell and what procedures work. As with any organization, Microsoft started out the same way.
Their first stage worked well because they set the organization up with engineers working in small groups enabling them to work together as a team. This created an environment where new products could be quickly created and developed. During the first stage of growth Microsoft’s reward system encouraged successful performance by a team. If a team successfully developed innovative software they were rewarded with stock and benefits as a team. Highly successful team members were rewarded by promotion to managers or to lead their own new teams (Jones, 2010, p. 330).
However, as the company grew the focus started changing from rewarding the team efforts and the company went through as Greiner’s Model of Organizational Growth, the Crisis of Leadership. To move forward again into the Growth Through Direction, an organization moves from management by the founders to new leadership that is very business and growth oriented. During this growth phase investors become more interested supporting the organization because of the leadership shift (Jones, 2010). In addition to being more focused on the fundamentals of business management, leadership shifts to a more centralized approach (Recklies, 2001).
This was the case with Microsoft. The organization was pushing for more profits and began changing its control and evaluations. Soon Microsoft really ran into difficulty and hit the Crisis of Control (Jones, 2010). The Crisis of Control came because as Microsoft grew it changed from rewarding the team and recognizing outstanding individuals on the various teams, to implementing a rigid performance evaluation of each member on the team. Each individual was evaluated by their manager on a strict 1 to 5 scale. Microsoft implemented this system to increase fairness in their performance evaluations.
The evaluation system caused employees pursued their own ideas and interests and not the teams. Employees became lost in favoritism and bureaucracy and team performance suffered (Jones, 2010, p. 315, 316, & 330). The situation even caused the employees to work against each other in attempts to get the best evaluations (Ricklies, 2001). During this crisis Microsoft lost many of its top engineers to competitors. Some left to start their own companies. All this happened because the organization created an evaluation system that no longer rewarded or motivated their employees (Jones, 2010, p. 30). Critical Thinking Question 2: Microsoft today is most likely in the growth through collaboration stage. How do you recommend it changes its structure, culture, and control systems to solve its problems at this stage? Greiner’s Growth Through Collaboration stage should put the emphasis back on spontaneity in the management and teams. The Collaboration stage shifts control back to social control and self-discipline. The organizational structure should recreate an environment that will motivate the employees by coordinating their activities to make the best use of their talents and ideas.
Microsoft needs to move back to a control system that rewards the teams again rather than focusing on individual success. This will help motivate teams to actively work on achieving the organizational goals of developing innovative products. Greiner advocates the use of product teams and matrix structures to improve their ability to create new products and meet customer needs. This Matrix will create a collaborate linkage within the organization. This will also move the organization away from the mechanistic structure to a more organic organization (Jones, 2010, p. 318 & 330).
These changes will be difficult but should help reshape Microsoft’s culture back towards an innovative organization that supports, encourages, and rewards its valuable employees. References Jones, G. R. (2010). Organizational theory, design, and change (6th ed. ). Upper Saddle River, NJ: Pearson Prentice Hall. Kinicki, A. & Kreitner, R. (2009). Organizational Behavior, key concepts, skills & best practices. McGraw-Hill, New York, NY. Recklies, O. (2001). Managing Growth – 5 Phases of Growth. Retrieved on 12-09-10 from http://www. themanager. org/Strategy/ManagingGrowthI. htm