Tuesday, August 4, 2015
Software Development Business
Lessons from Microsoft
In 1997 Julie Bick, a former senior product manager at Microsoft, wrote a book entitled "All I Really Need to Know in Business I Learned at Microsoft - Insider Strategies to Help You Succeed." Her business primer provides some good insights that will help one-person independent software vendors (microISVs) succeed. Here are some of her Microsoft-based ideas about running a software business:
Learn from your Mistakes
Bick tells us that Microsofties (the term of endearment that employees use to describe themselves and each other) are dedicated to learning from their mistakes.
"Microsofties relentlessly study their underdog products, failed marketing programs, and missed forecasts," Bick explains. "This is not to assign blame or prove why it was someone else's fault. Many of the company's best lessons have come from failures. Microsofties figure as long as they lost all that money, mind share, or market share, they may as well learn something from it."
microISV owners would benefit greatly by following this Microsoft practice. Too many microISVs draw the wrong lessons from their failures and mishaps. The software development forums are littered with superficial discussions about marketing and business failures, and many developers seem to be learning the wrong lessons from these conversations.
One developer will post a question such as "I've been thinking about buying a display ad in a magazine to promote my application. Has anybody tried buying display ads? How well did it work?"
Another developer responds, "I tried it last year, and I lost my shirt. I'll never do it again." And a chorus of other developers thank the responder for the advice.
Truth is, there is absolutely no marketing or business information to be gleaned from a conversation like this one. Was the developer whose advertisement failed in a growing software niche, a mature niche, or a declining market? Did the developer advertise in a well-targeted technical magazine, a general computer publication, or a business journal? Did the advertiser have any experience writing headlines and sales messages? Was the display ad's artwork professionally executed? Did the ad's call-to-action attempt to sell the software, or did it encourage the reader to download the trial version?
Without knowing more information than is usually included in these forum discussions, it's impossible to learn enough about the advertiser's failure to know if other developers might suffer the same fate. Studying failures requires a lot of work. It's dangerous to perform a superficial analysis and draw conclusions about how to best spend your time and money.
Don't Punish Failure
Microsoft's employees are not punished for failures, Bick tells us. The company believes that allowing people to fail makes it easier for people to take risks on future projects.
Often, people who run 1- or 2-person companies are too hard on themselves. Herb Cohen, the author of "Negotiate This," calls this the Personal Pimple Principle. "We judge others by what they have accomplished," Cohen explains, "whereas we judge ourselves based upon how far we have fallen short of our potential capability."
Learn from your mistakes, but don't beat yourself up if you've created problems. Everybody makes mistakes. Learn from them, and do better next time.
Listen to your customers
"You can imagine or guess what your customers think of this or that product or service," Bick tells us. "But there's no replacement for asking them directly."
Most developers' websites don't include their support phone numbers. I believe that this is a serious mistake, for a number of reasons.
It's possible that the trial version of your software has a major problem. And if you encouraged phone calls from your software's users, you'd find out about it much quicker than by continuing with the feedback regimen that you're now using.
If you welcome your customers' phone calls, you can ask them why they bought your software. You can inquire about why they almost didn't buy it. You can query them about improvements that they'd like to see in your application.
What if listing your phone number on your website results in your getting lots and lots of support phone calls? You'll find out what's wrong with your software, allowing you to correct the code, or explain better how to use your application. And you can always remove your phone number again, and reduce the number of annoying support calls.
At Microsoft, most marketing managers must take their turn on the product support lines, listening to Microsoft technicians dealing with customers' complaints. Try this in your business, too, by welcoming tech support phone calls.
Microsoft likes to think small. Microsoft's "small," of course, is what microISVs refer to as "big."
Microsoft's philosophy is to run individual business units like small microISV shops. Sure, they have huge marketing budgets, and oodles of money to spend on research and development (R&D). But employees are empowered to act like they own the product that they're developing.
Microsoft's ability to make decisions at the individual business unit level, Bick tells us, means that Microsoft can compete effectively with nimble microISVs.
Bick quotes Microsoft's Vice President Chris Peters on the topic of changing the rules: "You usually can't win by doing the exact same thing as your competitors, but ten percent better. You need to change the rules to get ahead. Offer something else."
This attitude is even more important for microISVs.
What features should you add to your application next month? Next year? Bick tells us that at Microsoft, the management team is encouraged to think "three moves ahead."
They think about competitors, customers, and partners. All of these parties will react to whatever Microsoft does. And before Microsoft implements any change, their management team thinks through how these people will react - and how Microsoft will respond to their reactions.
Fill Real Needs
Microsoft is always looking to fill unmet needs. They've figured out that there are great rewards for being the company to "get to a new platform, paradigm, or even country first with something customers want."
Remember, however, that even the smallest operating unit at Microsoft has access to R&D resources and marketing money. Be realistic when assessing what it will take for your microISV firm to break fresh ground and create a new category of software.
Openly Alpha Test and Beta Test
Microsoft tries to interact with customers and prospects before developing new software.
Microsofties aren't afraid to show prospects early versions of their software, even if there is missing functionality and an assortment of bugs. It's better to get reactions from prospects to your ideas, Bick explains, than to try to figure out everything while locked in your office.
The Bottom Line
Learn from your peers. But be open to learning more about Microsoft's management process. Adopt the ideas that Microsoft employs if these ideas would make sense in running your software development firm.
For more software development business and marketing ideas, visit my Software Marketing Glossary.