What do you do when you your market is finite and your brand is ubiquitous? That is the challenge faced by Microsoft Australia’s Managing Director Steve Vamos, recently described by AFR Magazine as the most influential person in Australian IT. Vamos is not daunted by the challenge, nor does he seem reluctant to seek advice from others. Bringing the touchy-feely Microsoft culture down-under, Vamos is a poster child for open communication and new economy values.
After 14 years with IBM Australia, Vamos became Managing Director of Apple Computer Australia from 1994 to 1995 and Vice President of Apple Computer Asia Pacific from 1996 to 1998. From 1998 to 2003, he held the prestigious role of Chief Executive Officer for ninemsn, growing this Microsoft and PBL joint venture from start-up company to online media leader. So, what does the future hold for Microsoft Australia? A change of culture from new player to industry shaper and a shift in sales strategy from volume to education and industry development.
In your opinion, what is Microsoft’s role in Australia?
This is a question that I am often asked. Are you a branch office that does what it’s told? The answer is, No. We have a set plan through to 2007, based on how we want to succeed, customer satisfaction, where we have growth aspirations for the company, how we want the company to be in terms of the people who work here. We are predominately Australian.
And one of the great things about Microsoft Australia is the level of open communication we have here. I have many opportunities to talk to the people working here about what’s right, what’s wrong, and where we should go. I have never worked in a company where I’ve had more access to the management, employees and customers. We are the arms and legs of Microsoft; we touch customers, partners, government and the community.
It’s not like we are a subsidiary in Australia. We are part of a living organism and we have an important part to play in it. If we do a good job in Australia, supporting local industry, we’re successful and industry’s successful. You can’t cut the two apart. There are a lot of different roles we play in the community. It’s not just a sales and marketing operation, you can’t look at it that way.
The Unlimited Innovative Community Program has been launched, the Partners in Learning Program supports innovative teachers and gets technology better incorporated into the education system. These are the sort of things that we’re doing because they have long-term benefit for the economy, industry and Microsoft.
What does Microsoft Australia spend on R&D?
The company’s total R&D spend is U.S$6 billion and in terms of Australia’s involvement in that, we don’t have a Microsoft development centre in Australia but our R&D centers in Asia collaborate with Australian Universities. So there are many projects that we do there. We have a couple of ideas in development around us collaborating more with organizations, such as NICTA [National ICT Australia]. So, in terms of Australia, it’s really about supporting our R&D groups and developing linkages with local centres of excellence in R&D.
The ISV (independent software vendor) model is an interesting model. It seems like a strategy geared toward growing the pie rather, then consuming it in incremental chunks.
You have to start somewhere; you have to start with an existing market. We see our ISV’s as having two functions. There are definitely two focuses. One is about serving the market today and the other is about developing the software industry and potential Microsoft ISV’s for the future.
Parts of our business today are not about sales, but focus on the longer term. Our developer and platform groups are not measured on revenue this year. They are measured on how many new ISV relationships they can develop. For example, they are measured on how many are signing up to .Net.
What is .Net?
.Net is an industry cluster for the ICT sector. It is a government partnership. We don’t control it; we are a contributor to it. There are other examples, there’s a company that just received our global partner award, Bookstone Technologies, which is based around wireless solutions. It is being helped by Microsoft to expand its business overseas and gain business here.
In Australia, like most of your markets, Mircosoft already has a large slice of the market. And there is a finite number of computers and workstations. How do you go out there and build your market?
The way I look at it is to say, ‘Do we think every customer is getting the best value from technology and are they saturated by the technology that we have to offer’? The answer is overwhelmingly, ‘No’. There are lots of opportunity out there for us. We, as a player in the industry, can do so much more and help our customers get so much more value from technology already available. So, that’s our challenge.
Look at Office 2003, it’s a break through. It’s not a word processing package. It’s that, plus group collaboration. So, we need to articulate to the customer the value of having your people teamed, collaborating and using tools like Share Point and Live Meetings and all these technologies that we have right now to improve the quality of communication. So, we have lots of products that our customers aren’t using, but would gain value from if we were better able to articulate the value they offer. So, I see lots of opportunities, whether they’re in the top end or the consumer end.
Do you think that comes about largely as a result of consumer behaviours?
It’s always easier to win customers who already understand the value of a new technology. Unfortunately for us, they are the early adopters or the IT advocates. Most of our customers are the people at home who don’t really want to know the ins and outs of the technology. Or they are people in a company or small business who just want to do business.
And that’s where we have to do better. We need to understand those customers better then anyone else. It’s the same in telecommunications, media, retail, manufacturing, health, defence and other verticals. So, we’re heading in a direction where our company is structured around customers. So, we think about how we can help them, instead of simply saying, ‘Hey, we have Office 2003. You should buy this.’ That’s the focus.
How similar is the culture that you’re building here in Australia to Microsoft in the US and how different is was it when you first starting managing Microsoft Australia?
I was attracted to Microsoft, because I worked for ninemsn before I got exposure to Microsoft. What excited me about Microsoft was the commitment to change that Balmer had as a CEO. So, what he did was publish a list of values for the company that were six behavioral codes. He said, ‘Look, we’re now a grown up business. We have to be different in the way we look at things. We need to be more mature in our approach to business as an industry leader. We are no longer a start-up that’s up against one of the big players. We are one of the big players. We have to change the way we behave.’
He implemented these cultures, these values. And they are values that I can relate to and I believe in. So, we are in a transition phase. Some people will understand this culture, some may not. It’s a corporate led thing, but it’s something I like doing and something I believe in. So, I hope that we get there fast, as fast as any part of the Microsoft organisation. We need people to feel good about the company, and not see us as an aggressive player but as a responsible leader. That’s a change.
Changing culture is a difficult process. What can you do to bring about cultural change in Australia?
The first thing to do is make sure everybody in the company, no matter who they are, understands the broader goals of the organisation. So even if your job is stamping a form, you need to understand why this is important to the organisation, because then you will begin to question whether this is the best way to do something to meet the needs of the company. So, broader knowledge of where we are going at a really high level is important, so that every Australian employee will, I hope, know what our priorities are.
The second thing is to instill a really strong sense of values, culture and behaviors. When our people get reviewed now they don’t just get reviewed on whether they made the numbers, or whether they did the job the way they were supposed to, but how did they do that job? Did they display teamwork? Did they help others? Did they demonstrate an open and respectful style of communication? So, what we are trying to do here is promote not what you have to do but how you’re going to go about it. Those are the two main things. If you do those two things you can create great organisations.
That emphasis on behaviour rather then results – how does that fit into a growing organisation? Should an organisation begin thinking that way or is it a luxury exclusive to big corporations?
When I joined ninemsn, the directors had already established a private company with 80 staff. There was an acting MD, but not a permanent position until I arrived. When looking at the skills of those people, they were as good as any at any time in the history of the company. The issue was that these 80 people each had a different view of what they wanted to do and how they were going to do it.
The job that we had to do was bind the team together. We had to become team orientated. For example, the network design lead in those days was someone who wanted to build a homepage that he felt was visually outstanding. But the homepage of ninemsn has to reflect what is technically possible, what marketing needs in terms of brand and promoting the network, what the content guys need in terms of being able to display information that will draw people’s eyes to the homepage and what the sales guys need for good advertising opportunities that they can sell. So you create a brief and then the outcomes are quite clear.
The designer I had back then could produce a homepage that was as beautiful as any homepage in the world, but he wasn’t interested in a brief that was restrictive. So the designer that we have now is a person who understands the need to take all these inputs and produce the best business outcome. And whilst it will be a great homepage, it will be great within certain parameters. So, are the skills of those two designers different? Probably not, but with the second designer the attitude was about the team – sharing and doing what’s best for the company, not necessarily optimising the homepage from a purely visual design viewpoint.
What are your goals moving forward?
Where the gains are really going to be made now is not by making your finance department better at finance or your sales department better at sales. It’s going to be about how you make the different functions of your company integrate to (achieve) the broader goals of the business. I call it ‘we’ not ‘me’. If you’re the finance guy, for example, you should be quite ready to trade something in your department, in terms of a goal, an objective or program, for the better of the company. That’s one way we will be moving forward.