I’ve been thinking about how MSFT has made the move to change one of their core products, MSFT Office, fundamentally changing the way they do business. This, in my humble opinion, is in response to what they’ve seen newer, and some smaller companies do. Please see previous post in which I elaborated on this. I see other companies that would fundamentally have to change the way they do business. For instance, the pass on the Free the Airwaves initiative could potentially effect the business models of ISPs. They need to understand the implications of this, and how this can potentially change user behavior.

Comcast and other ISPs could be like EarthLink (full disclosure: I used to work for EarthLink) or AOL, if they don’t decide to reposition themselves. EarthLink held on to its dial up business for too long, and never made the adjustment. They have high speed access, but they are a reseller , so there isn’t enough margin for that to be a sustainable business. Over the past few years, they’ve begun to layoff the majority of their staff.  The strategy never changed. AOL made a transition from subscription based revenue to an advertising revenue model. And they’ve also acquired properties such as Bebo which helps them keep up with current online trends.  An organization has to have vision, one can’t assume that the industry will remain the same.

I remember having a conversation with Doug White, from Mindcomet (i’ve cited this before as I frequently revert back to his statement) but paraphrasing “if Union Pacific or Norfolk Southern would have thought of themselves as a transportation provider, instead of a rail road company, we’d all be flying Union Pacific” or Norfolk Southern. I interpret this statement as companies can’t be myopic when it comes to how they perceive themselves. There must be constant checks and balances in order evolve with where their particular industry is going, and identify opportunities in which they can take advantage of because of either legacy systems, historical knowledge, technology, and/or expertise.

Just like how BP changed from British Petroleum to Beyond Petroleum. British Petroleum merged with Amaco. Amoco (formerly Standard Oil of Indiana) in December 1998, becoming BPAmoco until 2000 when it was renamed BP and adopted the tagline “Beyond Petroleum,” which they still use today, recognizing that they had to be more forward thinking. Apple changed its name from Apple Computer to just Apple, realizing that they were becoming more than just a computer company. Steve Jobs, Apple CEO and Cofounder,  argued that traditional computing was now just a part of his firm’s overall business strategy, which now focuses heavily on handheld devices and those built for the living room.

I think their are other companies, in other verticals, that need to change their approach and thinking. Some larger organizations can be on offense versus being on defense. Being reactive to market isn’t a good thing. They just need to be a little broader in their approach and more nimble. Larger organizations tend to hamper innovation, and they can be slower to market. While smaller organizations remain nimble.

Yesterday, Microsoft(MSFT) announced that Word, Excel, PowerPoint and OneNote will have a new home in the cloud.  I previously had concerns on how MSFT was going to handle/compete with products such as Zoho, Google Docs and SlideRocket and IBM’s Lotus Symphony.  Not to say that they couldn’t, just when were they going to release some products to protect their core business.

However, this new announcement lets me know that they are thinking about how the industry is changing and how it effects their core product offerings. This is definitely a good strategic move for them. They are in a position to take advantage, considering their market share. Consumers are already familiar with their products, so this could be a easier transition, versus them moving over to a new brand.

In, Bill Gates’ book, “The Road Ahead” , which I read in college, he hints at some of this, and I’m glad that it looks like its coming to fruition.

Related Articles:

From FT.com Microsoft in online Office demonstration

From Gigaom.com Microsotf Office is Coming to the Cloud