One of the more interesting tasks I faced during my business career was in 1997 when I was the COO at Microsoft and it was becoming very clear that the internet was for real and that someday people would no longer be buying software on CD’s. They would be downloading software off the internet and totally eliminating the need for packaged software; i.e., a box containing CD’s and a manual.
To complicate matters, the manufacturing arm at Microsoft that produced those boxes employed about 500 people. Also, Microsoft owned the manufacturing complex where all of this was produced.
The options were tough. If you did nothing, then it clearly wouldn’t be long before the facility would be useless and 500 people will be left without jobs. Option number two was to see if there was a buyer for the facility including all of the CD equipment and personnel. In 1997, virtually all music was being sold on CD’s so we approached the various outsource vendors that produced music CD’s for the key players in the huge music industry. We found a firm that was very interested and negotiated the price as well as the employment contract for all of our employees with the exception of a few managers at the top of that organization that the buyer clearly did not need.
The deal was executed in 1997 and we got a not-great but decent price for the facility, equipment and people and avoided what was likely to be a calamity within the next 5-7 years.
There are valuable lessons in this example:
1.) He Who Hesitates Loses – When faced with the need for change, it is often the case that you are so much better off by moving quickly; ahead of your competitors and with the ability to design the future yourself as opposed to reacting to a situation that is forced upon you.
2.) Plan Carefully – Changing the nature of organizations and closing down projects are complicated tasks. You need to assign your best people to planning and probing the details of all that needs to be considered. The financial impact needs to be carefully evaluated and the biggest risk is the inherent bias on the part of personnel to favor the status quo.
3.) Treat People Fairly – At Microsoft, while the reality was that eventually those people in the CD manufacturing facility would need to look for other kind of employment, the pain would be put off significantly. Importantly, this sale signaled to employees that they need to think about their next career step.
When facing change, leaders need to remember: the pain is typically worse the longer you delay!