Software giant Microsoft Corp. has long been known as a company that tightly controls all aspects of its marketing and communications with customers, business partners, analysts and the media. Company announcements, product news, marketing initiatives and executive presentations are carefully orchestrated by its internal marketing organization and its long-standing public relations firm, Waggener Edstrom.
The software company is somewhat secretive, requiring all media calls, requests for interviews and inquiries to go through the well-oiled machinery of its PR bureaucracy. And Microsoft typically doesn't pitch stories to publications.
That's why BtoB was surprised to get a call from Waggener Edstrom with an offer to interview a senior Microsoft marketing executive about what the company is doing to change its image and develop a more open marketing culture.
`The first time we've done this'
"This is the first time we've done this type of outreach. It is unusual," said David Hamilton, director of Marketing@Microsoft, a 2-year-old organization that is charged with developing best practices for marketing and communicating the company's marketing mission internally and externally.
The fact that Microsoft is reaching out to the media and analyst community to talk about the change is news in itself.
"Microsoft as a company has been more proprietary with its marketing," said Hamilton, who has been with the company for more than 10 years. "We want to be clear about what we want marketing to stand for as a company and what changes we need to make. To drive the next generation of growth for the company, we need great marketing."
Ben Bajarin, an analyst at consulting firm Creative Strategies, said, "This is a fundamental shift in their current organization. They are trying to gain market insights and knowledge so they can do a better job developing the first two versions of their products."
Bajarin said that in the past Microsoft sometimes had to develop four or five versions of a product before people really wanted to use it.
Internally, Microsoft is changing the way engineering and marketing work together in order to create a more cohesive and seamless product development process.
"This is a very different way of doing things," Hamilton said. "We are an engineering company. Marketers have been involved in an unstructured fashion [with product development]."
Previously, marketers did not get involved in product development early in the process. "This has never been done, and, quite frankly, it should have," Bajarin said.
Now, about nine months before Microsoft starts developing any code for a future product, it brings together a group of senior marketers and engineers to develop a value proposition process.
"During the first three months, we conduct a detailed marketing opportunity analysis, looking at micro and macro factors," Hamilton said. "We then spend the next six months doing a habits and practices study, looking at what customers do independently of the product."
For example, Microsoft's market research group, which has grown to more than 100 people in the last two years, trails customers and watches everything they do in an office environment, such as using e-mail to communicate with colleagues or walking to the next office for a conversation.
This process has been used in three pilot projects so far, including new versions of Office, Visual Studio and Exchange.
In addition to developing new internal processes for product development, Microsoft is changing its external marketing communications processes, including the development of advertising campaigns for new products.
"The perceptions we were trying to change and the ways we changed perceptions weren't as clear as they could have been," Hamilton said.
Now Microsoft is working more closely with its advertising agency, McCann Erickson San Francisco, to identify customer perceptions about its products and what needs to be changed to communicate product benefits more clearly.
For example, when Microsoft began developing an ad campaign for a new version of Office 2003, it realized it needed to change perceptions of older versions of the software.
"Traditionally, we tried to `deposition' our competition. Now we needed to deposition older versions of Office," Hamilton said.
However, in ad campaign testing, customers felt Microsoft's strategy was a negative approach because they had an emotional connection to the product, he said.
"So we changed our strategy. Rather than depositioning Office 2003, we talked about the pain points, and we were able to tie the pain points to solutions in the current version," Hamilton said.
The result was a new campaign for Office 2003 called "A New World of Work." Created by McCann Erickson, it featured dinosaurs and used humor to convey product changes.
To develop its marketing department into a world-class organization, Microsoft has launched an aggressive recruiting and training program, in which it hires between 70 and 80 college graduates and MBAs from campus recruiting programs each year.
The recruits get training from Microsoft executives, including CEO Steve Ballmer, and are assigned mentors within the organization.
In performance evaluations, the recruits were found to surpass the performance of marketers in the organization with a similar level of experience.
"Unless we grow great marketers internally, we won't be able to do great marketing," Hamilton said.