Seven Businesses Plan for FY'04

Executives representing each of Microsoft’s seven businesses reviewed the previous year’s performance and explained their goals for fiscal year 2004 (which began July 1, 2003) at a recent conference for financial analysts. In contrast with past Financial Analyst Meetings, in which Microsoft has revealed new strategies and justified entering risky new businesses, this year’s presentations focused on how the company will turn existing initiatives into slow but steady growth in the coming fiscal year. The presentations also showed Microsoft’s maturation into a company in which divisions have discrete business goals and more autonomy in how they run their businesses.

Long Road to Autonomy

When first introduced in spring 2002, Microsoft’s seven business units were useful mainly as a way for Microsoft and outsiders to track the financial performance of certain product lines, particularly new areas such as business productivity applications and gaming consoles.

This has changed. Over the last 18 months, the company has made organizational shifts that place the product groups in each business unit under a single leader (with a few exceptions), and has given each business its own financial team that controls resource allocation and is responsible for profit and loss. According to interviews published in the Wall Street Journal, CEO Steve Ballmer has given the business leaders more discretion in making day-to-day decisions, such as determining marketing expenditures, making investments or striking strategic partnership agreements, and implementing cost-cutting measures, while still guiding the company’s overall strategy and stepping in to resolve disputes between business leaders.