Get All Access for $5/mo

4 Lessons Microsoft's Resurgence Can Teach Enterprise-Software Startups Once complacent because of the dominance of its software, the company is moving forward in both cloud and mobile.

By Tx Zhuo Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

No one is immune to complacency. A company may sit back to ride a wave of success, only to find some scrappy startup making a leaner, meaner product targeted directly to its users. Suddenly, the company's success becomes irrelevant -- or at least loses some of its relevance.

Related: Watch Microsoft's Eye-Popping Hololens Demo Using Minecraft

That's what happened to Microsoft. Its Windows software led the company to dominance, with 95 percent of computers using the system at its peak. But instead of looking forward, the company hung its hat on its overwhelming popularity and siloed itself.

Then, consumers began using Gmail, which wasn't compatible with Microsoft Explorer. Apple grew in popularity despite the fact that Microsoft Office wasn't native to its system.

Next, phones were transformed into mini portable computers, and it was three years before Microsoft even had a mobile presence. Pretty soon, the Microsoft Office suite plummeted in market share on connected devices and was almost nonexistent on smartphones.

This is a case study in complacency: Microsoft had held on to the belief that its dominance would allow it to dictate the pace of innovation, and that was a mistake. But with the appointment of Satya Nadella as CEO, Microsoft is experiencing resurgence. Nadella is leading the company under the charge of, "We want to move from people needing Windows, to choosing Windows, to loving Windows."

In this context, Microsoft's catch-up game may have some things to teach enterprise-software startups that they should do, including:

1. Build strategic partnerships.

Maintaining success can be as much of a struggle as achieving it. Setting your sights on the present while simultaneously anticipating what's on the horizon is tough for anyone to do alone. To stay ahead of the curve, build partnerships with other companies -- even your competitors.

Microsoft's partnership with Salesforce will connect Salesforce's CRM platform with Windows and Office to enable Microsoft users to be more productive in the mobile and cloud space. To succeed in the enterprise software world, you should find similar partnerships and align yourself with other best-in-class software to build a platform that promotes collaboration.

2. Play to your strengths.

Startups often get distracted by the opportunity to diversify. They either venture into a new market too quickly or start developing new products before perfecting their current offerings. You can't be everything to everyone, so continue to do what you're good at to help maintain (or achieve) success before branching out.

Google built a multibillion-dollar business by focusing on what it knew best: building the world's best search engine. Microsoft, with the help of Nadella, has come to recognize its own core strength: productivity. The company has since refocused its efforts to strengthen its position in this space.

Related: At WWDC, Apple Ripped Off a Bunch of Features From Google and Microsoft

3. Recognize your competition's position.

Nadella brings two important traits to the table: objectivity and pragmatism. He was quick to recognize Google's position in cloud data processing and Apple's ingenuity in user experience and design. Unlike many other leaders, he was never deterred from developing Microsoft's own niches in both cloud and mobile.

In fact, one of his first few moves as CEO was to partner with Dropbox and integrate its cloud service with the Office versions for iOS, Android and Windows. That move quickly got consumers to start seeing Microsoft as cloud-friendly.

4. Listen to users.

So many outlets are at your disposal that you no longer have an excuse to not know what consumers want or need. To be on the cutting edge, you must constantly use feedback to refine your products or services, to best meet those wants and needs.

When Office for iPhone launched in 2013, Microsoft required consumers to subscribe to Office 365 to use the app. Users were frustrated, but instead of ignoring their complaints, Nadella took a bold step by making the app free across iOS and Android. He also used the feedback to improve Outlook's mobile functionality, resulting in an app that's heavily praised by both consumers and critics.

Microsoft's new CEO recognized that in order for his company to win, it would need the support of other leading enterprise software vendors. It needed to play to its strengths and use the position of its competition to its advantage.

Above all, it needed to never turn a deaf ear to consumers. These are things the company had forgotten along the way. So don't wait for a resurgence to put these lessons to work for you -- start now.

Related: Microsoft Says Windows 10 Will Be Available Very Soon

Tx Zhuo

Managing partner at Karlin Ventures

 TX Zhuo is a managing partner of Karlin Ventures, an L.A.-based venture capital firm that focuses on early-stage enterprise software, e-commerce, and marketplaces. Follow the company on Twitter.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Side Hustle

She Grew Her Side Hustle Sales From $0 to Over $6 Million in Just 6 Months — and an 'Old-School' Mindset Helped Her Do It

Cynthia Sakai, designer and founder of the luxury personal care company evolvetogether, felt compelled to help people during the pandemic.

Science & Technology

Get a Lifetime of Raspberry Pi and Arduino Lessons for $70

For businesses with development teams, this discounted bundle is a must.

Business News

Google's AI Is Now Appearing in Gmail and Docs

AI is being introduced to some of Google's most popular products.

Money & Finance

How to Leverage Credit Cards for Business Growth (the Right Way)

By being aware of the risks and embracing best practices, entrepreneurs can make the most of credit cards.

Business News

'Cannot Stop Crying': Hooters Employees Shocked After Dozens of Restaurants Suddenly Close Without Warning

The chain is the latest fast-casual restaurant to face difficult decisions amid inflation.

Business Solutions

5 Actionable Strategies to Improve Your Brand Reputation

For established brands or emerging franchisors wanting to connect with their base, here's actionable advice for improving industrywide reputation.