Microsoft Layoffs: Another Signal of What's Ahead for Family Enterprises and How They Operate
4,800 roles have been eliminated at Microsoft. Understanding the catalysts for these layoffs gives us important clues about how some family enterprises will soon manage core business operations.
Last week, Microsoft cut nearly 5,000 jobs or 2% of its global workforce. We saw the same AI-related layoffs at Meta (formerly Facebook) in May: 8,000 employees let go, or 10% of its workforce.
This news is notable, sure, but does it have any impact on my own company (i3), and the family enterprises we serve? I believe the answer is yes. And the reason why starts with this excerpt from the Los Angeles Times:
Starbucks Corp. is developing in-house tools with the help of artificial intelligence that could replace some software applications it now buys from companies such as Microsoft Corp. and International Business Machines Corp.
A trend is quickly emerging, and the reasons why are worth studying. For us, this pivot made by Starbucks is validating, another reassuring signal that justifies my own investment in building i3’s proprietary software, RAAMP.
Also, remember, this isn’t really about “software.” Software is only the tool modern businesses use to run their companies’ operations: payroll, customer service, supply chains, sales and so on. So what we’re seeing is a big pivot away from the operating tools we’ve relied on for the better part of the last 25 years toward something entirely unproven.
Yet, successful companies like Starbucks are willing to make this move, favoring a custom build (now possible through the expertise and efficiencies of AI) over the one-size-fits-all approach offered by cloud-based software subscriptions (think Microsoft, Intuit — the developer of QuickBooks — and many others).
But is this move worth it for middle-market firms like i3 and the many family enterprises in our orbit?
We believe it’s absolutely worth it. And just as the news of Microsoft’s layoffs worked its way through last week’s news cycle, we published this article detailing why smaller companies that are not in the software development business may benefit from doing just that — building their software.
It’s the price of admission in an emerging economy shaped by a seismic shift in our digital landscape:
According to CIO, a publication for tech executives, “The organizations that recognize this shift early will not just move faster — they will compound intelligence faster, creating asymmetric advantage in markets where speed alone is no longer sufficient.”
Please understand, this isn’t about greasing the wheels of your company’s operational infrastructure to speed things up — though speed is a welcome side effect. It’s about creating operating tools that capture, organize, extract and use information in seamless ways that account for your own company’s unique needs and workflows.
And when you can do that for your company’s systems and processes? The result is a compounding operational intelligence that, in turn, informs and elevates how executive-level decisions are made and improves returns on those decisions.
Yet, we won’t have compounded intelligence unless we ourselves build the operating tools that make nuanced customizations possible. We explain that in another passage of the same article:
… the institutional knowledge and unique operating needs and complexities of family enterprise have been documented over time, establishing a roadmap of reason to contextualize each tactical decision made during the build.
This is a key differentiator.
“Oftentimes, architectural choices live in Slack threads or linear tickets or just in someone’s head,” wrote venture capitalist Chamath Palihapitiya in a post on X.
Palihapitiya has written extensively on how software development is changing as AI becomes embedded in the process. He believes the missing piece won’t be coders or even writing code faster; it’ll be the system architecture. “A good, multiplayer version of the software development experience would capture the ‘why’ layer, not just execute the ‘what’ faster.”
That’s why i3, a private asset management and family CFO office, is building its own software even as i3 is not a software company.
In this new and emerging digital landscape, with the help of AI-driven development, companies from every industry and sector can apply their own unique institutional knowledge to the operational tools they will soon build and own.
In fact, it’s businesses like i3 and the family enterprises we serve that understand our own needs better than any software company.
Further Reading:
Starbucks Bets on AI to Replace Microsoft and IBM Software
For years, businesses were tethered to their technology vendors due to fear of business disruption and the complexity of building in-house tools. Now AI is shifting that calculus …
The Price of Admission
AI now makes it possible for middle-market companies to build their own software applications, improving their operational tools and regaining control of private information and internal systems and workflows.
Digital Sovereignty: What Took Us So Long
For many years, the trade-off inherent in subscription-based software — less control in exchange for speed and convenience — was rational. Now, for a host of reasons, that old trade-off no longer holds.