Recently I had a chance to chat with Jackson about this project, the importance of data science, and how competition can drive innovation. 

The Idea:

The idea behind this project is a radical one: Offer products, that are typically sold in Enterprise format, to consumers for free, allowing the product experience to drive the business. Although free versions of Office applications had existed for several years, there were a few reasons that made augmenting them to grow the business compelling. First, by offering a free suite of products to users, the company would create more opportunities to get customers into the Microsoft ecosystem, resulting in an expansion of business rather than a shrinking. This strategy, known as Product-Led Growth, has become central to Microsoft’s culture and strategy.

Second, in 2020, the world changed. The pandemic brought remote and freelance work to the forefront of our collective consciousness, creating more demand for accessible and reliable productivity tools. Jackson reflects “...we had some market competition and market pressure to create a free version” with competitors rolling out their free productivity tools. Jackson feels that this pressure was a positive thing, causing Microsoft to innovate in ways that will impact their products in the future.

Jackson says, “For a long time we did not have a way for people to get into our ecosystem in a way that was easy and straightforward. Microsoft Office had been seen as a paid product that people traditionally bought through discs and retailers. As we became more digital, people would buy a subscription with continuous updates, but the subscription was always paid… we needed a way to get customers to engage in the ecosystem, and also find new ways to grow our business, because we're always looking to grow the subscription.”

The Challenge: 

Jackson's managers were proposing that the company invest in a Freemium business strategy.  This new strategy would leverage the existing free web apps to help users uncover the possibilities of a paid subscription.  It would also require a plan to grow the volume of potential subscribers by encouraging the discovery and adoption of the free Microsoft 365 web apps. Balancing objectives between growing both free and paid business was necessary.

They would need to be diligent about proving the value of investing in a Freemium model if they wanted to implement big changes to Microsoft 365’s already strong subscription business.

Jackson admits that there was skepticism about leaning into the free products but says that this skepticism was well-intended. “When we want to promote free, we must trade it off with the existing business, people internally were diligent to ensure this was a viable business strategy. We would prove every time that Freemium, and our technology was successful at growing our business and not causing cannibalization.”

His managers knew that he would have to be meticulous about proving and communicating the positive impact that this initiative could have towards growing their subscription business. Cultivators are never afraid to take on a challenge, and Jackson is no exception. Over his years working on this project, he dove into learning new skills, embracing a learn-it-all mentality, and implementing product-led growth tools to support this latest product evolution.

The Outcome: 

As of Spring 2023, Microsoft365.com, the Microsoft 365 desktop app, and the Microsoft 365 mobile app are free. Early on, Jackson worked to steward the Freemium business model within Microsoft 365.com and the Microsoft 365 desktop app. But to stop the story there is to do a disservice to the diligent work that Jackson and his team did to make this huge shift happen and prove its business viability. 

The shift was incremental and involved many tests, experiments, and data analysis, for which Jackson credits the company’s internal culture. He says, “One of the through points of the whole story is experimentation culture within Microsoft and experimenting with your product to prove the hypothesis that you have about your business. In this case, we hypothesized that by increasing the distribution of our free products, we would grow the free user base, build it into a channel, and not negatively harm our existing business.” To start, through multiple rounds of tests, Jackson and his team partnered with their cross-firm colleagues in Windows to grow traffic to what was then the Office app, to see if this increased engagement with the free products. These tests allowed them to hypothesize that the free format was not going to risk existing paid business, but rather grow sales, giving them an overview of how a Freemium model could work and improve customer experience.

Now that they had more customers coming into the ecosystem, the team needed to increase the efficiency of the purchase flow for the paid Microsoft 365 subscription, leading to the development of a new internal merchandising and checkout technology that allows customers to buy the subscription without redirecting outside of the app being used. When the rollout of this new, efficient tech increased subscriptions, the team took an iterative innovation approach, running scoped A/B tests to improve the purchase flow even further, until they were sure that they had created an interface that was as customer-friendly and as efficient as possible. At that point in the process, with clear data that the free product suite had a tangible positive impact on the business, Microsoft expanded the team further to build out the consumer version of both the desktop app and web-based tool suite.

Speaking to Cultivate right after the launch about the impact so far, Jackson notes, “Five years ago we didn't have Freemium web and desktop…we created a new distribution tactic for Microsoft 365 which increases our ability to get more people into the ecosystem and I think that’s important.” He sees huge possibilities for this Freemium model in emerging markets like India and Latin America, where cost has previously been a blocker. “[Now] we have this free product that can be upgraded [to paid] down the road and this whole enterprise ecosystem too. I think about it from an emerging market perspective of 'How do we grow the Microsoft brand in these emerging markets and empower new customers?' And having it be free is critical.” 

Of course, a large project like this also has a personal impact on those who give their time and energy to it. “It feels like an incredible journey. I came from working on this app as an intern and now we have successfully built this Freemium business within it. I couldn't have pictured myself doing this, you know, six years ago and to see it come through and work…feels ambitious and important for the broad productivity tool market. It is a huge honor.” 

What Product-Led Growth Practices Worked? 

• Leverage Data Science to show impact: Something that Jackson kept coming back to was the power of data to prove business value. He shared so much valuable information that we wrote a whole separate article about it!

• Embrace iteration: Jackson and his team tested features, like the payment flow, many times before they reached the optimal version. A willingness to make incremental changes rather than needing to “get it right” on the first try allowed the team to maximize their impact and get valuable user feedback along the way. Jackson and his design team used years of knowledge and customer experience to devise a well-architected vision for current and future business needs, releasing a major update to their UX last year which resulted in a uniquely impactful business result for Microsoft 365.

• Seek supportive leadership: Jackson credits his managers with fostering a culture of documentation, ensuring that his wins are cataloged for communicating the journey to partner teams and for milestones like reviews and promotions. By ensuring that his impact is written down, his manager is empowering him to continue to grow at Microsoft and celebrate his wins. 

• Getting the word out in company channels: Even when you have data about your impact, it can be challenging to socialize that data to stakeholders. Getting access to meetings or time on the agenda may be out of your control, but that doesn’t mean you can’t get the word out there. Jackson and his team take a creative approach. He says, “We have this concept within my product group of writing internal blog posts.” He would write a post, analyzing the qualitative and quantitative data he obtained through user experience testing and publish it internally. That way, all stakeholders would understand the current state and impact of the project. He says, “Having this written communication has been really important to tell the story of Freemium internally to build political buy-in.” We think that’s pretty genius! 

Jackson’s Advice for Fellow Cultivators: 

• Persistence is key: This project took a number of years and Jackson admits that there were times when he felt discouraged or unsure. He invites Cultivators to consider that big change may take a long time, adding that “if you are bought in on the vision, commit to the work because it takes a long time to have it come to fruition.” 

• Have evidence: The Microsoft 365 Growth team leveraged data science to prove their initiative’s value to both customers and the company’s bottom line. Jackson says, “When we say we think this is going to increase sales by 6% and then it increases sales by 8%, it’s really hard to argue with that proof.”

• Have a strong thesis: Based on your hypothesis and the data you collect, develop a strong point of view on how things should change. And be willing to test that thesis along the way to ensure that your strategy doesn’t have to shift, or if it does need to shift, you have data indicating which ways you should iterate next.

• Use data to tell a good story: Data is only helpful if your stakeholders can clearly understand its impact. Think about the narrative your data and thesis are telling. Think about what your stakeholders or your larger company care most about. Use these factors to create a compelling data story. (Need help? We’ve got you covered!)

With this massive project finally complete, the big remaining question is what Jackson will do next! Since this article was written, he’s started to focus on Copilot in Microsoft 365, Microsoft’s everyday AI companion. In the meantime, this Cultivator doesn’t just create change at work, he also is the director of a non-profit that is running a community-supported art initiative to contemporize the city flag of Seattle into a more compelling and inclusive symbol. Be sure to give him a follow on LinkedIn to learn more about all his change work.

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Note: Any opinions shared by Jackson are his own and do not represent the views of Microsoft. Any learnings or information presented are his own based on his experience at Microsoft.