Sunday, July 29, 2012

Epic smackdown

The Forbes article about Microsoft is as brutal as anything I've ever read in tech.  For example:
Cool is what tech consumers want. Exhibit A: today the iPhone brings in more revenue than the entirety of Microsoft.

No, really.

One Apple product, something that didn’t exist five years ago, has higher sales than everything Microsoft has to offer. More than Windows, Office, Xbox, Bing, Windows Phone, and every other product that Microsoft has created since 1975. In the quarter ended March 31, 2012, iPhone had sales of $22.7 billion; Microsoft Corporation, $17.4 billion.
The author chalks it all up to bad management of epic proportions:
At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor.

“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” said a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”
I interviewed there in 2001, and quite frankly was turned off by the arrogance on display.  I wasn't interested, and it seems that the feeling was mutual.  Instead, I went to a startup that actually solved some of Windows' horrible security problems.  This article is an interesting insight as to why Microsoft wasn't able to do that.

Interestingly, when Cisco was negotiating to acquire us, Microsoft was, too.  That same arrogance was still on display, and while it didn't queer the deal it almost certainly led to a low ball offer.  Funniest of all, the Microsofties stayed at the hotel near our office where we would regularly go for a beer after work.  We knew a number of the bartenders who would give us the low down of the discussion the Microsofties had the previous evening.  Not smart enough to realize that treating everyone like you're God's Gift to the world doesn't pay.

The entire article rings true, from my own experience.  It's a train wreck, but a cautionary tale.


Tim Covington said...

I worked at MS before this stack ranking stuff started. They are losing a lot of talent because of it. The rankings often do not even have a basis in reality. Instead, it is whoever the manager likes most. I have a feeling that there might not be an MS in 20 years.

Ken said...

The 20/70/10 is straight outta GE and Jack Welch. Guess it works a treat if your business model is farming the government.

George said...

I left MSFT in the middle of this madness. Tim is spot on. Stack ranking was a joke. If your manager liked you, you made out well. If not, oh well.

We would bring PMs to meet customers, and when the customers told them why some feature wouldn't work for their business, the PMs would tell the customers that they were wrong.

I could go on and on...but the Fordes article is pretty spot on for my experience.

libertyman said...

I could never understand how a company that sells such poor products could make it as far as Microsoft did. Except that they reached critical mass with their operating system, and most everyone had to follow along.
Their stock was a good investment, years ago, but now it is lackluster at best. (Not just because I bought it in the lackluster stage, but that may have something to do with it.)
They may starting to roar their defiance, nothing is forever.

ASM826 said...


It's the same reason we don't widen all the rails and build bigger trains. Once enough of an installed base is in place, the cost and pain of change becomes too large, no matter how obvious the benefits.

So IBM took on DOS and we got Windows/Microsoft.

Alan said...

MS is coasting in the inertia of the installed base. Their stock price tells you everything you need to know about them.

thesouthtexaspistolero said...

That was a fascinating read, especially the part about Windows Vista vs. Mac OS X Tiger. All the issues I read about with Vista back in early 2007 were collectively the biggest reason I bought a Mac when I was in the market for a new computer about that time. And guess what OS that Mac came with?

I wonder just how sorry Steve Ballmer got to be about pooh-poohing the iOS devices after they became Apple's cash cows. Probably not very. He doesn't come off as too smart that way.

Elsweyr said...

I almost snorted out a little coffee reading how MS does its in-house promoting, since it seems exactly like how the Air Force is doing it these days (separated last summer, now happily working away at FedEx).

If your commander liked you, you got a "strat", or stratification number. It was a little secret code like thing that would say you're #3/40, etc. Didn't matter if you were expert at your primary job - flying skill not important to the USAF anymore. Only how much extracurricular crap you load onto your performance reports such as running the office Xmas party, doing lots of community volunteer work, etc.

And mark my words, God help us all if we stop fighting cave savages and have to fight a technological peer with air capability. Modern AF's lost the focus of having outstanding pilots...more like a corporate bureaucracy these days.

Anonymous said...

So the big question is, How good is Apple minus Jobs?

We'll have a pretty good idea in six months, and know for certain by a year from now.

As is perhaps obvious, I remain unconvinced that Apple is/was anything other than a Steve Jobs show. And I've used their computers for two decades now.

Dirk said...

MS ain't the only place that does stack ranking. AT&T and IBM do it - I should know, as I worked for both companies. It's also done at other places I've worked, too.

Not that it much mattered, unless you were that one employee that had the bad review foisted on them. The difference in raises between meets, exceeds, and far exceeds were something like 0.5% per grade.

Once you realize that, you figure out that it's just not worth it to bust your ass, because your raise will be, at most, 1% lower than the guy who worked 80+ hours a week kissing the manager's ass.