And then…

If you have ever had to manage employees, you’ve probably had to deal with performance reviews. A performance review gives you an opportunity to discuss an employee’s effectiveness at reaching previously established goals and gives you an opportunity to establish new goals for the next review period.

It is my experience that reviews, although painful to perform, are extremely successful at accomplishing one thing: getting employees to focus on whatever metrics you are using to measure them. If you rate them on finished widgets per hour, they will give you lots of widgets. If you measure them on the quality of produced widgets, they will give you very fine widgets. People are smart - they will focus on what you consider important.

This principle applies at the institutional level, too. If the CEO establishes a set of goals, his/her lieutenants will work to accomplish those goals. The lieutentants will accomplish this by turning around and establishing goals for their own lieutenants (captains or sergeants or whatever the right rank would be). Ultimately, some shmoe will be tasked with accomplishing some specific micro-goal that contributes to the überscheme.

And thus, bad policy can flow from top to bottom.

In my 11 years at Microsoft, I never had a manager (and I had at least 6 during that time) that valued people Management. Not a single manager who set goals for me that included developing my people. Not a one ever asked me to read The One Minute Manager or The Pursuit of Excellence. I generally had excellent “employee feedback” scores, but received few kudos for them. I’m pretty sure my experience was not unique. My fellow managers certainly did not spend much time discussing their management theories or employee enrichment programs with me. Microsoft valued management to the extent that it helped deliver great product but never from the perspective of delivering great people.

Microsoft (at least, from 1987-98) was a very technology driven and product driven company. Software developers were tasked with completing components on time. Development managers were charged with delivering product. Business Unit Managers were measured on whether they won or not. Did they ship their product? Was it reviewed better than the competitions’? Was it outselling the competition?

The old “Systems” group at Microsoft was particularly known for its hard driving fashion. While the Applications group was known for being methodical and consistent, the Systems group was intense and mercurial. Steve Ballmer always paid special attention to Systems and drove it hard. Developers were expected to write tight, fast, code at breakneck speeds. Test was expected to validate code against dozens of different OEM systems. Program Managers scurried to coordinate Development, Test and User Ed. Screaming was a completely acceptable form of employee motivation. It was okay that Windows 95 was a year late because, heck, it would have been 3 years late had management not pushed so hard.

The arrival of Dave Cutler did little to change this. Windows NT was run in a similar fashion (although with a truly excellent crew; if Cutler yelled at you it was probably because you screwed something up.) If anything, the success of Windows NT and Cutler helped to reinforce the Systems culture. If Windows 95 had given screaming a black eye, Windows NT had helped to heal the welt and make screaming acceptable again.

And thus, decades later, Microsoft finds itself with an executive staff that knows little about good people Management (with a capital M). The Developers and Development Managers and Business Unit Managers are now the Architects and Vice Presidents and Executive Vice Presidents who run the company. Having never experienced good people management it’s difficult for them to spontaneously develop such skills themselves.

I still have many friends at Microsoft and several of them are exactly these Architects, VPs and EVPs. They are fine people with tremendous technical skills. Some of them have learned business skills and understand their markets remarkably well. They understand their competition, they understand the business and they understand the underlying technology. When I step back and consider them as a whole, with few exceptions (TW, KR, SD - you know who you are), I know that none of them were chosen for their positions because they were great at managing people. On the contrary, when I look at senior Microsoft executives (at least, the ones I’ve met), I can say that many of them are well known for having poor people skills.

This then is my first observation regarding the Decline and Fall of Microsoft: it is doomed because it has failed to develop a culture of excellence with regards to management. It has defined quality management only from the perspective of delivering product and not from the perspective of managing people well and delivering talent.

Hiring people from outside the company does not help. Already, Microsoft consumes a large percentage of the available talent pool. There are hundreds of development and managerial jobs that go unfilled because quality people can not be found. The company has had to lower its hiring standards to simply be able to limp along. When outside managers are hired, it doesn’t take them long to figure out how  they’re being measured.

As long as the company cares only about product, that’s all that it will get. What it doesn’t “get” however, is that the best way to develop quality product is to first develop quality people. Take some of the old-time developers (AP, RM, JG, you know who you are) and have them teach mediocre developers to be great developers. Send first-level managers to management classes run by outside firms. Set management goals at all levels that provide incentives for internal employee development and promotion. Measure people on their ability to develop others and watch what happens.

I think this is unlikely to happen. Large companies have a tendency to become “brittle”. The ranks of Microsoft managers consist of people who are already culturally acclimated to the norm and who have little incentive to bring up such initiatives. Microsoft will continue to lose good people to other companies. College graduates, already leery of Microsoft, will increasingly choose to take jobs elsewhere. Microsoft will end up with the kind of folk that it used to scorn when it was a small company.

The rest is simply “math”. Eventually, Windows and Office (and their offspring) will not be enough to pay the bills. There’s only so much you can do when you near 100% market share. Microsoft needs to develop successful new product lines. Does it have the right people to make this happen?

Back when I first left college and got a job, I worked for Hewlett-Packard. HP was a great place to learn engineering, to become a good manager. HP was a large, slow moving company however, so for many people, the next step was to go and apply those skills elsewhere. In my case, the faster company was Microsoft. I worked there from 1987 to 1998. Those of you who are familiar with what was happening in the software business and the stock market will know this was a very good time to be at Microsoft. I am eternally grateful.

 One of the things that I learned at HP was Total Quality Control (TQC, as it was termed back then). Now, these days, TQC has been replaced by a myriad of ISO number sequences, but I think the basic tenets hold: measure lots of stuff, understand your processes, fix them. 

One of the things that most struck me about TQC, something that has stayed with me in the 20+ years since I left HP, was an anecdote from a Japanese automobile company executive. At the time, American car quality was very poor. The Japanese executive commented that their American counterparts had only taken the first step towards TQC: they were looking for and counting defects in the cars exiting the production line. The second step, he explained, was to look at your processes and find out why defects were occurring. If door panels were misaligned, you needed to look at your door assembly process and figure out why the misalignment was occurring. The third step, he went on, was to understand what was wrong with your “meta-processes”. What were you doing that resulted in a poor door assembly process. This “upstream” analysis of corporate process and culture, he explained, was crucial to TQC.

When I got to Microsoft, I was thrilled to be working at a faster company. My first week there, my manager took me aside and told me to stop waiting for consensus. If I thought something needed to be done, I should go and do it and apologize later for any mistakes along the way. Microsoft spent very little time thinking about TQC, scheduling methodology, management techniques, etc.

The company was extremely decentralized. The Excel team cared only about Excel. The Word team, only about Word. I remember “midnight requisitioning” where we would go to an adjacent building and steal some other groups’ office chairs (only to have them restolen by some other group on some other night). Each business was run by a general manager responsible for, maybe, 100-200 people and $100-200M worth of revenue. The technical and marketing managers were all aware of their group’s P&L and were all doing everything they could to beat their competition (back when Microsoft had competition: Lotus, WordPerfect, etc.).  

My first year at Microsoft, I spent in the Systems group. I was working on the Windows 1.0 SDK and then on OS/2 Presentation Manager. The latter project, of course, was part of the JDA (Joint Development Agreement) with IBM.

Everyone hated working with IBM. They were slow. They were bureaucratic. They had hundreds of developers writing software that was bloated and buggy. Our developers would rewrite code in half the time and half the memory. IBM was also weird. They insisted on their own terminology (remember DASDs instead of hard disks? PELs instead of pixels?). They wanted to change the cartesian origin of the graphics canvas (in spite of the typical layout of display memory). Microsoft engineers rejoiced when the JDA fell apart. The company focused on making Windows successful and the rest is history.

Fast forward 20 years. Replace IBM with Microsoft and the same story could be told. It is Microsoft that has gotten big and slow. It is Microsoft that is having trouble executing on its strategies. It is Microsoft that ignores industry standards and insists that others follow its directions.

This is not to say that there is nothing good happening at Microsoft. I still have many friends working there and some are working on genuinely interesting things. Last week, I met with some folk in the System Center group who really seem to understand the importance of supporting non-Microsoft systems. It is altogether conceivable that Microsoft will continue to deliver on quarter after quarter of increased sales and revenue.

 And yet, I think there’s something fundamentally wrong at 1 Microsoft Way. Although the company can survive in the short-term, I believe that its basic flaws will ultimately require a major restructuring of the company and its business. IBM has successfully converted itself into a service company (although its mainframe business is booming!). Microsoft may need to perform a similarly radical redefinition.

In my next few posts, I’ll go more into what I think is wrong in Redmond and what they need to do to fix it. Here’s a hint: it has something to do with TQC and listening to Japanese auto executives.

About four years ago, when I started my company (Centeris, back then; Likewise Software now), I started a blog describing our early challenges. I maintained it faithfully for about six months, recounting the saga of getting funded, hiring people, getting an office, firing people, etc. Right about then, I started reading about the legal ramifications of blogging and how postings by corporate officers were getting people into trouble. Although I figured the odds of getting into trouble were low, I had enough things to keep me busy and I decided to take the blog offline.

Frankly, it was a relief. Although I enjoy writing and sometimes have trouble stopping once I start, writing on a regular basis can be quite a chore. It may be hard to believe that someone who works 11-12 hours a day can be lazy, but it’s true. If I wasn’t lazy and I didn’t have to sleep or eat or tend to my family, I’d work 24 hours a day. Life at a startup is such that, every day, you work twice as hard as you have ever worked, you accomplish twice as much as you do at a big company, but you end the day further behind on your TO DO list than you started.

I hate to see untended blog sites. There’s nothing worse than seeing a site (usually a corporate one) with a “Hello, here’s my first blog” entry that’s 2 years old. If you’re going to blog, you have to commit to doing it regularly. “Regularity” implies self discipline (well, it also implies a well-functioning digestive/execretory system, but let’s not go there.)

I have figured out self-discipline. Here’s the trick: do things while you’re still not fully conscious.

I figured this out in the context of getting regular exercise. I just could not get myself to the gym on a regular basis. I’d put on the “Freshman Fifteen” (or maybe 30) when I’d started my company. I was so busy, however, that it was easy to rationalize why I couldn’t take a break to go exercise or why I was so tired that I couldn’t get to the gym on the weekends. The trick that worked for me was to start running at 5:30 in the morning (yes, A.M.).

If you wake up at 5:15 A.M. your brain does not function properly. You’ve probably just finished your R.E.M. sleep stage and you’re still trying to figure out what Cindy Crawford was doing in Bellevue, let alone, doing it with you. You stumble out of bed, put your running clothes on and head out the door. 40 minutes later, you take a shower, get some breakfast and head into work without realizing what happened.

Do this about 20 or 30 times and it embeds itself in your reptilian brain. After that, you might find yourself exercising at 2pm in the afternoon. The trick is to ingrain the habit while your reasoning functions are still in a vulnerable state. Once the salivary glands start drooling at the the sound of a bell, your work is done.

And so with writing. I’m going to try to write early in the morning and see how that goes. My topics will inevitably include work-related things. My company provides products that allow non-Windows computers (Unix, Linux, Mac) to work with Microsoft Active Directory. Right now, this is a hot topic. A lot of our business is driven by security problems, PCI/SOX audit compliance and by the high costs of administering computers without centralized account management. Writing about work all the time is boring, however, so expect an occasional reference to funny stuff (Chuck Norris Facts, for example, or “The Flying Conchords”) or to other things that I’m interested in (photography, golf, running, books, etc.).

We’ll see if the 5:30am trick works again. If you start seeing too many references to Cindy Crawford, however, please pinch me…