The Decline and Fall of Microsoft? Part 2.

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?