Agent Unknown
Member
Very interesting and eye opening article, I started reading it last night before bed and couldn't stop until I was finished. A lot of the blame is of course pointed directly at Ballmer. Also of note is a completely idiotic forced employee tier system called "stack ranking" which has lead to nothing but constant back stabbing and in fighting within the company. Also fascinating was how MS had a golden opportunity to launch its own ebook reader in the late nineties, many years ahead of Kindle, ect. but ditched it since Gates insisted it use a Windows style GUI and was a boring idea few would want and also how they missed out on the Ipod craze. I highly recommend reading the whole article, I've quoted some choice bits below (don't miss Ballmer's epic meltdown when a key employee told him he was leaving for Google when Eric Schmidt was still at the helm):
http://www.vanityfair.com/business/2012/08/microsoft-lost-mojo-steve-ballmer
http://www.vanityfair.com/business/2012/08/microsoft-lost-mojo-steve-ballmer
Microsofts Lost Decade
Once upon a time, Microsoft dominated the tech industry; indeed, it was the wealthiest corporation in the world. But since 2000, as Apple, Google, and Facebook whizzed by, it has fallen flat in every arena it entered: e-books, music, search, social networking, etc., etc. Talking to former and current Microsoft executives, Kurt Eichenwald finds the fingers pointing at C.E.O. Steve Ballmer, Bill Gatess successor, as the man who led them astray.
By Kurt Eichenwald
Sixteen days later, Bill Gates handed off the C.E.O. reins to Ballmer. I was stunned when Bill announced that he was stepping aside to become chief software architect in January 2000, with Steve Ballmer succeeding him as C.E.O., recalled Paul Allen. While Steve had long served as Bills top lieutenant, you got the sense through the nineties that he wasnt necessarily being groomed for Microsofts top spot. Id say that Bill viewed him as a very smart executive with less affinity for technology than for the business sidethat Steve just wasnt a product guy.
A businessman with a background in deal-making, finance, and product marketing had replaced a software-and-technological genius.
Within a year, Microsoft had lost more than half its value, never to return to its soaring heights of the past. The stock optionsonce the golden key to untold wealthwere underwater.
The music had stopped. The Microsoft Millionaires were now working alongside the Microsoft Minions. One came to work bragging about his new Bentley; the other made do with a Dodge Neon.
Sometimes, though, the problems from bureaucracy came down to a simple reality: The young hotshots from the 1980s, techies who had joined the company in their 20s and 30s, had become middle-aged managers in their 40s and 50s. And, some younger engineers said, a good number of the bosses just didnt understand the burgeoning class of computer users who had been childrenor hadnt even been bornwhen Microsoft opened its doors. When younger employees tried to point out emerging trends among their friends, supervisors sometimes just waved them away.
In 2003, a young developer noticed that friends in college signed up for AIM exclusively and left it running most of the time. The reason? They wanted to use the programs status message, which allowed them to type a short note telling their online buddies what they were doing, even when they werent at the computer. Messages like gone shopping and studying for my exams became commonplace.
The developer concluded that no young person would switch from AIM to MSN Messenger, which did not have the short-message feature. He spoke about the problem to his boss, a middle-aged man. The supervisor dismissed the developers concerns as silly. Why would young people care about putting up a few words? Anyone who wanted to tell friends what they were doing could write it on their profile page, he said. Meaning users would have to open the profile pages, one friend at a time, and search for a status message, if it was there at all.
He didnt get it, the developer said. And because he didnt know or didnt believe how young people were using messenger programs, we didnt do anything.
By 2002 the by-product of bureaucracybrutal corporate politicshad reared its head at Microsoft. And, current and former executives said, each year the intensity and destructiveness of the game playing grew worse as employees struggled to beat out their co-workers for promotions, bonuses, or just survival.
Microsofts managers, intentionally or not, pumped up the volume on the viciousness. What emergedwhen combined with the bitterness about financial disparities among employees, the slow pace of development, and the power of the Windows and Office divisions to kill innovationwas a toxic stew of internal antagonism and warfare.
If you dont play the politics, its management by character assassination, said Turkel.
At the center of the cultural problems was a management system called stack ranking. Every current and former Microsoft employee I interviewedevery onecited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The systemalso referred to as the performance model, the bell curve, or just the employee reviewhas, 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.
The best way to guarantee a higher ranking, executives said, is to keep in mind the realities of those behind-the-scenes debatesevery employee has to impress not only his or her boss but bosses from other teams as well. And that means schmoozing and brown-nosing as many supervisors as possible.
I was told in almost every review that the political game was always important for my career development, said Brian Cody, a former Microsoft engineer. It was always much more on Lets work on the political game than on improving my actual performance.
I asked Cody whether his review was ever based on the quality of his work. He paused for a very long time. It was always much less about how I could become a better engineer and much more about my need to improve my visibility among other managers.
In the end, the stack-ranking system crippled the ability to innovate at Microsoft, executives said. I wanted to build a team of people who would work together and whose only focus would be on making great software, said Bill Hill, the former manager. But you cant do that at Microsoft.
Why, Jim Allchin wanted to know, was Apples technology so much better than Microsofts?
I would buy a Mac today if I was not working at Microsoft, Allchin, a senior member of Microsofts leadership team, wrote in a January 7, 2004, e-mail to Gates and Ballmer. Apple did not lose their way.
Years passed. Finally, on November 14, 2006, Microsoft introduced its own music player, called Zune. Fifty-four days later, Steve Jobs unveiled the iPhone, which combined a mobile phone, a music player, Internet capability, a camera, and other features not available on Zune. But the iPod was still around for customers who didnt want a phone. In fact, Apple had already introduced its fifth-generation iPod, its less expensive iPod Mini, and was about a year away from marketing the least costly of its music players, the iPod Nano.
Zune was blown away. By 2009, iPod maintained an astonishing 71 percent of the market, the kind of numbers rarely seen anywhere outside of a North Korean election. Meanwhile, Zune limped along with less than 4 percent. Last October, Microsoft discontinued it, in hopes that customers would instead purchase a Windows Phone that, like the iPhone, has a music player.
Longhorn was doomed. A few months later, Allchin brought together the Longhorn team and made the announcement: Microsoft couldnt complete Windows Vista in time to hit the latest planned release date. In fact, the company couldnt foresee any launch date. So a decision had been made at the most senior reaches of Microsoft: after three years of work, throw everything out and start over. It was decided, at least for now, to drop or modify many of the original objectives; no more using C#, abandon WinFS, and revise Avalon.
Apple was already in the market with those features; Microsoft was basically giving up in its effort to figure out how to make them work.More than two years passed before Vista was available in stores, and the public response was scathing. PC World, the industry magazine, declared it the biggest tech disappointment of 2007. Apple had won hands down on Microsofts playing field for operating systems.
Then came Bing. Cue the evil laughter and organ music.
One topflight engineer, Mark Lucovsky, met with Ballmer on November 11, 2004, as a courtesy to let him know that he had accepted an offer from Google, which at the time was led by Eric Schmidt. And, according to a sworn statement submitted by Lucovsky in an unrelated lawsuit, Ballmer exploded.
He threw a chair against the wall. Fucking Eric Schmidt is a fucking pussy! Ballmer yelled, according to the court document. Im going to fucking bury that guy! I have done it before and I will do it again. Im going to fucking kill Google.
Finally, in May 2009, Ballmer unveiled Bing. But by then the unit working on online search had become encrusted with Microsoft bureaucracy and the usual destructiveness that came along with it.
It was a bloated mishmash of folks, said Johann Garcia, a former Microsoft product manager who worked on the Bing project.[/B] They had two or three times the number of people they needed. There were just so many layers of people.
Working in the online division evolved into a miserable experience, members of that unit said. Most of the homegrown innovations were shoved aside. Instead, managers spent their days studying Google and telling the employees working on Bing to match whatever that competitor brought out.
There was this never-ending demand to keep up with Google, and after a while we saw no more innovation for Bing, Garcia said. Google was so far ahead and we had so much infighting. A lot of people became so unhappy and just lost all momentum.
When Apple introduced the iPhone, Steve Ballmer laughed. No chance that the iPhone is going to get any significant market share, he said in 2007, adding that same year, iPod is a hot brandnot Apple.
He pooh-poohed the iPad when it came out, in 2010, and it has been busting down the barn doors ever since, selling more than 55 million units
Plenty of people can make predictions that prove boneheaded. But Ballmers bad calls have been particularly damaging for him inside Microsoft.
With the competitors showing that kind of successand winning so many accoladesBallmers confidently proclaimed errors have been hugely embarrassing for Microsofts technical specialists,
Steve has a knack for putting his foot in his mouth and being made to look incredibly foolish, and that just always grated on people at Microsoft, said a former program manager who left the company last year to work at Google.When he makes these predictions that are so horribly wrong, and you know it at the time, it is hard to forgive that, because it means he is hopelessly out of touch with reality or not listening to the tech staff around him.
Ballmers key business philosophy for Microsoft was so antiquated as to be irrelevant. The Microsoft C.E.O. used to proclaim that it would not be first to be cool, but would be first to profitin other words, it would be the first to make money by selling its own version of new technologies. But that depended on one fact: Microsoft could buy its way into the lead, because it always had so much more cash on hand than any of its competitors.
No more. The advantage that Ballmer relied on for so long is now nonexistent. Google has almost the same amount of cash on its books as Microsoft$50 billion to Microsofts $58 billion. Apple, on the other hand, started the year with about $100 billion. Using superior financial muscle to take over a market wont work for Microsoft or Ballmer anymore.
Ballmer has said he plans to stay in the saddle until 2018, but whether he and the rest of Microsofts management want it or not, change will almost certainly come as Wall Street tires of the companys unfulfilled promises. Already there are rumblings that the time for him to go could be in the offing.
