
Microsoft’s Downfall: Inside the Cannibalistic Culture That Felled a Tech Giant - 127001brewer
http://www.vanityfair.com/online/daily/2012/07/microsoft-downfall-emails-steve-ballmer
======
cletus
I suspect many of the people reading HN these days aren't old enough to
remember the "golden age" of Microsoft (or simply of "of age" at the time).
Back in the 80s and 90s Microsoft was an unstoppable behemoth that people
would describe as a battleship that could turn on a dime (IIRC this referred
to Microsoft reinventing itself in the mid-90s so that everything was about
the Internet).

Three things happened to Microsoft (IMHO):

1\. The DoJ suit in 1997 was a serious blow to Microsoft inertia. Speaking as
nothing more than an observer, it seemed that Gates lost his way. He simply
didn't know what to do. From this I get the distinct impression he really
believed Microsoft wasn't doing anything wrong and things like bundling a
browser with the OS were just "innovations";

2\. Microsoft became too hierarchical combined with more B and C managers.
Once you don't have A managers in a software (or any tech) business it seems
like it's all over. Nothing rots from within so deeply and completely as poor
management; and

3\. Ballmer had and has no business being CEO of a software business. This
isn't simply due to him being a manager rather than an engineer but that
certainly doesn't help. Gates was a programmer and actively participated in
tech reviews in his heyday. Ballmer is the Carol Bartz of Microsoft. It's
simply taking longer to kill Microsoft from within than it took Yahoo.

As far as stack ranking and these other things go: on the face of it I
consider them symptoms rather than the root problem. The root problems are:

1\. Microsoft, as an organization, is deathly afraid something will kill the
Windows/Office golden goose;

2\. Everything Microsoft does is done from the perspective of furthering the
Windows/Office cash cow. It's why you hear Ballmer describe tablets as "just
another PC form factor". He sees them as simply a means to an end and that end
is selling licenses;

3\. Microsoft is at the mercy of hardware OEMs that are shortsighted enough to
run themselves into the ground taking Microsoft with them;

4\. There doesn't seem to be any central strategy (beyond sell more
Windows/Office licenses) or innovation; and

5\. The "backwards compatibility" crowd lost out to the "breaking changes"
crowd, which hastened the switch to Web-based applications.

~~~
bcantrill
Spot on. If I had to identify a root-cause of Microsoft's failure, it would be
its voracious business practices in the 1990s. If you are in your mid-30s or
older today, you grew up under this totalitarian regime -- and you hated it.
And when you had the opportunity a decade or so ago, you were on the vanguard
that led x86 server build-out with Linux, not Windows. To the degree that you
had to care at all about Windows on the server, virtualization assured that it
was in its own little box, never again to escape. And of course, you sure as
hell don't trust Microsoft now: the last thing you'd ever do is buy a Windows
phone or deploy on Azure -- you are of an entire generation that won't be
fooled again.

And what if you're younger than that? If you're in your 20s or younger, you
probably just don't care about Microsoft -- though you might not get why the
older folks get so frothy about them. But know that your luxurious apathy is
because an older generation considered Microsoft's offenses to be capital
crimes -- and meted out punishment accordingly.

Microsoft proves that in technology you can get away with being predatory for
a while -- maybe even a long while -- but not forever (at least not in a free
society). And once the world moves against you, those that you so aggressively
bullied will cheer your demise: you will never recover until you accept that
you have failed your customers and violated their trust. Very, very few
technology companies have gotten to a point of such vilification and recovered
(indeed, the only example I can think of is IBM). And while I may be too early
in calling it, I dare say that Oracle is (at long last) at that point or
approaching it rapidly -- and I fully expect the same conversation to be had
about their (coming) lost decade...

~~~
mattmanser
I think you're being a bit lax with history here and looking with rose-tinted
glasses, Apache had made far too many inroads in the server way before MS
really tackled servers properly. That C# is as popular as it is kinda debunks
your entire argument, it's a firmly entrenched behemoth in the corporate
world.

The MS hate that was in the 90s/early 00s just doesn't exist any more. What
should worry MS far more is that these days so many programming articles and
guides just assume you are working on a Unix system. Windows is becoming
irrelevant to the elite. It's a bizarre phenomenon given that MS is still
dominant in the OS field that has been gaining serious traction for the last 3
or 4 years.

Also SQL Server is good. Very good. And cheap, very cheap compared to the
other good DBs. While MySQL and Postgre are alright, in reality they really
are quite bad compared to SQL server in terms of overall polish and quality. I
got reminded of this the other day tracking down an excessively poorly
performing query, fixed in MySQL by an index that MS SQL would have
effectively just done for you.

And don't even get me started on how many business run exchange. Ugh.

~~~
rdtsc
> Windows is becoming irrelevant to the elite. It's a bizarre phenomenon given
> that MS is still dominant in the OS

That is a terrible symptom for their case. In that long term that is what will
kill them. They ignore the geeks and people who eventually end up promoting
technology.

For example, looking at some open source projects (say Redis), a Windows
version is not even supported. Most just assume you have 'gcc' and 'make'
installed and will compile the project that way.

Now they are trying to appeal to the cool kids, they got Erik Meijer, they
have F# but it is just not enough.

~~~
steverb
Microsoft itself supports Redis on Windows:

[http://blogs.msdn.com/b/interoperability/archive/2012/04/26/...](http://blogs.msdn.com/b/interoperability/archive/2012/04/26/here-
s-to-the-first-release-from-ms-open-tech-redis-on-windows.aspx)

The major issue I see MS having is one of perception. For many long years they
had "not invented here" blinders on. They have (for the most part) moved past
that.

Take a look at the Web Platform Installer next time you're working on a
Windows box.

------
silverbax88
"Eichenwald’s conversations reveal that a management system known as “stack
ranking”—a program that forces every unit to declare a certain percentage of
employees as top performers, good performers, average, and poor—effectively
crippled Microsoft’s ability to innovate."

This is the most important sentence in the article. Because many companies
over the years - a lot of them start ups - would point to this practice by
Microsoft and try to follow their lead. Microsoft has been stack ranking
almost since conception. It was always a horrible way to run a company. But it
took decades for it to actually bring the company down.

~~~
jgrahamc
Novell did something similar. They used to fire IIRC the 'bottom' 10% every
year. This HBS article talks about the system:
[http://hbr.org/2001/05/leading-through-rough-times-an-
interv...](http://hbr.org/2001/05/leading-through-rough-times-an-interview-
with-novells-eric-schmidt/ar/1) Interestingly, Eric Schmidt seems to have
modified it a bit and seen that it wasn't working well.

"Incidentally, not all systemic changes work. I’ve also learned that certain
management techniques can actually make things worse when applied to a
distressed culture. For example, I had always worked in companies with yearly
and quarterly employee ranking systems, in which people were divided into
three groups: overperforming, performing, and underperforming. So not long
after I came here, we started a ranking program that graded on a curve: 45%
into the overperforming group, 50% into the performing group, and 5% into the
underperforming group. I didn’t know—and certainly didn’t intend it this
way—that if you got the lowest grade, it was presumed that you were about to
be fired. We started getting hate mail from people who argued that there was
no way to rank people who worked as a team. The ranking system exacerbated the
culture of fear and proved to be such a huge retention and motivation issue
that we were forced to stop it after a year. In its place, we introduced a
modified ranking program that better reflected overall employee performance."

~~~
rcthompson
Firing the bottom 10% company-wide is quite different from firing the bottom
10% from _each_ department, regardless of the performance of that department
relative to others, which is closer to what the article describes for
Microsoft. As the original article noted, being in a 10-person "unit" meant
that 1 out of those ten was guaranteed a bad review, even if that unit as a
whole somehow generated 50% of Microsoft's profits for the quarter.

~~~
Elepsis
The article is completely wrong on this point. In 99% of cases, people are
stacked in a sufficiently large group that everyone on your immediate team
could hypothetically get a great review.

~~~
Umofomia
While that's true, it is also reliant on the fact that the manager of your
immediate team be able to effectively argue for your team members during the
stack-ranking meeting. If you happen to have a manager that ends up being too
reticent, many of the underperforming scores could end up being
disproportionately assigned to your team.

~~~
Elepsis
You're definitely right on that. However, if your manager isn't willing or
able to effectively argue for your team members, it doesn't matter what the
review system is: you'll still get screwed.

------
mgkimsal
_“I see Microsoft as technology’s answer to Sears,” said Kurt Massey, a former
senior marketing manager. “In the 40s, 50s, and 60s, Sears had it nailed. It
was top-notch, but now it’s just a barren wasteland. And that’s Microsoft. The
company just isn’t cool anymore.”_

Probably the best line from the article.

The point about stack ranking - good observation. I've heard about it for
years from MS people as well as mini-MS and such. It struck me as problematic
even back then. In one way it's "just another internal policy", but it's
pretty obvious it's going to create internal competition, which is the last
thing a company needs.

I remember around 2000 or so - when the DOJ trial was going on - the stuff
coming out of MS was "we're the underdog - we see everyone as competition or
potential competition" (paraphrasing, obviously). I don't know where that
mindset went, but the last decade, they've not really acted like it.

Gosh, I'm not saying this well. They _have_ acted like it, but haven't chosen
their battles well, perhaps. Trying to compete in dozens and dozens of
competitive landscapes at the same time has led to little focus. Yes, "Office
and Windows" are cash cows, but the respect (and fear) for MS is largely gone
- they've squandered their image playing "me too" catchup in too many fields,
and they've got a long way to go to be the leader in any field that they once
were.

At least one tech generation, probably more, never experienced MS as the big
leader to be feared - back in the mid 90's, any conceptual startup had to
consider "what if MS gets in to this market?". You had to be able to answer
that question. I doubt that's a question anyone has asked themselves in at
least 10 years, if not more. Replace MS with "Google" or "Apple" and that
would instantly make sense to today's crop of startups. But if you said MS, no
one would even take you seriously.

~~~
wcdolphin
Well, given how the DOJ treated MS, it is pretty clear that there was very
little it could do in terms of integrating experiences without getting sued.
Bundle a browser in your OS, get sued. Bundle a media player in your OS? Get
sued. But Microsoft is in the middle of a huge culture shift, and it is doing
things that are new, bold and targeted, unlike any company in the industry.
Google is shooting blanks in every direction, hoping something won't just be a
flash in the pan. Apple is cold and consistent, but given their record and how
they treat developers, I would be surprised if they don't overplay their hand
again. Amazon, on the other hand, is pretty awesome. Besides being a horrible
company to work for, from all reports I have heard, they execute hard, fast
and generally pretty well.

~~~
chris_wot
Tightly coupling products does not necessarily lead to greater innovation.

~~~
TazeTSchnitzel
But it did lead to better user experience. Imagine buying an iPhone which was
unable to play music and videos or surf the web, and if you tried to do those
things it would tell you to go and download an app for it.

The average user doesn't want to have to download some program to listen to an
MP3. They want it to "just work". And that's what Microsoft did.

~~~
chris_wot
I don't call 2 years between IE5 and IE6, then 5 years between IE6 and IE7 and
then 3 years between IE7 and IE8 a "better user experience".

Tell me again how tightly coupling the apps made things better?

~~~
TazeTSchnitzel
For the average user, an included, well-integrated browser makes surfing the
web easier.

Even if it's a PITA for web developers like me that they are using an outdated
browser.

~~~
chris_wot
Except it wasn't well integrated. Incompatible DOM events, non-compliant CSS,
didn't implement newer standards very quickly, leading to IE only sites, or
sites that follow the standard and that just don't work... How dies this
making surfing the web easier?

~~~
TazeTSchnitzel
Because on a new computer, the average user could just double-click the blue e
and they were online, no EU "choose a browser" prompts.

~~~
chris_wot
As opposed to the situation whereby hardware vendors prebundled Netscape (with
an icon on the desktop) before Microsoft heavied them into only bundling
Internet Explorer?

------
brudgers
> _"Today, a single Apple product—the iPhone—generates more revenue than all
> of Microsoft’s wares combined."_

revenue != profit

And thus the article follows the canonical narrative: a dividend paying
company's stock price looks different from that of one which is focused on
accumulating cash; a B2B company oriented company doesn't inspire the same
loyalty among consumers as a consumer electronics company; and a CEO who is
the second largest shareholder (first is Gates) doesn't knee jerk from quarter
to quarter to the delight of Wall Street analysts like a typical hired gun.

Of course the biggest cliche is that Microsoft has failed to innovate. This
despite creating two new UX paradigms - the ribbon and Metro - not just
implementing a PARC based UI on a touch screen;* or developing the .NET
framework and the development of its associated tool chain; or things which
few people in the tech press ever think about like Windows Server HPC.

*If capacitive touch screen development is seen as a great leap forward by Microsoft's competitors, where does that put Kinect?

~~~
beagle3
> Of course the biggest cliche is that Microsoft has failed to innovate. This
> despite creating two new UX paradigms - the ribbon and Metro - not just
> implementing a PARC based UI on a touch screen

"Innovation" != "Different Idea".

I'm sure some people like Ribbon or Metro, but I haven't met any; I've been
looking for WP7 "in the wild", and over the last 6 months found exactly one.

Intel innovated with the Itanium - but that wasn't useful innovation.

> where does that put Kinect?

In the PrimeSense / 3DV innovation camp. Yes, MS did bring it to the masses.
But they didn't get the thing working themselves - they licensed from one
innovator, and bought (and closed down) the other, shutting everyone else out
of that market for a while.

Personally, I think Metro and Ribbon are both from the same design school:
They look beautiful when you look at someone else using them, but they
actually get in the way when you're trying to get things done. I've spent an
hour playing with a Metro based WP7 to see what it's about; I feel that their
"throw all other tiles, then replace the one you pressed" wastes time. I know
what I pressed - let me get there.

~~~
Timmy_C
If you live in Seattle you'll see WP7 phones in the wild. They're all owned by
Microsoft employees however.

~~~
beagle3
> WP7 phones in the wild. They're all owned by Microsoft employees however.

Well, that's a reserve around their natural habitat. It's a far cry from "in
the wild".

------
wmeredith
"Eichenwald’s conversations reveal that a management system known as “stack
ranking”—a program that forces every unit to declare a certain percentage of
employees as top performers, good performers, average, and poor—effectively
crippled Microsoft’s ability to innovate. “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,” Eichenwald writes. “If you were on a team of 10 people, you walked
in the first day knowing that, no matter how good everyone was, 2 people were
going to get a great review, 7 were going to get mediocre reviews, and 1 was
going to get a terrible review,” says a former software developer. “It leads
to employees focusing on competing with each other rather than competing with
other companies.”

HOLY SHIT that sounds like a bad idea! Who in the world would think that's a
good idea. That's crazy.

~~~
tomjen3
Given that it is a disaster in a tech company, but would work okay in the
production floor of a paper mill, I guess some MBA.

I really wish somebody would teach MBAs for 21 century businesses. They would
properly be useful.

~~~
127001brewer
I think "MBAs" are used as a "strawman" far too often (probably because I'm
biased as someone who has an MBA and since I've been developing for over ten
(10) years). Bad "business decisions" can be made by anyone.

Overall, it really doesn't matter who implemented this policy.

~~~
yuhong
Does not excuse legacy MBA courses making it worse.

------
InclinedPlane
This is pretty spot on. The process of reviews is one of the most corrosive
elements of working at Microsoft. However, there's more to the story. MS
fumbled a huge opportunity in the way they reacted to the financial crisis and
recession. They put the vast majority of promotions and bonuses on hold. Keep
in mind that this is a company that has tens of billions of dollars in cash on
hand. More so, this is a company with an "up or out" philosophy baked into it
(and that's a big reason for the review system). Due to fear and lack of
leadership the company saved spending who knows how many millions of dollars
and in the process drove away a lot of their best talent and lost out on
hiring a lot of new talent as well. The way they went about layoffs didn't
help either, with lots of little layoffs instead of one big purge and done (so
that the remaining folks didn't have to question their job security every
day). Instead of projecting strength they projected weakness, and they paid
dearly for it.

But beyond all that it's the increasing culture of bureaucracy that's eaten
away at MS. All the reorgs treating developers as nothing more than assembly
line workers. All the incompetent middle managers and PMs that are 10x harder
to get rid of than incompetent devs. All the silly out of order budget and
management priorities. There's only so many times that an individual can pour
their heart into a job and see nothing of substance come of it before they
decide to move on to greener pastures.

The worst part of the whole thing is that few people realize the significant
amount of lag between when a company starts falling down before it hits
bottom. Losing a ton of talented devs probably won't stop you from shipping
the current version of whatever is in the pipeline, or even the next version.
It'll just mean a lot of projects that would have been conceived won't be, and
it'll be harder to execute on a lot of projects that should have been a slam
dunk. More so, being able to work with more talented devs is a big perk for
other devs, which will tend to accelerate the exodus at all levels. And
typically people will make up their mind to leave months or even years before
they actually do. By the time it's actually supremely obvious that all the
good talent has left it's far too late to do anything about it.

~~~
jacques_chester
> The worst part of the whole thing is that few people realize the significant
> amount of lag between when a company starts falling down before it hits
> bottom.

To borrow a phrase from Adam Smith, there is a lot of ruin in a great company.

------
rlu
Plain and simple this article seems like it was written 3-5 years ago. With
the recent things Microsoft has been coming out with (Kinect, WP7, WP8, Win8,
Surface, New xbox, etc.) that has generated genuine interest...are we really
saying that this company is dead?

Some good points are made in this article, but it gives off a strong vibe of
bitter employees who got bad reviews.

Also:

>"Today, a single Apple product—the iPhone—generates more revenue than all of
Microsoft’s wares combined."

uh, maybe but revenue != profit. I like the closing on this post:
<http://dcurt.is/steve-ballmers-microsoft>

"we should not forget this very consistently true fact: Microsoft makes around
$5.5 billion every three months. In pure profit."

~~~
mrdodge
Last quarter Apple made $11.6 billion. In pure profit.

Apple's margins are actually better than Microsoft's.

This is an incredible change of events. For the first time in ages Microsoft's
primary competitors are far richer or just as rich. The competition are also
now more talented and arguably better run. Microsoft cannot afford to act as
if nothing has changed.

------
mahrain
Until now most of the Microsoft reporting I've read has been "they need to
move" and "they're feeling the heat from (Apple, Google etc.)". This is the
first time they're past-tense, over and done with.

I'm not sure, though. They're surfing a wave of Windows/Office and XBOX cash
and still very relevant for business with a huge ecosystem of developers,
schools and universities educating future Microsoft users and sysadmins.

~~~
wpietri
Educating them for what, though?

A lot of the MS technology stack makes sense in a world when you have a lot of
individual servers scattered across companies. But speaking as a guy who still
maintains a couple of physical servers of my own, I think that's dying.
Ubiquitous good bandwidth means centrally managed services make much more
sense.

I'd hate to discourage anybody from doing technical work, but about the last
thing I'd recommend a student become today is an MS sysadmin. I think its
career prospects are similar to COBOL developer: reasonable for people to keep
going until they retire, but definitely not a growth industry with 40 years of
solid prospects ahead.

~~~
mark_integerdsv
>Ubiquitous good bandwidth...

Hello from Cape Town, South Africa where one of the planets most innovative
mobile service providers runs once of the biggest and most important
organisations in the country and does it all on physical servers.

I'm talking about Vodacom and as a denizen of the third world it really gets
up my nose when people make wild claims based on the ubiquity and quality of
_their_ broadband as to the future of technology in the world at large...
emerging markets, much?

~~~
wpietri
I get your point, but I'm talking about a multi-decade time horizon. My
impression is that emerging markets are just lagging the first world, not
permanently trapped in 1995.

Even if they were, I'm not sure my point's different: if Microsoft's major
future market is only those parts of developing nations where bandwidth is
unreliable, they're pretty much doomed. That's a niche business, and won't
yield the kind of revenue that lets them sustain their hegemony.

~~~
mark_integerdsv
Fair.

I'm not sure I agree with you though that emerging markets are niche... I'm
not an expert in economics but I suspect there may be a sense in which first
worded is niche... Even more so in your several decade time horizon.

~~~
wpietri
Oh, I don't think many poorly networked emerging markets will _stay_ niche.
But in going from emerging to emerged, they're going remain poorly connected
niches.

------
wcdolphin
The way they describe stack ranking is fundamentally wrong. Currently Windows
is in calibration, where we stack rank and reward behaviors that are positive
for the company. This is not done on a per team basis, but on a whole
organization basis. Everyone at a given level is ranked against everyone at
the same level, with the goal that those who do well will be rewarded-- not
only monetarily but also in terms of their position within the company. This
starts at the team level, where managers push for their reports and ICs to be
recognized for their successes, and it follows all the way up the chain and
across the company.

Stack ranking is not simply based on what you accomplished, but also how you
did it. There are three main pillars: what you did, how you did it and how you
showed growth during the timeframe/milestone.

There is no perfect system, but to be frank, the calibration and review system
is pretty damn fair and consistent.

~~~
RandallBrown
Why rank the employees at all though? What good does it do to tell someone
that they're worse than everyone else?

It is to your advantage to make your coworkers look bad, and that sucks.
Thankfully, people are generally pretty good and don't do this too much, but I
can see it creating a very toxic work environment.

~~~
wcdolphin
Ranking employees and rewarding behavior allows a company to form a culture.
What actions are rewarded? What actions are not? For example, if someone
delivers well, but is an asshole in the process, do they get rewarded? If they
do, then that is the behavior that will be emulated and replicated throughout
the company, as that is the behavior that is encouraged. If someone does a
good job, delivering for their team, working well with our organizations and
providing insight and value to many different projects, and this is rewarded,
then this is emulated. It is classic behavioral psychology.

It isn't in your advantage to make your coworkers look bad, it is in your
favor to make them look great, because they review you! You can ask different
people for feedback and reviews, provdiding a great opportunity for growth. I
have to agree with you in that it could create a toxic work environment, but I
don't see that happening, and there doesn't seem to be much stress or strain
around the process. Sure, there are worries, receiving feedback both negative
and positive is not comfortable by any means, but the fundamental purpose is
for everyone to get better, do better, and to have people rewarded for doing
well!

~~~
anotherblue
If you have a problem with a person, either with their results or with their
behavior, fire them.

Whole review process is designed to help managers avoid making tough decisions
like firing bad apples.

In Microsoft, I got one year underachieving mark, and that made huge dent on
my career. It took open-minded manager (who was recent external hire) to offer
me a spot in new group. After that, I did really great, got promotion and
enjoy the work.

Now, tell me, how giving me bad mark helped Microsoft? It kept me in miserable
state for a year and half, forced me to work with people who already said that
I am failure, and I surely didn't produce much at that time.

However, next year, I (same person, working same job), got middle-of-the-road
review, and was officially allowed to look for a position elsewhere... But no
hiring manager will talk to me. Whenever you apply for a position inside
Microsoft, first question hiring manager asks is: What are your last
three/four/five review scores? As soon as any of those is 4 (in today's
system), they will stop talking to you. You cannot get even informationals...
Some jerks don't even want to answer your emails anymore...

Dolphin, I know you are all smart and shiny, but axe is waiting for you too...
Yank-and-rank...

~~~
Daniel_Newby
"Whenever you apply for a position inside Microsoft, first question hiring
manager asks is: What are your last three/four/five review scores?"

Does anyone know the rationale for blocking internal transfers? If somebody is
unhirable by all teams but one, why are they not fired? If a manager might
need a sacrificial goat, why would he not hire a proven low performer?

~~~
twoodfin
I can imagine at least three rationales:

\- Avoid "manager shopping", wherein a low performing employee transfers from
group to group until he finds one that doesn't recognize his lack of
competence. Similarly, communicate to the low-ranked employee that his only
path to redemption is with his current group.

\- Encourage effort from employees who are dissatisfied with their current
group. Continue to perform or you won't be able to switch.

\- Discourage managers from handing out worse reviews to team members whom
they'd just like to see leave the group, as opposed to genuinely poor
performers.

But I'd love to hear the real reasons.

------
balloot
The problem I have with stack ranking, and one that I would think engineering
companies like MSFT and AMZN would share, is that it is just bad science.

I can get on board with the idea that it is good to drop the bottom 10% of the
company on a regular basis. But they're essentially taking very small sample
sizes (individual teams), and assuming their distribution matches that of the
entire company.

Or to put it another way, let's say you ranked every employee in the company
1-40,000 or whatever. You are trying to drop employees 36,001-40,000. An
absolutely awful way to make that happen would be to create 4000 small groups
of 10 people and then drop the bottom person from each group. Anybody who's
even somewhat proficient in stats can tell you that this setup will yield
results WAY off the mark. You could even quantify it with some simple
analysis, and though I don't have time to do so, I'm sure the results would be
horrifying.

And that's assuming a totally random distribution of people, which isn't true,
and totally ignoring psychological effects of such a system. But at the very
least, stack ranking is just bad science, and that should matter to these
companies.

~~~
grandalf
The idea is to create specific psychological effects.

Suppose that of the three attributes motivation, initiative, and talent two of
them are very much within the control of the employee and the other less so.

The goal of the incentive is to make the employee want to maximize all three
rather than doing other things (such as wasting time, etc.).

Imagine the slow, cynical organizations that give everyone a 5% bonus year in
and year out no matter what. Just show up, put in your 9 to 5, and collect
your bonus.

Bonus/incentive programs are intended to create more of a dynamic. Yes it's
more stressful but the idea is that it's worth it.

~~~
balloot
But the motivation given is to beat the people around you. Which in many cases
does not help the company as a whole. It also puts a damper on team
coordination.

Nobody here is suggesting a total lack of merit pay. We're just saying that it
is awful to assume that in any small group in an organization there is always
someone who deserves to be fired, and someone who deserves a big bump, etc.

~~~
spaghetti
I wonder if the following would work: company is divided into small to mid-
sized teams. Say 5 to 30 people. Each team has to do something that results in
profit. More profit from a team implies larger raises and bonuses for that
team. There's a catch: if the company as a whole doesn't meet a certain profit
goal then no teams receive raises or bonuses. It seems like this structure
encourages teammates to cooperate with each other in the "we all succeed or
fail together" theme. Also there's some incentive for team A to ensure team B
is successful since team B's failure could bring the entire company down. The
psychological implications could be interesting. Seems like there's a snowball
effect: n successful teams => team n+1 will probably be successful. This
effect probably works in reverse: n lousy teams could imply that team n+1 is
highly unlikely to succeed.

~~~
rwmj
I'm no management guru but I can see a couple of major problems:

(1) Some teams are necessary but won't make a direct profit, eg. internal IT,
customer service.

(2) It could encourage a team to make a profit at the expense of another team;
eg. the Office team might release a buggy product quickly (maximizing their
profit by not testing it) knowing that the customer service team are the ones
who'll suffer a loss supporting it.

~~~
spaghetti
Good points. Some creativity is in order when it comes to structuring the
teams. For example the Office team could be responsible for customer support
themselves! I'm only half joking. Think about the incentive that creates for
making an intuitive and easy-to-use product.

------
jusben1369
Microsoft's downfall? Downfall?

They initially missed the "Internet" and watched Netscape become huge and
threatening. They initially missed gaming. Enter Xbox (which now actually also
seems like the best VendorTV offering on the market vs lightweight and talk by
the other guys)

They initially missed mobile and tablets. Hmmmmm. Now Windows 8 is right
around the corner and CIO's are going to be enticed to have support just one
OS across all devices.

The Miami Heat were down a couple of games in each series during the playoffs
and had their end predicted more than once. I guess if you reject the premise
what do you do with the details of the article?

------
woodholly
While he's not right about everything he writes, and if you can separate fact
from opinion, younger readers should acquaint themsleves with Cringley's book
Accidental [MB]illionaires. It will tell you all you need to know about Gate
and Ballmer's management style.

Anyone who thinks Gates is both a genius (as in programming genius) and that
this genius was responsible for the success of the company is wrong. One of
those is not a true statement.

Gates and Ballmer were very aggressive and sociopathic, like Steve Jobs. This
helped the company succeed. But success is really the result of the young
talented programmers who signed on with them, and worshipped these characters.

In MS's case it was Simonyi, the man who gave us Excel. And before him, it was
Allen who helped Gates get into business. Gates could not write the compiler
tools himself. He needed Allen.

Some people might not appreciate the way these guys treat employees. Many
simply would not tolerate being belittled by a guy who is not as smart as they
are. (Gates' famous line "I don't know how technical your are." was supposedly
his way of dealing with the many, many others who knew more than he did.)
But... many programmers are happy to be treated this way. And this is
management formula that works very well. Belittling the young and easily
influenced, especially software programmers, works. Perhaps that is Gates' and
Jobs' genius.

Read Cringley. I think you will come away realizing guys like Simonyi were the
true geniuses.

Hollywood ending to this comment i.e., the moral question leaft to the
viewer/reader: Not all geniuses are good leaders, but is it necessary to be an
a-hole to be an effective leader (of geniuses)?

~~~
zohebv
Gates was indeed a programming genius. He wrote the BASIC interpreter and most
of the software in Microsoft's early days. He also managed to publish an
algorithm with Papadimitriou as an undergrad, while running Microsoft in
parallel.
[http://www.sciencedirect.com/science/article/pii/0012365X799...](http://www.sciencedirect.com/science/article/pii/0012365X79900682)

> Gates could not write the compiler tools himself

You are both underestimating Gates and overestimating how hard building a
compiler/tool is.

------
danielpal
This is absurd. I worked at Microsoft and blaming everything on Stack Ranking
is very shortsighted.

This is the kind of things reporters do. There are many bigger issues with
Microsoft than stack ranking.

How about the company focused on Desktop computing for far too long and missed
the web, cloud and mobile? This has nothing to do with reviews or HR, and
everything to do with lack of vision and innovation. They thought Windows
would remain relevant forever.

------
corford
Downfall is a bit strong. Call me when Windows 8 is out of the door and it
turns out to be an enormous flop. Until then, Windows 7 is a very solid os
(the best iteration of windows MS has ever released imho); xbox rules the
console gaming roost; exchange, active directory and c# dominate in the
enterprise space; Office is still the best at what it does. The only parts
they really suck at are web and phones.

To me that means they have some serious weaknesses (given the ever increasing
importance of phone and web) but it doesn't mean they're in a death spiral.
RIM... that's what real downfall looks like!

~~~
flyinRyan
You can't count on xbox for stability. The gaming industry is a drunken battle
royal. Just when someone is getting dominant, Nintendo (wasn't he out
already?) comes in from behind and clubs them with a chair.

AD "dominates" only because Windows OS "dominates" and surely Java is still
more used than C#?

>The only parts they really suck at are web and phones.

You mean the biggest areas of future growth? That doesn't sound too bad.

~~~
corford
I'm not a gamer so I don't know much about the console world but I think
you're right. I remember when the first PS came out and wiped the floor with
everything. Fast forward a few years and the xbox started taking over and then
the Wii came along and mopped up what was left (although it seems the Wii has
waned a bit since).

Yes, AD dominates because Win server and Win desktop dominate in enterprise
land. However, part of the reason Win server dominates is because of things
like AD, Exchange, Sharepoint, SQL Server etc.

Re: biggest areas of future growth. Yep, that's why I said it was a serious
weakness. However, just like with the xbox, MS has the money and patience to
battle its way in to a new sector (i.e. modern smart phones). This doesn't of
course explain why they've been fucking up the web side of things for so long.
To be honest, I don't think they are ever going to re-establish themselves in
the web sphere (from a developer perspective at least). *nix, open source in
general (python, ruby, php, javascript), FF, Chrome, etc. just make sense in
that space.

Basically, if Windows 8 is a flop and their Nokia merger smart phone plan
doesn't work out, then I think words like "downfall" will suddenly become a
lot more appropriate.

Also, to set the record straight, I'm not an MS fan boy. I run Windows 7 as my
desktop but apart from that I spend my life inside putty terminals talking to,
programming on and administrating Linux systems (specifically Debian). I even
have an sdf.org email address FFS :D

~~~
flyinRyan
You're right about the web but honestly they've been doing the same thing in
mobile. They had an initial lead with their embedded windows stuff but they
never progressed it. Competitors quickly surpassed it with them staying the
same.

I think people are saying downfall precisely because they're playing catch up.

------
tomelders
Post rationalised nonsense. Microsoft's problem has always been, and always
will be, that's it never had an original idea, it's never understood why it's
doing the things it does. It got lucky with Windows which has always been a
shoddy product. Microsoft is no different now to what it was when Windows
launched.

Put simply, Microsoft isn't a very good company. It's a blip on what is at
present a very short timeline.

~~~
nkohari
This is just ridiculous. Microsoft is a powerful company that has simply
foundered, like many before it. They've just never been able to understand (at
a corporate level) the changing forces of the software industry. They remain
entrenched (perhaps rightfully so) in Windows, which firmly anchors them in
the PC era.

Comparatively, Apple has embraced the post-PC era, and has reinvented
themselves as a consumer electronics company. Remember that in the late 90s,
Apple was trying to make it as a PC manufacturer as well, and only at the
brink of failure were they able to recognize that they had to pivot. Microsoft
still makes too much money via the PC-oriented Windows-based business model,
so they haven't been forced to reinvent themselves.

Also, for the installed hardware base, Windows is and has always been the most
consumer-friendly operating system on the market. It's certainly not perfect,
and it might not suit power users, but it more than serves its purpose.

~~~
pseudonym
>Also, for the installed hardware base, Windows is and has always been the
most consumer-friendly operating system on the market. It's certainly not
perfect, and it might not suit power users, but it more than serves its
purpose.

I'm going to disagree with this on the base that "A generation has primarily
grown up using it" does not necessarily means "consumer-friendly". Not to say
that Mac or Linux or Plan9 or iOS whatever is objectively better (although I
think iOS would give it a run for it's money, from personal anecdotes
regarding computer-unsavvy people), but if you had a generation that grew up
running primarily Mac at home, at school, and so forth you'd be calling that
the consumer-friendly OS.

~~~
nkohari
The key phrase is "for the installed hardware base," by which I mean the
different hardware configurations Windows can support. OSX is the most usable
OS hands-down in my estimation, but it can only be used (by non-enthusiasts)
on Macs.

------
runako
Quote from Steve Stone, founder of the tech group at Microsoft:

"“We couldn’t be focused anymore on developing technology that was effective
for consumers. Instead, all of a sudden we had to look at this and say, ‘How
are we going to use this to make money?’”

The duality here strikes me because the winners in consumer technology are
able to do both at the same time. They make money by shipping technology that
is effective for consumers.

------
bootload
_'In the 40s, 50s, and 60s, Sears had it nailed. It was top-notch, but now
it’s just a barren wasteland. And that’s Microsoft. The company just isn’t
cool anymore.'_

Microsoft once was cool. It might be difficult to imagine, but from the time
PC's came out with DOS through to MS Windows, you really could do interesting
things on commodity hardware with their great tools and large user market.

It was obvious to me that MS lost it's cool as the Internet gathered steam at
the time the Web was born. Doing Post-grad I couldn't help but laugh, to
connect to the Internet using Microsoft operating systems you needed a vital
component [0] from a lone programmer from Tasmania. How did that happen? How
did MS miss the tidal wave we now call the Web?

    
    
       "Open access to the World Wide Web was 
       not originally included in the classic 
       MSN service at the time of its initial 
       launch" 
    

Toys like the Internet simply didn't register to the like of Microsoft. Gates
even tried to tame it - remember _'The Microsoft Network?'_ [1] MS missed the
Internet and the Web because of this need for control. Lesson learned: No
matter how hard you try, networks can't be fully controlled or contained. You
can't tame the beast.

[0] Winsock built by Peter Tattam owner of Tattam Software a small Tasmanian
software company. Used Trumpet & didn't pay? You can here ~
[http://trumpet.com.au/index.php/news/3-latest-
news/17-mar-20...](http://trumpet.com.au/index.php/news/3-latest-
news/17-mar-2011.html)

[1] <https://en.wikipedia.org/wiki/Microsoft_Network#MSN_Classic>

------
StacyC
Microsoft’s strategy has, for a long time now, seemed to me to be one of pure
reactivity. Look for what others are being successful with, then try to
emulate it just well enough to turn a buck. A vision for the future? Someone
else will take on the big risks and figure that out.

~~~
nkohari
This is pretty much the norm in large, entrenched companies like Microsoft.
It's the reason why so much innovation comes largely from startups and small
businesses.

------
grandalf
Stack ranking is equivalent to having a finite bonus pool, or having Gold,
Silver and Bronze in the Olympics. Yeah the 4th place finisher is an amazing
athlete, but there are only three medals.

Suppose you are a manager who manages 5 employees. If you have $100K to give
out as bonuses, you could just divide it up equally. Over time employees would
come to expect to get their bonus and it would cease to be a motivator.

While stack ranking imposes a bit of an assumption about the distribution of
effort/merit on a team, it's also intended to foster spirited competition for
the top spots, much like the medal system used in the olympics.

If you are managing a meritocracy and the rules of the game are known, nobody
will begrudge someone else getting a bigger bonus. Many workers idealize
working on a team where they are not the strongest, so that they can learn
from others.

The point is that it's not just about rewarding people, its about rewarding
people for the kind of significant contributions to the team that make a
business difference. If managers are letting it get political and it turns
into a BS metric, then that's evidence of a larger management problem than a
problem with the particular distribution of bonuses entailed by the program.

One could argue that any bonus that is uncertain has the potential to alienate
the employee if it is not earned. The converse would be to give all employees
motivational bonuses, or, in other words, not to give bonuses but to rename
some of the guaranteed compensation "bonus" when it's actually just salary.

If a corporate culture is so backward that the genius in the next cube getting
a bonus is viewed as a bad thing, then it's probably time to think about
how/why bonuses (or the equivalent) are given in a smaller business where the
bonus comes in the form of options being worth something, etc.

~~~
tomjen3
Are you a manager?

If so you need to keep these two points in mind:

1) The reason the oplympics works is that you can rank people accurately down
to within miliseconds. And peoples success doesn't depend on others help.

2) If the bonus pool is fixed, you can give everybody the same one year if
that makes sense given the input and one year you can give something to one
guy and more to the rest. You can't do that with a fixed band system. That is
its key flaw.

~~~
it
Also, if you are working on a team then the incentives should be based on team
performance, not individual performance. You get what you reward.

~~~
grandalf
I was not arguing that a team based bonus is not also a good idea.

In my experience three qualities that are very unevenly distributed are
motivation, initiative, and talent. Depending on the business some combination
of these represents the ideal employee.

------
vessenes
This article has got it wrong; Sinofsky is remaking Microsoft. He is, of
course, remaking it into an even more competitive, Apple-ish kind of place.
But the market will reward him for doing that, and we as consumers will, too.

I think I'd rather have two Apples in the world, (although MS has a long way
to go to do that) than two IBMs.

~~~
silverbax88
Surely he's not responsible for that feeble Metro initiative, is he? That
could be the end of Microsoft for real.

~~~
joenathan
I think Metro is wonderful, I've been running the consumer preview since
release and now the release preview on my desktop, and I use metro apps quite
frequently(I'm currently in love with the game Flow).

I'm also looking forward to replacing my Android tablet(Touhpad on ICS) with a
Windows 8 tablet. In my mind Windows 8 presents the best concept for a tablet,
a touch friendly UI for content consumption and casual gaming but also a fully
featured OS when needed.

I think Microsoft is on to something especially with things like Smart Glass.

~~~
flyinRyan
>I'm also looking forward to replacing my Android tablet(Touhpad on ICS) with
a Windows 8 tablet.

Personally, this is what I always figured would happen: Windows in mobile
wouldn't kill Apple but rather kill Android. Android is the "cheap" competitor
to Apple's luxury. That's the space that MS has traditionally filled. I expect
Android to eventually fill the traditional Linux space.

All this assumes that Windows even gets off the ground with W8.

------
chadzawistowski
> “They used to point their finger at IBM and laugh,” said Bill Hill, a former
> Microsoft manager. “Now they’ve become the thing they despised.”

I was under the impression that Bill really admired IBM, and wanted to emulate
them.

~~~
bgilroy26
I think they're making a more specific, snide point about how Microsoft
employees would watch IBM become less and less relevant for general consumers
and think on some level that they were less vulnerable to the same fate.

In general, I'm sure you're right. Even today, IBM and Bell Labs still
represent the majority of the private side of innovation in computing history.

------
RandallBrown
I am really hopeful for the future of Microsoft. They have the potential to do
something _really_ awesome with Windows 8/Windows Phone 8/Xbox.

We've been promised ubiquitous computing for years and Microsoft has finally
developed a common platform that might make that possible. It's all going to
be about execution. The things they've announced so far seem promising, but
we'll have to wait and see if it actually works.

~~~
VikingCoder
Microsoft has never wanted ubiquitous computing; they've wanted ubiquitous
licenses of Microsoft operating systems and applications.

Even when they've tried to behave well, people don't trust them, because of
this.

I think the single best thing Microsoft ever did was bail out Apple, so they
didn't have to go bankrupt.

<http://www.wired.com/thisdayintech/2009/08/dayintech_0806/>

~~~
philwelch
Microsoft didn't "bail out" Apple--Apple by 1997 was solvent and profitable.
The immediate cash flow problem was solved by Gil Amelio and Fred Anderson a
year before. The truce between Apple and Microsoft had more to do with Apple
focusing on the future and abandoning several frankly promising legal claims
against Microsoft, including Microsoft's outright theft of the QuickTime
source code. Promising to sell Microsoft Office for Mac was more important
than the $150 million.

------
gfodor
The reason Microsoft has gone down the tubes, to paraphrase Steve Jobs, is
they have no taste.

------
sseveran
While I can agree that stack ranking is corrosive in many respects removing
under performers is essential. I was at a company (rather large internet
company) that did not get rid of under performers. When I arrived what had
collected was mostly senior engineers that in all frankness should not be let
near a source control system much less be allowed to commit changes. There was
so little engineering talent but thousands of engineers. And this is an
impossible problem to fix without wholesale firing entire orgs since competent
engineers don't want to work in a team of people with equal or higher level
than them who don't know the difference between a compiler and an interpreter.

While there we did do stack ranking. Its just another game to play inside a
company, just like all the other games that go on. It was easy to play that
system as opposed to doing something like aligning with other teams retarded
ideas. We did real awesome stuff and made sure we got recognized for that. I
think the hard part for many people is the recognition that 80% of people
(including maybe you) don't deserve a big bonus and promotion.

There will always be politics and politics will always drive these decisions,
even in small companies. I don't have an effective way of objectively
measuring a software engineer. The most important thing you can do is to pick
a great manager (or startup CEO) and align yourself with him. While they will
do different things to help you in big companies vs little companies, a good
manager will hire good people and ensure that his team is working on big,
company impacting problems. Startup CEOs will be doing the same thing.

Now a couple of notes to make sure your stack rank goes awesome:

1\. If senior leadership does not see your team as directly impacting profit
move to a new team. 2\. Make sure that now that you are working on something
with great business value make sure everyone knows about it. 3\. Send out
reports to everyone who is interested every week telling them what your team
accomplished that week (especially for you budding managers out there). 4\.
Compile all the congratulatory emails from executives as well as other teams
(Directors and managers). Your manager will use these at the stack rank
meeting since all the other terrible managers who you no longer work for will
not be this prepared. 5\. Remember to deliver. When you deliver real value you
will be recognized.

I know this is hard but I used this strategy very successfully. I can not
emphasize enough that you must be working on big, impacting features. Adding a
widget to a form, or making some little feature is a butts in seats problem.
If you are just a butt in a seat expect to be treated like one.

~~~
kamaal
Stack ranking doesn't always ensure bottom performers go(If there is lot of
politics in the org and managers like their pet employees).

But almost always ensures erosion of team work, and attrition of some good
people.

Its great when executed well, horrible if you even get it slightly wrong.

~~~
sseveran
Agree that it doesn't always work. I am yet to see a viable alternative that
works in large organizations. If you know of something different I am all
ears.

------
kin
Reminds me of the article a short while ago about the startup culture of the
Bing team that lost its momentum because Microsoft tossed a bunch of managers
and PM's at it. Or rather, Microsoft crippled Bing with bureaucracy.

------
redcircle
Balmer and the other managers aren't the only ones at fault for bad
bureaucracy --- the employees that live with the system against their better
judgement, rather than leave or fight, are also responsible.

~~~
marshray
A lot of people have left. But I imagine it would be hard to leave if you have
a mortgage in a high-priced suburb that's flat or dropping in price.

------
krishnakv
The major point the came out for me from the article is how destructing
ranking people "against a curve" is.

"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"

This was originally popularized by GE and borrowed by dozens of companies as a
HR best practice. Now every major corporation tries to rank their employees
along a bell curve as 1's, 2's, 3's and 4's and inevitably, they lose the 1's
who quit in disgust rather than put up with this.

My hope is at least a few HR decision makers read this article, look at what
is happening in their own companies and come up with a better way to motivate
and get the best of employees. Quickly before this cancerous policy eats up
the best talent in in the organization.

------
at-fates-hands
I find it fascinating that most people forget Enron famously adopted the stack
ranking principles. Look how that worked out for them.

------
antidoh
Stack ranking where you fire the bottom 10% (even though they were supposedly
A players when you fired them; what did you do to ruin them?), is just a
manifestation of managers that have a hard-on for a brain.

------
jroseattle
It's a bit voyeuristic, so not a lot new in this article for those familiar
with the culture.

If the article has value, it will serve as a warning to others ( _cough_
_Google_ _cough_ _Facebook_ _cough_ ) that hubris and bureaucracy and koolaid
and everything negatively associated with group-think can happen to you.

It's like exercise -- muscle confusion is your friend. Keep it fresh, mix
things up. Try to avoid becoming exactly what Microsoft first attacked, then
became.

------
Zenst
First IBM who helped to create Microsoft who then helped to create Apple.
Guess Apple helped to create ARM.

IBM helping to create Microsoft is well known so lets not dupe that one.

Microsoft helping to create Apple, well Apple went thru a bad phase and
Microsoft chucked them enough life-lines to keep going and without those they
would of gone under.

Apple, when they started the Newton project helped put ARM were it is today so
we shall see were that goes.

Whoever is out infront always gets there head shot at. IBM took major flack
for there monoply of the market, then Microsoft and now Apple. ARM just seem
to be playing in that nice phase. But early days and not like Apple couldn't
indirectly spawn a new leader be it directlly or indirectly. Usualy the
pattern is that they will help another company to remove some heat from there
ass and that company will outgrown them.

Still IBM still around, Microsoft still around etc etc etc.

Just a case of everybody loves to hate a winner it seems :(.

------
6ren
Christensen ( _The Innovator's Dilemma_ ) has an anecdote that prompted his
PhD research:

Digital used to be extremely successful with their minicomputers. Highly
profitable, their management was lauded by the press. Then, the PC arrived,
and quickly undermined minicomputer sales and profits - and Digital. The press
ran a series of articles about how Digital management had lost their way, and
kept making terrible decisions. But, according to Christensen, management
hadn't changed. They were the same people, making the same kinds of decisions,
on the same basis, with the same values.

<http://www.strategy-business.com/article/14501?gko=ca7ad>

------
anuraj
This is the story of every large company out there including Google. With
size, comes structure, and with structure bureaucracy. Metrics take the place
of intelligence and straight jacketing becomes the norm. Some companies (like
some people) live to a ripe old age; some die a premature death. A 100ton
truck cannot take a hairpin at 100mph.

Decline and death is the norm in industry as in life. The next microsoft would
come out of the thousands of startups that are being hatched today or
tomorrow.

------
akkartik
Google also stack-ranks.

~~~
tomjen3
WTF. You would expect Google to create a better way to solve that problem.

~~~
jacobquick
It doesn't have a standard implementation, each company kind of makes it up as
it goes. Google's is different from Microsoft's, though it's prone to the same
issues on a smaller basis.

------
adharmad
This book gives a good perspective of some of the internal feuds at Microsoft
(from the dotcom times): [http://www.amazon.com/Breaking-Windows-Fumbled-
Future-Micros...](http://www.amazon.com/Breaking-Windows-Fumbled-Future-
Microsoft/dp/0743203151)

------
posteditdelete
Well, if HP wasn't going to use their MovingBrands rebrand, Microsoft might as
well steal it.

------
wluu
I think this blog post by a former Microsoftee (Hal Berenson) is also worth
reading - [http://hal2020.com/2012/07/03/acknowledging-the-aquantive-
mi...](http://hal2020.com/2012/07/03/acknowledging-the-aquantive-mistake/)

------
medinismo
even though I like the thought of the article, the author botched it by
turning into an unsubstantiated complain fest. We are all curious to figure
out how MSFT screwed up so badly, however blaming stack ranking is just
amateur. Stack ranking is used by many great companies that are doing v well,
thank you very much, such as Johnson and Johnson, Bain, McKinsey, Coke.

------
tonetheman
Anyone who thinks stack ranking is good, seriously quit your job you are
complete dumb cunt.

------
hexagonal
What's the point of a paywall if you put all the relevant information in the
"teaser"?

------
nirvana
As someone who has seen stack ranking in action at Amazon and Microsoft both,
this is an excellent interview question at any company you consider,
especially one founded by ex-Amazon or ex-Microsoft employees. Do you use
stack ranking? If the answer is yes then you know they aren't performance
based.

Microsoft and Amazon both seem to think it is "scientific". It isn't really
scientific when, in advance, you decide that %10 should be on a firing track,
%70 should be warned and %20 should be promoted-- without regard to actual
performance.

Bezos likes to run around claiming he only hires "A players", but what it
ended up being was C & D[1] players who didn't know how to program or
understand technology, ranking their teams, almost completely based on office
politics[2] and ones ability to hype their work, rather than the actual
technical quality of the work. Of course generalizations like this will have
exceptions and I knew some groups who were lead by software developers who got
promoted, and the AWS group seemed to be insulated from the amazon culture.
But HR and Management at Amazon.com were absolutely atrocious. And that's in
comparison to Microsoft (where I also worked) where this "metrics" religion
was completely accepted as well.

If you're a talented engineer, work for a startup, but if you need a big
company and you're in the northwest, pick Microsoft before you pick Amazon.
(Maybe google is better than both, but I've not worked there.)

Edit to add:

In fairness I can compare myself to gates. I saw the Kindle at Amazon about a
year(?) before it was announced and wanted to kill it on the spot. (not that I
had any say in the matter) I thought it looked like it was designed in the
USSR. Still do, but bad design can still make for a good product financially
(and it has gotten better.)

[1] I'm being generous here. My boss and my bosses's boss and all the HR
people I'd give an F. Absolutely the most incompetent people I've worked with
in 20 years of mostly working with startups where even really competent people
have to struggle with immense difficulties and uncertainty, neither of which
was present at Amazon, except to the extent created by incompetence, though
this incompetence went all the way to the top. I saw other people leading
other teams who were C & D players, so I presume my team was just particularly
bad.

[2] (Talking about amazon here, saw much less of this at MSFT. MSFT was more
misguided than... evil.) In order of decreasing effectiveness: Kissing Bezos's
ass, Kissing your manager's bosses ass, kissing your manager's ass, kissing
your manager's peers ass, making up initiatives that sounded really effective,
even if they had no actual effect and then propagandizing them around the
company, sabotaging your co-workers products, knifing your co-workers in the
back verbally, deliberately mistranslating instructions from your boss to
others in the team, hyping yourself with other teams, conspiring with others
at other teams, and just generally lying. I saw all of this occur. If I'm
bitter it is because I was not smart enough to accept that this was the
companies culture, and I gave them way too much benefit of the doubt. I should
have left immediately after they broke a hiring promise to me (in the first
month.)

~~~
edster
The stack ranking system is really known as the "GE Way" and is one of the
reasons Jack Welsh is famous and made a ton of money selling management books.

IBM also employed the 20/70/10% concept to employee reviews in the 90s.

~~~
jasomill
Sure, but there seems to be a difference between divesting of a conglomerate's
lowest performing business units, lavishing on the highest-performing ones,
and putting the rest on notice, and applying a similar system to a _small_
team. The latter reminds me less of Welch than of _Glengarry Glen Ross_ :
"First prize is a Cadillac Eldorado. Second prize is a set of steak knives.
Third prize is you're fired."

For anyone who hasn't seen the movie: it doesn't end well.

With respect to employees, the point of a "forcing function" has less to do
with motivation than with finding _some way_ to make change _possible_ in a
crumbling organization of fiefdoms whose managers insist that, nevertheless,
"all _my_ children are above average." If I recall correctly, Welch even
points out that "C" players often go on to be "B" or even "A" players in other
organizations, which doesn't change the fact that _everyone can't be doing
everything right when the overall organization is underperforming_ , so there
are either weak spots, or no alternatives to immediate liquidation.

Finally, I'm quite confident Welch would agree that "blindly applying a vague
principle you read in some book, then sticking with it for years because 'it
worked for $MEGACORP'" is a stupid idea, regardless of who wrote the damn
book!

~~~
kamaal
As per Welch, stack ranking works because managers are themselves stack
ranked. All the way up to the CEO.

Therefore if a manager plays politics and promotes his inefficient pets,
sooner or later he comes ranked last among his peers. So if though he wants,
he can't.

He also says that the stack ranking system makes it very difficult for the
managers in the 3-4 year after it was implemented, because now they may have
to let go some good people to retain the very best.

However it did work to a large extent in GE. Jack Welch's immediate reportees
all went on to become CEO's of top companies.

But things like this blind copied and applied don't fly much. You need to
implement them in spirit and that's difficult.

~~~
jasomill
Letting go of good people to retain the very best doesn't sound like a
problem. Letting go of the very best to retain the most difficult to replace,
on the other hand...

~~~
kamaal
Stank ranking is not ideal for everyone.

Also stack ranking requires a great leader with courage in the top who
actually has the vision to take things down to the last employee. For this you
need to cut bureaucracy, bring in meritocracy. And do nearly every thing your
traditional exec can't.

The reason this fails is some clueless MBA's in the name of case studies take
it up and blindly without knowing the spirit behind it apply to anything and
everything under the sun.

Each leader has his style you can take some lessons from it. But you can't be
that leader copy cloned and template act everything he did. When you do, you
only do it ritually and not in spirit.

Which is what cause things like Stack Ranking to no be viable else where.
Because you are not thinking as Jack Welch did, you are trying to imitate his
action and hope to get the same results.

------
powertower
> and Cannibalistic Culture That Felled a Tech Giant

Someone forgot to show him Microsoft revenue numbers for the last decade.

~~~
flyinRyan
You mean the long tail? Someone should show you RIM's revenue numbers for the
last decade.

------
goggles99
Saying something like stack ranking is partly responsible for ruining
Microsoft completely discredits this article. It makes every word suspect in
the whole thing.

1\. Microsoft has almost always stack ranked. 2\. Companies like Google who
has done nothing but grow in the past decade also has almost always stack
ranked.

Try not to put things in your article that seem so baseless. It makes you look
like a hater.

