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Microsoft’s Downfall: Inside the Cannibalistic Culture That Felled a Tech Giant (vanityfair.com)
347 points by 127001brewer on July 3, 2012 | hide | past | web | favorite | 355 comments

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.

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...

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.

I don't think Bryan is being lax with history at all. In fact, he completely nailed it. The only points in your comment that I found persuasive, on the other hand, are that Windows is indeed becoming irrelevant, SQL Server probably has an edge over MySQL in some ways, and Exchange needs to die a quick death. The rest just doesn't fly.

Hatred for Microsoft doesn't exist any longer? Says who? I believe it runs much deeper and stronger than you realize. I haven't purchased a Microsoft product in well over a decade, and that "purchase" was a PC preloaded with an OEM license of Windows that I had no way of not buying. My loathing for Microsoft was sown over decades of the most user-hostile, winner-take-all, I-will-rip-off-your-head-and-shit-down-your-neck corporate culture I've ever witnessed. Bryan calling Microsoft "predatory" is being kind.

I'm not sure what "OS field that has been gaining serious traction for the last 3 or 4 years" refers to, but if you're talking about desktop computing, they are doing exactly the opposite of gaining traction: http://twitpic.com/a31jis They aren't just becoming irrelevant to the elite; Microsoft is rapidly becoming just plain irrelevant.

How does C#'s popularity debunk Bryan's entire argument? A lot of companies still use Windows (for now), which means a lot of people use C# to develop applications for those computers. I don't see how this debunks much of anything.

SQL Server is good. Is it better than MySQL in some ways? Sure. What are the chances I'd select SQL Server instead of PostgreSQL? Zero percent. So that's a false equivalence right there, but that's besides the point. The reason people use MySQL or PostgreSQL instead of SQL Server is that you don't need Windows. Why tie yourself to a user-hostile company that's only going to charge you ad infinitum upgrades for a malware-ridden operating system? Even if SQL Server were heads-and-shoulders above MySQL/PostgreSQL, people would avoid it because you can't get it without Windows.

As I said, Bryan really nailed this: you're either burned so badly by Microsoft that "hatred" doesn't even begin to describe your feelings, or you're apathetic because the world has moved on and Microsoft continues to pretend like they live in the 1990s. With Ballmer at the helm, steering Microsoft towards seemingly inevitable obsolescence, Microsoft appears destined to eventually join Wang, Sun, RIM, Nokia, and the other dead or soon-to-be-dead. It didn't have to end that way, but reaping what you sow is generally the way the world works.

Although I agree with all of your emotions because I share many of them, certain of your comments have me wondering how much time you have spent around big corporates.

Microsoft is to this day, beyond pervasive. I have over a decades worth of experience in data analysis, systems analysis, business intelligence and software design and I have never been in a big corporate office that does not use exchange, Outlook is de facto, period.

Clearly then all of those desktops are windows boxes.

With the release of MSBI as a competitor to all of the top flight BI suites that pretty much comes bundles with MSSQL... Watch this space - MS will be ubiquitous in BI within the next decade, I am an expert in the field and I have zero doubt about that.

The simple fact is that MS is still the 'safe' (define that as you will) choice for the dinosaurs that run corporate IT... The world you assert as real right now is a in my opinion a far future possible state, nothing more.

Companies using Microsoft SQL (and sometimes requiring the same from others, which is very odd) are often viewed as somewhat clueless. I think for business people, Microsoft has some positive aura (I don't really know why), but everyone else just tries to stay mostly away from them.

Personally, I wonder if enterprise BI will even exist in the next decade. I think corporate IT is on it's way out.

Of course it will - everyone needs to understand their data, how else do you think they make an informed decision? If anything this market is increasing in size, and the Microsoft suite does an excellent job of filling the mid size end of the market. Dont knock MSSQL till youve tried it because its pretty fucking awesome at the moment.

I use MSSQL every day. But that's because I'm currently working in IT for a very large company. I don't expect the job I do to exist for another 10 years so I think it's irrelevant what's popular here.

BI will, but the EDW will become less important. As long as businesses need data, there will be BI, or the same concept with a different name.

"and Exchange needs to die a quick death"

What do you propose as an alternative to the hundreds of thousands of mid-sized companies who use Exchange/Outlook now?

Google Apps my friend - even Mining companies of 2000+ staff are right now eveluating it and loving it. As for your BI statements you must have a short memory. In the last decade alone the strategy for MS BI changes every 3 years or so, products that partners have spent thousands on training etc have been cut without notice, acquisitions in the space have been squandered with very little IP making it into MS product. You must have picked the worst example to disprove the OPs argument. Open source based BI solutions have made serious progress over the last 4-5 years.

If you are seriously claiming that Exchange and Google Apps provide the same features except for the most basic, one-sentence description of those features (as in, 'they both send mail and store contacts'), you clearly don't have the slightest idea of what Exchange is or does.

Regarding the BI, I think you're mistaking me for another person in this thread, I don't know much about that, nor do I have an opinion. I'm just saying that Exchange is unique and there is nothing out there that can replace it without making very different trade-offs in the way your IT infrastructure is set up.

You have obviously never used Google Apps Premium edition. It does the bits that actually matter to users. I havent looked after Exchange since the 2007 version but am well aware what it can do.

Part of the "charm" of corporate IT is that what matters to the users isn't even part of the equation.

Do Google apps allow you to have your own server completely cut off from Google? (cos no way would the company I am in want to let google see their mail)

No you dont host the Google Apps product locally - thats the whole point of it.

Yeah, that's going to be a dealbreaker for a lot of businesses. Some of them actually take confidentiality of their own and clients' data somewhat seriously. And for good reasons, too. Besides, you're not just trusting Google with your internal communications and sensitive customer data, but it's also an American corporation that's been known to willingly share data with government agencies. If you're not based in the US yourself, why place such trust? To illustrate, imagine there's a service like "Yandex Apps" (maybe there even is, I don't know), of course some businesses would not care as long as the product is good, but you can also imagine there'd be many that would be rather hesitant to host their sensitive business data on a Russian webserver on a different continent... :)

Yes, Americas National Security Letters and lawful interception laws are sparking a lot of concern over this.

Zimbra. Zimbra+Thunderbird. GoogleApps.

Do you know how Exchange works, and how Zimbra works, from a user and management point of view? (I'm not even taking GoogleApps seriously, because many organizations don't want to outsource the storage of their private data).

If yes, how can you say that they are 'similar' except for the very most basic point that users can send email with them, much like both a Lamborghini Murcielago and a Ford Model T are both 'cars'?

If no, why do you suggest them?

I find the "organizations don't want to outsource the storage of their private data" an interesting one. Do they think they can secure their email servers better than Google can? Are they going to refuse to hand over data if requested by authorities? As far as I know Google doesnt do anything more than say a spam filtering service like MessageLabs would do - i.e. index some text to see if it should be classified as spam / malware etc. You can read their policies on this here http://support.google.com/a/bin/answer.py?hl=en&answer=6...

>Are they going to refuse to hand over data if requested by authorities?

At least they'll know the authorities are requesting the data...

I thought voting something down was for trolls, not because you disagree...

Is that directed at me? Look at my profile: I don't have the ability to down vote.

Do you know what the word "trusted" means in the context of security?

> Do they think they can secure their email servers better than Google can?

Just because someone secures their servers better than you can doesn't mean you automatically have to trust them with your data.

Let's assume for a moment that I have the safest vault in the world. According to your reasoning, the logical thing to do would be to put your valuables in my vault? Gosh ..

And even if you do trust Google with your sensitive data, do you also trust all their employees that might have access to it? http://gawker.com/5638874/david-barksdale-wasnt-googles-firs... And Google is a rather big corporation, if anything were to go wrong, they are notoriously hard to hold accountable.

> Are they going to refuse to hand over data if requested by authorities?

Well, they do not necessarily answer to the same authorities as Google does, so in some cases, yes, absolutely.

> Just because someone secures their servers better than you can doesn't mean you automatically have to trust them with your data. When coupled with credibility of course it does.

> Let's assume for a moment that I have the safest vault in the world. According to your reasoning, the logical thing to do would be to put your valuables in my vault? Gosh .. No it wouldnt, silly argument really. You have less than zero rep.

I know how Zimbra works, yes. And I think it is a bit harsh if you call Exchange a Model T - even though the search facilities through Outlook are crap, and many Exchange instances are configured with ridiculously little mail storage (eg. 250 MB/user).

If any comment ever deserved an "El Oh El" it's surely this one.

There aren't any enterprise alternatives even though there should be one.

For instance, if RIM had half a clue and a nickel for every bad idea they've executed on they'd have built a messaging platform to compete with Microsoft.

It's obviously too late for this now, but there aren't many companies that people would trust their email to.

I recently set up an email system for a small company using cPanel, hMailserver and Thunderbird. I actually looked at Zimbra but decided to go with a Windows-based solution. I also considered Google Apps, but was afraid it wouldn't allow for fine-grained control over access permissions (i.e. managers seeing subordinates' accounts and restricted shared folders) and also unrestricted creation email aliases/accounts.

Should I have taken a closer look at GA? Thunderbird isn't the easiest to use, but I like how it's easy to work with shared IMAP folders.

GoogleApps yes

But don't waste your time with Zimbra, really

I disagree about the sense of IIS v. Apache: Apache won because of Linux not the other way around. (There is, after all, a port of Apache to Windows -- it seems to have done nothing to stop the bleeding according to Netcraft.) As for the "bizarre phenomenon" that Windows seems to be "irrelevant" despite that it's "dominant", there is of course a simple answer: it's not dominant. Windows lost; humanity won.

>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.

I think this is because IT is being moved out of the enterprise. I don't think it was ever a smart fit so more and more companies are moving to "off the shelf" solutions, SaaS, etc. The best programmers are going to startups or freelancing. The people still chugging away in big firms writing code are essentially the COBOL programmers of the late 90's: just trying to grab cash as long as it lasts.

> 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.

Microsoft itself supports Redis on Windows:


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.

Isn't it a little ironic that they don't matter to the "elites" and "geeks" and then this article was in Vanity Fair? There is another aspect of bubble bursts, there is a point in which every sort of starts to expect it. I'm of the belief that once there is some critical mass of burst acceptance, it's an inevitability.

MS isn't going away (like they tried to do to so many of their competitors) but it may never be the same again. I don't see how Windows 8 can be a big enough win to be what they need it to be; they have set the benchmark as windows everywhere, not a plurality of windows. Really, the interesting question is what does Ballmer's successor do to shake it up and get the ship back on track. He could reset "normal." He could spin some stuff out (internet and games could/should be on their own.)

Having worked with MSSQL for 12 years, now PostgreSQL full time, I would like to hear what in your opinion is bad. Other that the lack of query parallelism, I find Postgres to be a pleasure to work with.

SQL Server is good to, and the price point comparison is correct, pending the changes being made for SQL 2012, which may change the pricing advantage somewhat.

You made his point again. In the golden Microsoft years, Exchange, SQL, SMS, etc all sucked. Really sucked. But you needed to take your medicine (aka buy the Windows platform), because the oxygen was snuffed out from the alternatives.

Today, the tools are keeping folks on the platform. That's dangerous to Microsoft's well being.

Bubbles like this have a way of collapsing so damned quickly.

I remember when Novell had an absolute lock on server software, the alternatives were all jokes, and yet one day they'd completely disappeared from the landscape, not a single server remained.

When people jumped to NT, or scrambled to Linux, there wasn't much time to respond.

What killed Novell was that their product was perhaps too good, it was frighteningly fast and extremely durable even under the worst conditions, but not good enough because it couldn't run general purpose applications like the other OS options could. Like you say, the only thing keeping them there was file sharing and when people moved past file sharing and on to other things, they were dead in the water.

What will make Microsoft disappear is the industry moving beyond email and groupware and "office apps" and instead to something else. What that is, maybe we just don't know yet.

> but not good enough because it couldn't run general purpose applications like the other OS options could.

I remember wrestling with BTreive settings on a client's NW 3.1.1 server to make Solomon (their accounting software) play nicely with ArcServe (the backup software). There's something I'm glad to not have thought of in years.

If the MS hate does not exist any more, explain why Nokia phone sales collapsed after they announced their MS alliance.

Is that really MS hate or just a lack of confidence in a Nokia/MS alliance being a good thing?

I cant speak for too many, but among my community of Linux users, Nokia has turned from Linux champion to piece of turd overnight.

It wasnt too long ago when I was a hardcore Nokia fanboy that forced my whole family to use Nokia-only, eagerly waiting for the next Meego phone, despite the lack of apps and user community.

Nokia was Symbian, it was the enterprise Symbian devices in Europe contributing to their marketshare. The future of lowend could have been Meltemi, but the hardware would have been made in China and sold by Nokia, Meego is gone (last people pushed into their own company, per the planets today), Nokia (with their Microsoft transplant CEO) announced an EOL for Symbian and marketshare dried up.

You're comparing apples with oranges. MySQL Enterprise Monitor would've automatically noticed the missing index and asked you if it's ok to add.

You misunderstand the MS hate to compare it to Oracle and IBM.

Oracle and IBM want to make money, period. They'll run their products on a competitor's platform if they can get a bite of the pie, they don't care. Further, I'd guess 7/10 geeks that "hate" oracle have never used their products and might not even understand what they do, it's just part of the hatred of really really successful companies. (That's part of it too, whenever a powerful and successful company actually competes, people tend to hate it.) I'm not going to defend them but when Oracle sued Google, I don't think there was ever an intention to make Google go away, they just wanted a cut of the action, it was all about money. Read up on what MS did to Digital Research and Lotus, MS wanted to "cut off the air supply," they refused to see a world where those companies could co-exist. It's just different, MS has wanted to kill the competition.

How come they don't port most apps to other platforms? Office on Mac is the only serious one I can think of.

What failure? I don't know what you mean by failure here. If you mean "fails to be the rockstar of the tech industry" that isn't much of a failure.

Microsoft is only a failure if we expect them to build an ever more powerful monopoly with no possibility of escape. They may be trying to do that. Instead they have a large and solid business which is still very cash flow.

Tell me of Microsoft's failure when the profits of Google or Facebook surpass the profits of Google.

Microsofts failure is most evident in their stock staying flat or dropping the last years, while all their competitors stock has soared, including Apples. That's the overall indicator of failure, and the one their owners care about.

But look underneath, and you find failure in every attempt Microsoft has made to branch out of their existing businesses, except for the Xbox.

Mobile? Lost to Apple and Google. Music? Lost to Apple. Instant messaging and identity (.net Passport)? Lost to Facebook. Tablets? Lost to Apple. There are countless examples like this.

Given all those failures, that nice cash flow will only be sustained until the Windows monopoly is replaced by something else. Windows 8 is Microsofts desperate response to something that threatens to do that.

But my larger point is that if my business only grows to be the size of Microsoft and ends up with a steady profit that size I won't care about the failures, only count the successes at that point.

Of course, but the question at that point becomes: How do you sustain those steady profits?

DEC was hugely successful in its day, but was a failure in the 90s because they couldn't manage the transition from minicomputers to PCs.

By creating stuff that people find useful.

Also I am less convinced than others that Microsoft is flopping on everything. Azure is certainly a good start for example.

Azure is certainly a good start for example.


Azure is what - 4 years old? It's still yet to see significant adoption outside places that were already .NET/Windows shops.

Until that happens it's little more than another defensive play by Microsoft attempting to protect Windows revenue.

(Yes, I know it can run Linux VMs. Again - is anyone outside .NET shops using it?)

Apple is using Azure for ICloud which is pretty huge. http://www.zdnet.com/blog/microsoft/is-apple-really-using-wi... The Vanity Fair article is almost identical to the articles released before Windows 7 came out in 2009 predicting the same kind of stuff than never comes true. Windows 8 has the potential to be a huge so I am sure these cookie cutter "MS is doomed" articles are going to be more prevalent as we get closer to release.

there have been folks on the PostgreSQL lists talking about their experience with Azure running Linux/PostgreSQL.

Any links - we had huge perf issues...

At their height they had plenty of failures too. Bob comes to mind....

My favorite is the MS OS/2 2.0 fiasco, particularly how it relates to DR-DOS (clue: OS/2 did not depend on DOS):


I'm still a little bitter about Microsoft getting paid for the box I bought to run NeXTSTEP.

While this is true it seems ironic that we've replaced one predatory behemoth with another in the form of apple.

What made Microsoft so predatory is that they wanted to dominate the market and squash any competitors, and drive everything into a Microsoft monoculture. Apple doesn't act in the same way, and only seems to care about profits and products rather than marketshare. So even if Apple does something that seems incredibly controlling, you don't have to worry, because you can always buy somebody else's product. Microsoft was trying to make it so you couldn't buy anybody else's product.

Well, while they might seem that way because they are a hardware company, they are incredibly aggressive in that arena. Take the bannings and attempted bannings of Motorola, HTC, and Samsung devices for example. They are definitely trying everything they can to prevent you from buying someone else's product.

Exactly. Apple as great as their products are, have started to resurrect the look/feel lawsuits of the 90s with their patents on trivial things such as how to unlock a phone, having a jump bar, etc.

Sure, but only because they apparently don't have enough non-bullshit, non-FRAND patents with which to play the "IP litigation counter-counter-...-counter strike" game. Apple sucks, but so does every other major player in the "mobile" industry. I could be wrong here, but no counterexamples come to mind.

Can we stop this ridiculous revisionist history.

Slide to unlock was not a common place feature before it came out on the iPhone despite the prevalence of touch screen devices. It is hard to argue against the fact that the implementation was indeed unique at the time.

If you're going to defend Apple, may I suggest that you at least pick ground that is less shaky than slide-to-unlock?

I can say just one thing and clearly demonstrate that it is your history that is revisionist: Neonode N1m

Star Trek had slide to unlock before Apple even made a phone. Star Trek PAD versus the iPad... hmmm

No, they're trying to stop devices they see as copies from entering the market place. They have no way of stopping competing but different things from entering the market. MS did and used it.

You nailed it - I lived under Microsoft's "Embrace, Extend, Extinguish" philosophy for more years than I care to remember. Microsoft wasn't just happy being profitable, it only recognized success when it both destroyed the competition and locked alternatives from arising. It was core to their culture.

Apple has always made it very clear that they are quite content having a small slice of the overall market, just as long as they occupied the _best_ part of that market. They tend to be elite snobs, who seem to be fine with 90% of the market running linux netbooks as long as 10% are running Mac Laptops.

Really? Apple are trying very hard to stop you buying an HTC phone.

They're trying to stop copycats. Do you see any lawsuits over the Windows phones?

You haven't been following Apple's lawsuits against Samsung much, have you?

There's a bit of a difference between trying to kill the entire phone industry and suing obvious copycats who don't differentiate their products.

If Netscape has sued MS and won an injunction a lot of people would have cheered. Which brings up the old 'who's most like MS in mobile today?' question...

Microsoft made a netscape clone and gave away the product for free. Google made an iOS clone and gave away the product free.

Sure, but there's an important difference between "giving away one product to sell others" and "using a monopoly position in one market to eliminate competition in another", namely, that the latter is illegal but the former is not. Grey areas? Sure, lots, whence so may lawyers. But IE and IIS were clearly (to regulators, not me) not mere loss-leaders, but prongs of a coordinated response to a perceived threat to Microsoft's PC hegemony.

Besides, Android device manufacturers effectively "pay" Google for Android in search traffic (or reduced revenue share from search traffic).

Besides, Android device manufacturers effectively "pay" Google for Android in search traffic (or reduced revenue share from search traffic).

Actually google pays the android device manufacturers, not the other way around.

And google still manages to make money off of it. They aren't crowding out competitors at a loss in order to twist the screws later.

Are they making money off Android?

From what I've read on some blogs they never give numbers showing their profit or loss from Android, and looking at the situation from the outside I'd think it's more likely they're losing money on it at the moment.

Apparently it became profitable 2 years ago. http://www.engadget.com/2010/10/05/googles-eric-schmidt-says...

>Sure, but there's an important difference between "giving away one product to sell others" and "using a monopoly position in one market to eliminate competition in another"

.... you mean like using a near monopoly in search to finance paying manufacturers to use Android?

I'm not so sure that it's ironic as inevitable. There are exceptions, but the winners of this marketshare game tend to be those who are willing to play at least a little dirty.

While Apple and Microsoft are very different animals with a completely different corporate culture, there are interesting similarities in their behaviour. That doesn't mean we should simply class them as exactly the same, as there are profound differences in their founding culture, outlook, and aspirations.

However once a corporation reaches a certain size, or perhaps in the process of reaching a certain size, corporations and other social tribes seem to acquire remarkably similar characteristics - the company becomes an ecosystem within which it is possible to thrive without actually serving the long-term interests of the company or customers at all - the corporate culture changes to one in which the most important achievement is to do well within the company, and others outside the company become a remote concern.

Perhaps this is inevitable when a company reaches the size of say Apple, Amazon or Microsoft - all of which have in their different ways abused their market position, and abused their power over smaller companies and competitors in order to make more money. They may not have broken the law very often, but they are all profoundly anti-social in their behaviour. All have tried to lock their customers in to ecosystems over which they have complete control (iOS, Kindle, Windows/Office), all have abused their power over their partners to make unreasonable demands, and all have ignored the long-term interests of their customers in pursuit of profit. They do this because they can, because no-one is stopping them, and because as a collective entity what is safest is for them to stamp out all competition anywhere - to completely dominate the marketplace (at least in the short term, ignoring that this is impossible in the long-term).

Perhaps that's just a natural outcome of capitalism, but as we have stronger limits in other areas of corporate malfeasance (for example regulations on pollution), we do perhaps need limits on the power of these larger companies in the marketplace which are stronger than antitrust laws (which seem to be unused and out of date at the present time).

We've seen Apple morph over the last 10 years (as MS did before it against IBM) from scrappy underdog to dominant corporation, and the transformation means that now they feel happy to arbitrarily ban partners from their devices (e.g. Google Voice, Kindle in-app purchase), sabotage their own production partners (e.g. Samsung), gouge partners with arbitrary licensing (iPod connectors), and ignore the effects on their users, or indeed on their own long-term survival. They are different from the Microsoft of the 90s (perhaps less cut-throat, a little less predictable), but in important ways are similar, and they're storing up the same sort of long-term resentment which is now undermining Microsoft in the consumer space. For example by banning all transactions on their devices which don't involve giving Apple a cut, they annoy both their users and their partners - the only entity this action serves is Apple, and that only in the short term.

>I dare say that Oracle is (at long last) at that point or approaching it rapidly

You say that as though it's a contentious thing?

They were past that point even before the Sun acquisition. Hell, when were they ever innovative like MS was in their heyday?

What was innovative? Copying other's stuff and integrating a browser into the OS?

Microsoft's business model was innovative, even where their software wasn't.

Per-unit licensing, bundling, including the browser for free (which, BTW, screwed Spyglass out of any browser-related royalties).

Doesn't the illegal use of monopoly powers seem new here, because it was in a newer field?

(Thanks for reminding me of Spyglass, shudder.)

Even that's arguable. IBM, Xerox, and AT&T all certainly exploited monopolies for some time in tech.

I suspect the real complaint was that Microsoft wasn't terribly innovative. Few things in tech are. The key is to steal from the best, and implement well. While it's arguable that Microsoft's technical implementations weren't all they could have been, the combined reach of their tech + business model worked very well, from the PoV of business success and spreading their "ecosystem" to borrow a more recent term, for most of 2-3 decades.

> Gates was a programmer and actively participated in tech reviews in his heyday.

If you need proof of Gates' technical genius, I recommend Joel Spolsky's "My First BillG Review"

> Then I sat down to write the Excel Basic spec, a huge document that grew to hundreds of pages. I think it was 500 pages by the time it was done...

In those days we used to have these things called BillG reviews. Basically every major important feature got reviewed by Bill Gates...

Considering that we only got him the spec about 24 hours earlier, he must have read it the night before...

He was flipping through the spec! [Calm down, what are you a little girl?]



A telling quote from that article:

"Is Ballmer going to be another John Sculley, who nearly drove Apple into extinction because the board of directors thought that selling Pepsi was good preparation for running a computer company? The cult of the MBA likes to believe that you can run organizations that do things that you don't understand."

Here he is making a comment on an article about 8-bit BASIC: http://www.pagetable.com/?p=43&cpage=2#comment-103039

"This history is SURPRISINGLY accurate. Rick Weiland and I (Bill Gates) wrote the 6502 BASIC."

(that whole blog is awesome if you're into 8-bit CPU's, by the way, and who isn't?).

'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";'

I can't tell from the quote what your stance on this is, but I think history vindicates the viewpoint you ascribed to Gates.

Can you imagine a serious general purpose OS shipping without an OS today? The idea is ridiculous. Doesn't that then make Gates/MS' decision in this area innovative and forward-looking?

For some reason there is always common confusion between legally having a monopoly/monopoly power and abusing a monopoly/monopoly power.

The problem wasn't that MS was bundling a free browser. The problem was when Microsoft forced PC builders to not only include Internet Explorer but explicitly forbid them from including another browser as part of their offering.

Additionally, Microsoft artificially integrated IE into Windows and then tried to claim that the two were designed to work together. It was easily demonstrated that Windows continued to work fine after un-bundling IE.

I'm with you on this. I really think the DOJ went after Microsoft for wrong thing. It would have been better if they had gone after the bundling agreements where Microsoft got paid for every machine shipped regardless if a Microsoft os was on it. Or the buy Office and get a discount on Windows. Netscape had better lobbyists not a better case.

Edit (past the editing deadline, whoops):

"Can you imagine a serious general purpose OS shipping without an OS today" should read "Can you imagine a serious general purpose OS shipping without a browser today".

I think it has something to do with what Steve Jobs identified - monopolistic companies don't value product folks, thus they end up getting run by sales and marketing people, and the company rots from within.


“The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesman, because they’re the ones who can move the needle on revenues.”

and of course then the famous 14 days in the life of a microserf (now called 7 days in the life ...) might also be unknown.

one of the first pre-prints of a book that made Wired famous (by Douglas Coupland).


Every one of the problems you mention, except for #5, existed at Microsoft in 1993! It didn't really turn on a dime at all, in fact, I think probably Balmer has improved this aspect[1], when you account for the fact that Microsoft is much bigger in the last decade than it was in the 1990s.

Of the causes, of course the DoJ suit was in 1997, but the massive bureaucracy and its problems and C quality managers existed in 1993. Just nobody cared because of the boom times. I think a lot of the perception of Gates come from PR control and marketing.

[1] Say in a "degrees of turn per month per employee in total head count" metric of some sort.

"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.

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... 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."

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.

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.

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.

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.

Read the article closely it says "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". Are you saying the employees were lying or that the interviewee misheard? Its not possible to argue against this point.

Also, what you say about a sufficiently large group never happens. What actually happens is each lower level manager is forced to rank his or her team members along the curve so as to make the process "fair". And inevitably, this gives rise to a large host of harmful behaviors - slacking off on work by people who have low self esteem as they will get ranked low "anyways", grandstanding, people trying to take credit for others work, infighting, corporate politics, people waking up and starting to work hard closer to the appraisal cycle to capitalize on the "recency effect", dysfunctional teams that deliver only because of heroic efforts from a couple of the team members.

Any system can be gamed this one has got gamed out long ago, my experience - I have seen it do nothing but harm in every single case.

That was an idea they (probably) stole from Jack Welsh. http://en.wikipedia.org/wiki/Vitality_curve

It seems like one factor in that scheme that would imply you're going to fire "underperformer"s is that 95% of people can't be classified that way. The names are symmetric; why not something more like 20% - 60% - 20%?

The other factor would be that there's an idea (which I can't speak to personally) that the only purpose of performance evaluations is to protect the company in case a fired employee sues to reinstate their job, which would mean that an "underperforming" grade was a necessary prereq to firing.

The overall flaw in this system is that it assumes that there are always people worth firing. But some companies - and let's think of smaller start ups as an example - try to hire really well, and there are some shops that are loaded with talented people. Stacking them and firing the 'worst' performers because of a metric is basically just cutting talent. My take is that if a company thinks they have 10% of people on staff worth firing every year, fix the hiring process - that's the problem.

I was employed in a company that used something like stack ranking. It was brutal having to evaluate the dev team I was leading. There were a couple veteran developers that consistently did excellent work, but there was a rookie that was learning incredibly fast and producing very high quality work.

On a scale of 1-5, I felt all three of them were 4.5, but I couldn't submit scores like that because of stack ranking. The question then became whether to piss off one of the veterans or to discourage the rookie by giving a < 4 score.

Yup, stack ranking effectively punishes good teams. Why should a manager strive to consistently hire the best people possible when some of them are going to have to be unfairly ranked?

Hmm, so the ranking system would actually encourage leaders of good teams to have hire poor performing members to act as their sacrificial employees come review time.

I've heard stories of exactly this happening. People hired just so they could absorb negative review scores. This is, obviously, dysfunctional on many levels.

Something similar happened to me. It's not necessarily that the hire is intended to be sacrificial, but it sometimes falls to the "new guy" to take the hit.

So after about 3-4 months of working at Microsoft, I was ranked in the bottom 10% (the bucket for people who don't have good prospects for furthering their career at Microsoft.) This was back when they used a 10/70/20 system.

Now, don't get me wrong, I don't think I'm some master developer that deserves to always be in the top 20%. I strive to be above average, but I consider myself to be merely average, especially compared to many of the exceptionally bright people working there.

Here's the real bitch. The reason I was given for this rating had nothing to do with my performance. I shit you not, and this is as verbatim as I remember it: "Somebody has to be in the bottom bucket and since you're new, I can't rank you higher."

The problem is that this stuff fucks with your career there. It's a black mark on your record that follows you around. HR assured me that someone being new is not a valid reason to rank someone like that, you have to base it on actual performance.

An easy fix that my previous company had employed: have a "too new to rate" category.

In retrospect, I just had a shitty boss, and it wasn't necessarily reflective of Microsoft as a whole. I also should have challenged it more vigorously, but I didn't want to create animosity between my boss and myself seeing as I was barred from transferring for.. 18 months was it?

I'm not too bitter about it though; I ultimately ended up resigning after a year and then coming back to work for the same department as a contractor at a much higher salary. As such, I no longer had to participate in performance reviews at all.

My company does stack ranking, and my first performance review mirrors yours almost to a T. And the distrust that it has created between my direct manager and his reports is horrendous. He always prefaces his evaluations (discussed personally with each of us) with "I'm limited to giving Exceeds Standards to only two members of the group." Said group having 18 members. He's not required to grade any employees as Does Not Meet Standards, unless they truly do. But know that I'm lumped in at the exact same level as the remaining sixteen coworkers is extremely disheartening. This just encourages employees to quickly determine the firing line.

The minimum performance required to avoid termination.

I ultimately ended up resigning after a year and then coming back to work for the same department as a contractor at a much higher salary

While that might have worked out OK for you. It's a beautiful example of this kind of dysfunction.

Avoiding nonsensical peer reviews (never seen one that made any sense) is one of the reasons I went contracting.

Well, it's that or have them on welfare. :)

Not exactly. It does encourage a manager to increase the 'beta' of his team. That is, adjust hiring standards to take more risks and filter out the subsequent higher flow of poor performers in exchange for finding (but not necessarily retaining) exceptional performers.

stack ranking actively hinders managers from retaining exceptional performers. if you only have 2 A grades to give out and you have five people deserving of it ALL of them are going to be motivated to switch to lower performing teams or entirely new employers.

any sort of 'objective' evaluation of employees is prone to being gamed and any gaming of evaluation is actively harmful to corporate culture/performance. witness google where lower profile or troubled projects are abandoned en masse by any employees with the ability to turn them around

At that point, I would just drop the person who I dislike the most to the bottom of the bucket. After all, as a manager, I have no choice but to fill that slot, and given every-one has performed well on the job, what other heuristic can I use to select the "bottom 2"?

Or I may drop the person who I can get rid of with the least hassle, maybe the new guy who just joined the team or someone who has taken long leave during this period.

See how it works? Nothing to do with performance, and inevitably its the "A" performers who quit in disgust. And companies wonder why they cannot get talent to stay...

This blew my mind. I was thinking it, but after reading your words it hit home.

The more prevalent variant on this is managers would leave "room" in their review model for themselves. Come in under the curve and you leave room that makes it that much easier for your manager to reward you.

Equally worse is giving points to your team based on the budget you have to increase salaries. A system I currently live under. the result is stack ranking stuck at the 70% part... Death to motivation if you ask me.

They used this as the point for why Microsoft has fallen behind. The former developer says, "I was too concerned with appeasing my manager's when I should have been concerned with being a better engineer."

But really? Is that why Microsoft has fallen by the wayside (realtively)? Because they don't have good enough engineers?

I disagree. I think they have a wealth of talented engineers.

What they need(ed) are people with vision, a deep understanding of the future of consumer electronics and computing, and a way to execute on that vision. They need to deliver short, medium and long-term products that feed their vision. They need to show people the future of the industry instead of lagging behind it.

Engineering is a crucial component in that, but it's only part of the story IMHO.

I disagree. I think they have a wealth of talented engineers. What they need(ed) are people with vision

Vision doesn't happen in a vacuum. It happens within the wider cultural context of the organisation. A technical lead, a project lead, a manager - they are all affected by the environment they are in. If you spend all your time fighting politics and trying to shore up demoralised engineers, you are not going to waste your time dreaming about ponies and rainbows.

If you want an analogy, you can take the world's greatest general, but if you drop him in a WW-I trench, he is just cannon fodder.

"If you spend all your time fighting politics and trying to shore up demoralised engineers, you are not going to waste your time dreaming about ponies and rainbows."

I think that's a fair point. Good reply.

I have to agree.

The article started with stack ranking, but clearly there were much bigger issues looming.

>“He didn’t like the user interface, because it didn’t look like Windows,” a programmer involved in the project recalls... “Windows was the god—everything had to work with Windows,” Stone tells Eichenwald. “Ideas about mobile computing with a user experience that was cleaner than with a P.C. were deemed unimportant by a few powerful people in that division, and they managed to kill the effort.”

They could have been years ahead on phones, tablets, and e-readers. But instead they had a culture that tried to shoehorn a standard Windows experience into every device (I imagine for marketing reasons). They are only now getting over it a decade later, though it's probably more accurate to say they have the same philosophy but in reverse: shoehorn a mobile experience into the desktop in Windows 8.

What difference does it make if you have the greatest engineers in the world but management is blocking them at every turn?

"shoehorn a mobile experience into the desktop in Windows 8."

I actually laughed out loud when I read that--it's true!

"I disagree. I think they have a wealth of talented engineers."

That statement is false in many ways. As a developer, you keep seeing substandard products from Microsoft. Have you looked at the architecture of SharePoint? compare SqlServer CE to SQLite, not to mention the horrible tutorials and source code which Microsoft keeps putting out.

C#/.NET is an excellent platform/language but Microsoft keeps putting out horrible sub standard code/tutorials

Your first two paragraphs are not mutually exclusive. My former employer had a wealth of talented engineers who were overridden or ignored on key architecture decisions, either by semi-technical upper management or customers. Things had to be done a certain way because X wants them done that way, and by the time the bad decisions get highlighted the technical debt is too high for management to justify changing direction, and the program is forced to limp along with the crap they have.

My impression of Microsoft (entirely from the outside) is that they have this same problem.

It's a mix. I've seen some brilliant engineers here but I've seen a lot of so-so employees collecting pay checks. What I do think is very real issue and more so than the stack ranking is that we are incredibly date sensitive here and cost sensitive. I often feel, in my personal opinion, that improvements or changes that could make us better off 13 months down the road are culled or punted because the upfront cost is too high or because set commitments for an upcoming timeline.

What is the point of having all those billions in cash on hand, and an R & D budget exceeding the market cap of many DJIA participants, if you're going to penny pinch where it counts? http://finance.yahoo.com/q/ks?s=msft What timeline is so important (short term) if you lose the future, period?

Look at Sharepoint's history. It's a Frankenstein of a bunch of acquired products. None of the built in services were enterprise ready last I checked (e.g. an alarm that doesn't always fire, a file upload service that doesn't always upload, etc., etc.).

In a large company, the technical documentation may be scrubbed by non-engineers.

Have you seen the sales of SharePoint?

Engineers always think that companies are engineering driven, when in fact mostly they are sales driven. If SharePoint sells well, then its not substandard, even if you don't like its architecture.

Sales? I thought it was just a free add on?

I think most of the comments here are missing a key ( and in my opinion the most detrimental) effect of stack ranking at microsoft: it prevents talent from clustering around good projects (unless they are so good as to be exempted from it).

Because someone always ends up on the bottom, a fair number of devs don't want to end up on who already has a top quality dev. Worse yet, in order to keep good people, managers don't want / will promise not to bring in more good people. Thus there is an active incentive to recruit( at least internally) mediocre talent since a team needs to hire people to keep headcount and needs to pad the middle of it's stack ranking.

Yeah, in theory this shouldn't happen because the rankings for each team are merge and those on the bottom of a good team should come in above the bottom of a bad team. In practice that seems not to work because both ICs and managers seem to have the above philosophy.

In education we call this 'norm referencing'. The highest scoring 10% get A, the next 15% down get a B and so on. In the UK, people have moved to 'criterion referencing' so certain performance criteria are set and if you reach those, then you get that grade.

Would the second practice, given sensible and negotiated targets work better?

Both Accenture and UBS do the same thing. I never liked it, myself, for the reasons cited in the article. This type of performance system means it's far more important to be good at schmoozing than to be good at working.

I worked at Andersen Consulting (which is now Accenture) for long enough to be inside the banding process as well as subject to it and actually thought that the ranking system worked pretty well -- in a consulting company.

To begin with, it didn't work the way described in the article (does Microsoft's system actually work that way? if so -- ugh). There were five bands, and the "you get fired" band didn't generally get anyone assigned to it. Furthermore, the percentages in each band were somewhat flexible and applied across the organization, not to any one group of people. It was quite possible for an effective team to all be band 1 and 2. (But then, AC didn't really have fixed teams.)

Of the four non "you're fired" bands, 1 was excellent, 2 good, 3 adequate, 4 was improve or leave. (I don't think we were even required to assign any band 4s.)

But a consulting company is very different from a product company. A consulting company actually WANTS a large proportion of its workforce to leave within a certain time because ultimately it's a pyramid scheme. Only 10% of people who join get to associate partner (or whatever) level and you need to advance at a certain rate or you'll be ticked off, so you need to shed 90% of people before they've lasted X years or you're screwed.

A product company needs people with deep technical skills to hang around. It's one thing to use "up or out" to drive your sales force (and the upper echelons of a consulting company are salesmen) and quite another to do this to your deep technical people.

So it's a misapplication of a management theory and not an intrinsically bad management theory.

Agreed that the model makes a lot more sense for a consulting company as opposed to a product company.

However, in terms of how it actually worked, I was also involved in meetings to allocate people to bands, and the percentages had to be respected across the client group (UBS, in that case).

This means that if there were, say, 10 analysts in the UBS client account, then only a couple could get "Exceptional" (or whatever it was called), and so on...

The implication of this was that your performance (and therefore pay raise, promotion, and so on) largely depended on whether:

a) you had made a strong enough impression on your manager so that he/she would be motivated to do a decent job of fighting for you in the meeting;

b) your manager was actually politically competent enough, and had the political capital to spend on getting you a good rating;

c) you had made enough of an impression on all the other people likely to be at the meeting so that they'd know about it and accept it when your manager suggested that you should be rated Exceptional.

If you hit all three of those, you might get a great rating. If you didn't bother to network with everyone who was likely to be at the meeting, or if your manager sucked or didn't like you all that much, you were pretty much fucked.

I agree with pretty much everything you've said, but the point is that AC was (Accenture is) a consulting company which is all about selling services and impression management (and seldom about the substance of the work, which is frequently copy-paste-and-edit stuff pulled out of Lotus Notes with the previous client's name and particulars replaced with the new client's), so the reward structure strongly mirrors what's good for the organization. And forcing people -- often excellent people -- out of the organization is actually a _beneficial_ side effect. (Yes, this is a very cynical view of management consulting, but I think I have some credibility here.)

The problem with Microsoft -- assuming we're talking about an accurate representation of their system -- is that the reward structure rewards visibility rather than results, but the organization actually wants results.

Coming up on my first performance review at Accenture. I'll see how flawed the system is in a few weeks ;).

The problem is with what the viable alternative is for companies that are huge like this. It's just tough. Maybe we all just need to stop worrying about how other humans measure our performance/value.

Good luck!

Definitely don't "stop worrying about it" - or you'll get screwed.

I disagree. Stop working as a permanent employee for big companies. Then you'll get paid more money and not have to do these stupid performance reviews. If you consult for a company that tries to do performance reviews, run because you've hit the "bad company" full house.

So when I was at Google, hiring was not done by the groups with the headcount. Instead they were hired centrally and then later dispatched. The reasoning for this is that for a manager, someone who is just good enough will generate utility and thus should be hired. The central hiring is supposed to enforce companywide higher levels.

I wonder if stack ranking is the same but for getting bad people to leave? Even a weak employee can be better than no employee for a manager...

This seems like a good place to mention the original stack-ranking critic, Mini-Microsoft (still going!):


Valve uses stack ranking as well. Does Valve do anything different which makes them immune to the same company-ruining internal competition?

(a) Valve does it company wide

(b) As I understood it, it is only used to determine comp adjustments

If you go into it with the view "We're all excellent people, and these people are the best of an excellent bunch, so they're getting the biggest raises this year", it seems like a reasonable system.

It's probably not competition that causes stack ranking to be a bad idea -- it's the measures that determine the ranking. Valve's flat hierarchy probably means that you only need to earn the respect of your peers, not of a group of managers that determine the rankings. I could see a situation in which a truly engineering-driven culture combined with stack ranking would become a meritocracy that rewarded the best engineers.

Seems like it could appear to work in a growing, young company with rising stock value. If someone is genuinely good, but gets stack-ranked out of your group, it's probably not as hard to move to another, possibly new group, when the firm is growing.

But when the company is mature, and the stock is flat, and the headcount is under pressure...

The problem all these companies face is how to determine raises fairly. To do that, you can allow each manager to determine his employees' raises independently, which typically means the manager will exaggerate their performance, or you can devise some sort of system based on numerical reviews. But how do you create such a system? Every one I've ever heard of has been unfair and political in some way - but still probably less unfair and political than each manager picking numbers for their own team.

I'm trying to say this is a hard problem, and picking on the downsides of "stack ranking" is easy if you don't consider alternatives.

This is a fairly common practice across many relatively successful organizations. In addition to the other companies mentioned in this thread,I believe McKinsey consulting also takes a similar approach.

Granted, successful does not necessarily imply they are innovative. This management strategy may be more effective in more sedate and established industries where adhering to best practices may be more important than charting new courses.

If anything, this would seem to be a cautionary tale to tech startups that may be tempted to hastily implement traditional MBA'esque management styles. One size certainly does not fit all.

IBM does something similar as well.

I believe GE does also. If these kind of companies are employing the same system with better results, would this imply that the theory behind stack ranking is not the problem?

GE's system (at least the one originally set up by Jack Welch) isn't quite the same, although the idea is similar‡.

Basically there are 3 "bands" in the Welch system (with the lowest band being 10%). You reward the top band (20%) heavily, the middle band (70%) modestly, and dump the bottom band (10%) every year.

In some ways, the intent is similar to the economic class system (incentivize the middle class to become the upper class).

GE had a lot of success when they adopted that model, although obviously, they did a lot of other things as well which may have been a more direct effect (getting rid of a lot of businesses they were in, for example).

I can appreciate the ideal of constantly cutting out the bottom-performing resources, provided that the mechanism to track performance is sufficiently quantifiable (and accurate). I haven't heard enough from people at GE as to whether or not that is the case there, though.


Practically, I think these systems suffer terribly from inertia effects. The top stays the top, the middle stays the middle, because it causes so much angst to move someone from the top to the middle. So the middle just gets a job somewhere else.

GE's executive team claims otherwise[1]. "The top 20% and middle 70% are not permanent labels. People move between them all the time. However, the bottom 10%, in our experience, tend to remain there."

[1]: http://www.ge.com/annual00/letter/page4.html

No. It is just that those companies are too big to have collapsed from it yet.

Or they run the system with non-fixed bands, where I guess it could be made to work.

“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.

I think the DOJ results had a big impact on that aggressive competitive spirit -- Microsoft sort of seemed to go into a quieter sort of ecosystem mode, where they used combined marketing launches and strategy to achieve the lock-in they had been just out and out dumping on consumers with technology.

I would say the brio left after the DOJ trial, but it may be back with Surface. If Surface sells, I would expect a new CEO and an invigorated Microsoft.

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.

Tightly coupling products does not necessarily lead to greater innovation.

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.

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?

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.

How? Most applications will work very well using a non-included browser. Chrome works exceptionally well on my Win7 workstation. How would using the bundled browser be any better?

All bundling did was encourage a crappy browser to stay crappy, and infest far too many PCs with malware due to a horrible plugin architecture as well as a lack of security consciousness.

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?

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.

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?

No, the average user at the time was perfectly content to download an application to play mp3s (WinAmp), surf the web (Netscape), etc. etc. And the notion that Microsoft made it "just work" is revisionist at best.

Right, they could just make innovative products that users would add themselves instead of just adding them in by default.

Trying to compete in dozens and dozens of competitive landscapes at the same time has led to little focus.

Isn't this what happened to Sony in the '90s?

>"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?

> 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.

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

> 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".

Same in Finland, where Nokia is headquartered

I for one, really like the ribbon version of Excel and Word. I'm not as happy with ribbon PowerPoint. I don't use Outlook.

I work at a company with a large contingent of non-Windows users. (several thousand people on CATIA workstations, most have done little to zero MS Office work, most are fairly internet/computer illiterate). Ribbon based Office works very well for them. They weren't proficient at the old office and the ribbon is a lot more approachable.

The same goes for my parents. They can get a lot more done in the new office vs the old office.

I think most of the negative opinions on ribbon come from people that were good with the old interface. The transition to the ribbon was all pain with no pay off. But for those that couldn't navigate the old office (many people), the ribbon makes finding functionality a lot easier.

Your point about licensing vs inventing a lot of the technology is fairly moot, Apple licensed a bunch of the multi-touch technology from various inventors (including the university I went to).

> I think most of the negative opinions on ribbon come from people that were good with the old interface. The transition to the ribbon was all pain with no pay off. But for those that couldn't navigate the old office (many people), the ribbon makes finding functionality a lot easier.

I suspect you are correct. The big question I have no answer about is what percentage of users was good with the old interface. If it was <10%, the ribbon is definitely warranted. If it was >80% ... maybe not so much.

An additional data point - my parents weren't really good with the old interface (need to call beagle3 tech support often), and the ribbon only made it harder for them (and for me, because it is harder to describe over the phone).

> Your point about licensing vs inventing a lot of the technology is fairly moot, Apple licensed a bunch of the multi-touch technology from various inventors (including the university I went to).

I don't disagree.

I'm amused that whenever someone says "Microsoft/Google is $UNFLATTERING_ADJECTIVE", the retort is "Apple is just as $UNFLATTERING_ADJECTIVE if not worse!", even if that was the first mention of Apple in the discussion.

So, to elucidate my point - the GP mentioned Kinect as a proof that Microsoft is a top notch innovator; They may very well be, but what I was saying was that Kinect is not an example for that.

> I suspect you are correct. The big question I have no answer about is what percentage of users was good with the old interface. If it was <10%, the ribbon is definitely warranted. If it was >80% ... maybe not so much.

My experience is that number was probably way lower than 10% -- basically, most people use Word as glorified typewriter. They do know to change font, and that's it. They indent/center text by inserting spaces in the front. They have no idea how to insert image..

>> revenue != profit

The comparison you cited is between revenue, and is a fair direct comparison.

But it is likely also true that iOS devices generate more profit than Microsoft's total revenue (this is an unfair comparison, biased in Microsoft's favor).

>> a dividend paying company's stock price looks different from that of one which is focused on accumulating cash

Both AAPL and MSFT have announced dividends (http://investor.apple.com/faq.cfm).

revenue != profit

There are estimates that the iPhone business does generate more profit than Microsoft as a whole.

> "where does that put Kinect?"

The same place as Siri - interesting technology, bad execution, with lack of competent follow-through, becoming a mild laughingstock of their respective fields, and causing users to be mildly embarrassed that they believed all the hype.

I think Kinect is a bit better than Siri in that respect, because at least people made interesting hacks with Kinect.

Two points:

* The difference between Macintosh 1984 and the Alto is bigger than the difference between before and after Ribbon. The difference between Macintosh 1984 and Macintosh 2012 even more so, to say nothing of the gap between Macintosh and iOS. Microsoft almost always followed Apple's lead in UI design though.

* Kinect is a game controller. There's no Kinect UI paradigm yet, certainly not the way multitouch is a UI paradigm over capacitive touchscreens. Again, the gap between mouse and Macintosh is at least as big as the gap between capacitive touchscreen and iPhone.

I had a Handspring Visor with Spring Board a decade ago. There's not as much difference in the UX between my wife's iPhone and it, as there is between Word 2003 and Word 2007.

That's not say that there aren't a lot of things that one can do much more quickly with the iPhone (e.g. maps and surfing the web), or that these don't tend to make it more useful...though I don't find the touch keyboards quite as fluid for writing as Graffiti under Palm OS (hardware phone keyboards being another matter).

Palm copied the UI for the Apple Newton with their OS, which shipped in 1987.

I used a Visor in college for three years and I use an iPhone every day. I disagree. The UX difference is huge. The iPhone was a leap forward in UX when it came out. Sure, other people had capacitive touch screen at the times, but they also had their "UX head" up in the sand.

Comparatively, Microsoft's PocketPC PDAs of the time took many steps backwards from the Visor in the quality of the user experience. That's despite a multiple-times CPU power and RAM advantage over the Visor. I remember being dumbfounded at that. Putting out PocketPC OS that is less enjoyable to use than a Handspring Visor--that's not innovation.

Sure, Microsoft broke some new ground with .NET and CLR and C#. Sure, their Visual Studio toolchain got way better--after the competition from Eclipse and IntelliJ. Sure, their C++ compiler standards support got better--after GCC began lighting a fire up underneath MSVC (you could do just enough with GCC and mingw to displace MSVC in plenty of situations).

You can clearly see the "Windows must be everywhere" idea stunting Microsoft's growth. The problem is that the PARC UI sucks. Windows sucks. Mac OS X sucks. It sucks for the uninitiated computer user, who can't imagine what the hell "windows" are on the screen. Why are there thin bands of things that must be clicked on and some path followed (menus). Why did suddenly clicking in one place made the web page disappear (accidental click on a background app brings it forward). The modern operating systems are STILL a fucking minefield, waiting for you, dumb computer illiterate user, to make that unlucky key press or a click that loses hours of your work.

Microsoft has (or at least had) no intention of recognizing that and addressing it. Microsoft, having penetrated almost the entire tech industry and all the personal tech markets that were willing to put up with Windows, rested on its laurels. Microsoft's improvements were all narrow-sighted and thus only capable of giving up small gains in the market. That's not innovation, that's incrementalism.

This is why Apple's iPad is whipping the llama's ass. It's the uncomputer computer. There's no windows. There's no chrome or close buttons or colored bubbles. There's just the one thing you're working with on the screen. People have been waiting for this shit since the first time they had to swap floppies between drives A: and B:.

It's amazing to me that enough other companies haven't figured this out yet. Apple is eating the competition because the competition has their heads up their ass. The competition needs to step away from geekdom and design something fresh. We will have a true Apple competitor (don't know how soon--I say 4 years), and when that competitor comes, it will be blindingly obvious why nobody can compete today. It's the TRUST in a quality, unpunishing TOTAL user experience. It's fucking everything. It's the A to the Z. TRUST in that exploring won't rake you over the coals, but will be rewarding. TRUST builds the kind of loyalty that gets the people to stay and pay premium.

Yea, why do you think MS is creating Metro?

We've done some attempts at connecting Kinect with more traditional UI paradigms, like drag-and-drop: http://bergie.iki.fi/blog/qt-air-cursor/

> the ribbon and Metro

When people talk about innovation I think they often mean disruption. The day the iPad came out everyone changed what they were doing (except MS). A light switched flipped and Tablets became something totally different than what they were before. Who has copied ribbon? Lots of people don't even think it's a good idea. Metro is too early to tell.

>or developing the .NET framework and the development of its associated tool chain

You mean a VM... like Java?

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

You mean that product that MS bought?

"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.

> "Who in the world would think that's a good idea."

Someone who manages a bunch of lazy good-for-nothings who, if left to their own devices, will sit around and do nothing all day every day.

These environments actually exist - but in the R&D and creative arenas, if you are in possession of such a working environment, you've already lost, and no amount of management "science" will save you.

Ballmer's a sales guy and the system is probably outstanding in a sales environment where individual effort is both more important and easier to measure.

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.

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.

Does not excuse legacy MBA courses making it worse.

Business "education" hasn't really advanced beyond Taylorism.

Not at all. By B-school professors mentioned Taylorism primarily as a matter of historical interest. None of them suggested using it to manage a software company.

Taylorist ideas still pervade relatively modern industries; offshoring software development is one such example. The knowledge work is separated from the execution. This split in management/development and the manual workforce was the main motivator behind the production line of the day. By moving the knowledge work upstairs, you could pay an unskilled workforce much less to execute the assembly.

> Who in the world would think that's a good idea.

Jack Welch, AFAIK. http://en.wikipedia.org/wiki/Vitality_curve

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.

> 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.

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.


>"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."

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.

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.

> They're surfing a wave of ... cash

That doesn't help. It is lagging indicator reflecting what you did in the past, not what you do today or will do tomorrow.

For example read the Innovator's Dilemma where the pattern is repeated. Companies would listen closely to their customers, getting improving cash, rinse and repeat. Everything looks great right up until it falls off a cliff because attention moves to something else that looked irrelevant, but was actually disruptive.

A good example is RIM. They kept sailing on their prior work and even a year ago operating margins were 20%. Now they are minus 25%. Historically no mobile company has ever got out the place RIM is now in. But their wave of cash looked good and was enough to fool them into being complacent.


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.

>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?

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.


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.

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.

If it makes you feel any better, I've been in plenty of first world homes that had no Internet options faster than 33.6 modem. No cell access, either. These claims are just as annoying here as they are in Capetown.

I don't think the tone is that MS is going to be gone. I think it's more like MS is going the way of IBM, Oracle, Cisco, etc.- companies that will stick around and make important things, but do so quietly and with much less excitement from the public.

The long tail. A drop in revenue isn't a sign that your company is dying or dead, it's a sign you're in the final stages of decomposition.

>This is the first time they're past-tense, over and done with.

The sentiment on HN has been that for a while.

Except when it comes to UEFI secure boot on ARM devices.

Then it is all about how Microsoft is going to get a monopoly on tablets and stop other OSes from booting on them and thus must be restricted by legal means right now.

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.

I'm assuming you're just naive and lack the experience to see through this BS. This type of system can be gamed 'til the cows come home! Here are some corrections to your description:

Currently Windows is in calibration, where we stack rank and reward behaviors that can easily be sold to one's boss. This is not done on a team basis, an organizational basis or really any rational basis at all. Everyone at a given level competes with everyone else at the same level for the next level of management's affection. Those who kiss ass up and trash talk their co-workers/competitors are rewarded in various ways. Usually with an ego boost but occasionally with a monetary reward.

Stack ranking is not based on what you accomplished at all rather how your managers perceive what you accomplished. There are three main pillars: how close you are to your manager, how effectively you can trash-talk any competing co-workers and how you helped your manager sell your accomplishments to his or her boss.

There is no perfect system, but to be frank, the calibration and review system rewards people more for their political skills than technological merits and therefore is pretty damn good practice for a career in playing corporate politics and approval seeking behavior in general.

Really? You must be on a rare and exceptional org, then. I left Microsoft because the stack rank system most often worked exactly as described in the article and it was just as corrosive as they described. (I’m making more money and having way more fun now, too.)

In my extensive experience as both an IC and a lead at Microsoft the curve is enforced down to at least the dev manager level (i.e. teams of 20-30 people). A manager with 20+ people often ends up having to pick two sacrificial victims to receive a punitive review score (i.e. a 5 in the current system) even if everyone’s performing well. This causes all kinds of unintended side-effects and has absolutely rotted the company from the inside out.

I understand that the idea is to keep everyone on their toes and encourage them to keep pushing. It might even work ok if there were some fool-proof way to guarantee that everyone always got evaluated on their actual product work, but engineers are smart people and they usually figure out that it’s easier and faster to optimize for networking/schmoozing/backstabbing than it is to merely do brilliant engineering.

If a low review score was just a momentary, “better luck next time” sort of thing then it still might work ok but a low review score is a terribly punitive thing. You get no raise/bonus/stock, you’re not allowed to interview with other teams, and you’re in serious danger of being fired. It drastically affects your career prospects for the next several years. If that happens to you, it’s not worth sticking around. Because a low review score is so punitive, people are highly motivated to do anything possible to avoid it. The most efficient and effective means of avoid it is often not to spend time doing great engineering, but rather to spend time on non-engineering tasks that “increase your visibility”, or doing things that make everyone else look bad. Some people are quite good at doing that and they tend to be rewarded for it.

Sometimes low review scores are handed out to people who deserve them but often they go to people who just got caught at the wrong end of the political network. Being “the new guy” on a team as a result of a reorg is one of the most hazardous places to be at Microsoft. If a manager needs to dump a low review score on someone, he’s going to choose the most expendable (i.e. least well-known and well-connected) person. The point is that you can easily end up with a low review score through absolutely no fault of your own, then your career at Microsoft is screwed. That kind of chronic stress and fear shapes the company and has made it what it is today.

Granted, not every team at Microsoft is completely disfunctional, but enough of them are that the company tends to bleed great engineers and visionaries. The proof is in the stock price.

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.

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!

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...

"Now, tell me, how giving me bad mark helped Microsoft?"

The bad mark kept you at the company where you're currently happy and productive. If the company had just fired you they would have lost a soon-to-be happy and productive employee.

The overhead of hiring/firing people in a huge company is non-trivial. Even taking your less productive 1.5 years into account your employment is probably still a net gain for the company.

"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?

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.

Typically, even if hiring manager would like you one way or another (either he genuinely believe that you can perform, or he wants sacrificial lamp), usually he is under orders from VP level which forbid interviewing anybody with bad mark in last three years.

However, those who call out VP orders are weak managers anyway, so you do not want to go work for them. A manager who hired me actually was impressed by me enough to go to director and bat for me to give me a chance to interview...

> 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!

True, but that can also be gamed in a classic case of kill the curve wrecker. Let's say Alice and Bob are excellent programmers, Charles through Henry are mediocre, and Isabella and Jerome are terrible. Everyone can go into the performance reviews and state their honest opinions, resulting in raises for Alice and Bob and a pink slip for Jerome.

On the other hand, Charles and Dana can get together with Jerome and Isabella. They agree to make each other look great and make Alice and Bob look terrible. If it works, then Charles and Dana get raises and Jerome and Isabella don't need to worry about their jobs. In fact, working together to throw Alice and Bob under the bus comes out to a happy ending for 80% of the department, so it shouldn't be to hard to get Erin through Henry in on the scheme.

Of course, once Alice and Bob are canned, it's a little awkward for Charles and Dana, since they're the new top of the chain. However, the rest of the department already knows that they're willing to deal. Charles and Dana agree to talk up Erin and Frank, so they wealth gets spread around. As for who gets the bottom ranks, just bad mouth Zach and Yolanda, the new hires that replaced Alice and Bob. This prevents needing to trust new members to the conspiracy while everyone gets to keep their job without needing to expend any effort to improve their skills. And, as I said, it's a happier ending for 80% of the original employees.

Doesn't that seem like spending an awful lot of time and effort on something completely internal?

Yeah, it's probably not worth the time investment to make sure employees are rewarded for their work in an equitable manner. If they can't sell it, why bother?

Every minute spent on determining how much profit to distribute is a minute not spent making that profit.

It sure is interesting to watch armchair HN give commentary on things they only have second-hand knowledge of, especially when your team just went through calibration 4 days ago and you got an inside look on how not-big-a-deal it was.

Is this your first calibration? How long have you been working at this company? The second year is much more stressful than the first. At least it was, to me.

MSFT Employee

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.

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.

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.

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.

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.

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.

>>There's a catch: if the company as a whole doesn't meet a certain profit goal then no teams receive raises or bonuses.

No this will be a disaster, Expect severe attrition in such a company. No one wants to work and then not get paid, just because you missed the mark by a meager x%.

>>It seems like this structure encourages teammates to cooperate with each other in the "we all succeed or fail together" theme

Read this as, we all succeed or go and work elsewhere.

To be clear employees are still paid their salaries when the company doesn't meet its quota or mark. Just the bonuses and raises are held back. Either way I think you're right about high attrition rates.

I have lots of criticisms of a stack type of system. It should be reset more than once per year, should be light hearted, and one big part of it should be being a team player, etc.

My point is just that it's easy to have the whole team become fairly complacent and start focusing on other activities. Do you want your star team member spending all her time collaborating on a non-business-relevant fun project, or pouring that energy into work stuff to earn the $50K bonus.

An alternative to stack ranking: http://news.ycombinator.com/item?id=4043188

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?

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)?

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...

> Gates could not write the compiler tools himself

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

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.

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!

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.

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

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.

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.

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.

>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.

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.

IMHO, you missed by a bit; MS got lucky with MS-DOS.

> that's it never had an original idea

And now I can ignore you.

I shall reciprocate.

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