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Microsoft’s Downfall: Inside the Cannibalistic Culture That Felled a Tech Giant

• khalidosama 14y ago
  check out the best blog for youth www.90sfuture.weebly.com
• redcircle 14y ago
  Balmer and the other managers aren't the only ones at fault for bad bureaucracy --- the employees that live with the system against their better judgement, rather than leave or fight, are also responsible.
  • marshray 14y ago
    A lot of people have left. But I imagine it would be hard to leave if you have a mortgage in a high-priced suburb that's flat or dropping in price.
• mahrain 14y ago
  Until now most of the Microsoft reporting I've read has been "they need to move" and "they're feeling the heat from (Apple, Google etc.)". This is the first time they're past-tense, over and done with. I'm not sure, though. They're surfing a wave of Windows/Office and XBOX cash and still very relevant for business with a huge ecosystem of developers, schools and universities educating future Microsoft users and sysadmins.
  • wpietri 14y ago
    Educating them for what, though? A lot of the MS technology stack makes sense in a world when you have a lot of individual servers scattered across companies. But speaking as a guy who still maintains a couple of physical servers of my own, I think that's dying. Ubiquitous good bandwidth means centrally managed services make much more sense. I'd hate to discourage anybody from doing technical work, but about the last thing I'd recommend a student become today is an MS sysadmin. I think its career prospects are similar to COBOL developer: reasonable for people to keep going until they retire, but definitely not a growth industry with 40 years of solid prospects ahead.
    • mark_integerdsv 14y ago
      >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?
      • rprospero 14y ago
        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.
      • wpietri 14y ago
        I get your point, but I'm talking about a multi-decade time horizon. My impression is that emerging markets are just lagging the first world, not permanently trapped in 1995. Even if they were, I'm not sure my point's different: if Microsoft's major future market is only those parts of developing nations where bandwidth is unreliable, they're pretty much doomed. That's a niche business, and won't yield the kind of revenue that lets them sustain their hegemony.
        • mark_integerdsv 14y ago
          Fair. I'm not sure I agree with you though that emerging markets are niche... I'm not an expert in economics but I suspect there may be a sense in which first worded is niche... Even more so in your several decade time horizon.
          • wpietri 14y ago
            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.
  • rogerbinns 14y ago
    > 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. http://www.asymco.com/2012/07/02/rims-tailspin/ http://www.asymco.com/2012/07/02/rims-tailspin/
  • Apocryphon 14y ago
    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.
  • cooldeal 14y ago
    >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.
  • flyinRyan 14y ago
    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.
• mgkimsal 14y ago
  “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.
  • vessenes 14y ago
    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.
  • wcdolphin 14y ago
    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.
• vessenes 14y ago
  This article has got it wrong; Sinofsky is remaking Microsoft. He is, of course, remaking it into an even more competitive, Apple-ish kind of place. But the market will reward him for doing that, and we as consumers will, too. I think I'd rather have two Apples in the world, (although MS has a long way to go to do that) than two IBMs.
  • silverbax88 14y ago
    Surely he's not responsible for that feeble Metro initiative, is he? That could be the end of Microsoft for real.
    • MichaelGG 14y ago
      Actually, it's the non-feebleness that's annoying about Metro. If they only pushed it where it made sense, it'd really work well. WP7 interface is really slick. But, instead, they seem to want to make the entire desktop take on the Metro UI there, and it just looks horrible. I'm starting to use VS2012 (need the F# improvements), but wow it just makes me cringe.
      • silverbax88 14y ago
        That was my take, although my comment above may have come across as snarky. I just find it hard to imagine someone is claiming Microsoft is moving in the right direction by taking their mobile desktop (which may work quite well) and trying to force it onto the desktop (which will be a massive disaster). Although I seriously doubt Metro ever actually shows up much on desktops - they are already sweeping it under the rug after the initial backlash.
    • joenathan 14y ago
      I think Metro is wonderful, I've been running the consumer preview since release and now the release preview on my desktop, and I use metro apps quite frequently(I'm currently in love with the game Flow). I'm also looking forward to replacing my Android tablet(Touhpad on ICS) with a Windows 8 tablet. In my mind Windows 8 presents the best concept for a tablet, a touch friendly UI for content consumption and casual gaming but also a fully featured OS when needed. I think Microsoft is on to something especially with things like Smart Glass.
• chadzawistowski 14y ago
  > “They used to point their finger at IBM and laugh,” said Bill Hill, a former Microsoft manager. “Now they’ve become the thing they despised.” I was under the impression that Bill really admired IBM, and wanted to emulate them.
  • bgilroy26 14y ago
    I think they're making a more specific, snide point about how Microsoft employees would watch IBM become less and less relevant for general consumers and think on some level that they were less vulnerable to the same fate. In general, I'm sure you're right. Even today, IBM and Bell Labs still represent the majority of the private side of innovation in computing history.
  • lawtguy 14y ago
    It wouldn't surprise me that Bill Gates admired the IBM of the 50's through 70's. They dominated the computer industry and did lots of amazing things. The IBM the earned such derision from Microsoft was the IBM of the mid-80s and 90s. IBM steadily lost it dominance in computers (mainframes) to smaller computers (minicomputers and microcomputers). It seemed to be so mired in bureaucracy and their successful past that they couldn't do anything about it. Microsoft of 2012 looks similar to IBM of 1982: their monopoly in computers (PCs) is threatened by smaller computers (smart phones and tablets). They are desperately trying to stay relevant, but are still stuck in their successful past (Windows) and can't abandon it. So as Mr. Hill said, it looks like they've become the thing that they hated so much.
• silverbax88 14y ago
  "Eichenwald’s conversations reveal that a management system known as “stack ranking”—a program that forces every unit to declare a certain percentage of employees as top performers, good performers, average, and poor—effectively crippled Microsoft’s ability to innovate." This is the most important sentence in the article. Because many companies over the years - a lot of them start ups - would point to this practice by Microsoft and try to follow their lead. Microsoft has been stack ranking almost since conception. It was always a horrible way to run a company. But it took decades for it to actually bring the company down.
  • jgrahamc 14y ago
    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-interview-with-novells-eric-schmidt/ar/1 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."
    • thaumasiotes 14y ago
      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.
• StacyC 14y ago
  Microsoft’s strategy has, for a long time now, seemed to me to be one of pure reactivity. Look for what others are being successful with, then try to emulate it just well enough to turn a buck. A vision for the future? Someone else will take on the big risks and figure that out.
  • nkohari 14y ago
    This is pretty much the norm in large, entrenched companies like Microsoft. It's the reason why so much innovation comes largely from startups and small businesses.
• RandallBrown 14y ago
  I am really hopeful for the future of Microsoft. They have the potential to do something really awesome with Windows 8/Windows Phone 8/Xbox. We've been promised ubiquitous computing for years and Microsoft has finally developed a common platform that might make that possible. It's all going to be about execution. The things they've announced so far seem promising, but we'll have to wait and see if it actually works.
  • VikingCoder 14y ago
    Microsoft has never wanted ubiquitous computing; they've wanted ubiquitous licenses of Microsoft operating systems and applications. Even when they've tried to behave well, people don't trust them, because of this. I think the single best thing Microsoft ever did was bail out Apple, so they didn't have to go bankrupt. http://www.wired.com/thisdayintech/2009/08/dayintech_0806/ http://www.wired.com/thisdayintech/2009/08/dayintech_0806/
    • joering2 14y ago
      Wow, thanks, I didn't know that. Its kind of hard to swallow (but Jobs-ish character type, of course) to see Microsoft rescuing them, and years later seeing both Jobs and Gates sitting next to each other and Jobs bashing Gates like he's a dirt.
    • philwelch 14y ago
      Microsoft didn't "bail out" Apple--Apple by 1997 was solvent and profitable. The immediate cash flow problem was solved by Gil Amelio and Fred Anderson a year before. The truce between Apple and Microsoft had more to do with Apple focusing on the future and abandoning several frankly promising legal claims against Microsoft, including Microsoft's outright theft of the QuickTime source code. Promising to sell Microsoft Office for Mac was more important than the $150 million.
• tomelders 14y ago
  Post rationalised nonsense. Microsoft's problem has always been, and always will be, that's it never had an original idea, it's never understood why it's doing the things it does. It got lucky with Windows which has always been a shoddy product. Microsoft is no different now to what it was when Windows launched. Put simply, Microsoft isn't a very good company. It's a blip on what is at present a very short timeline.
  • nkohari 14y ago
    This is just ridiculous. Microsoft is a powerful company that has simply foundered, like many before it. They've just never been able to understand (at a corporate level) the changing forces of the software industry. They remain entrenched (perhaps rightfully so) in Windows, which firmly anchors them in the PC era. Comparatively, Apple has embraced the post-PC era, and has reinvented themselves as a consumer electronics company. Remember that in the late 90s, Apple was trying to make it as a PC manufacturer as well, and only at the brink of failure were they able to recognize that they had to pivot. Microsoft still makes too much money via the PC-oriented Windows-based business model, so they haven't been forced to reinvent themselves. Also, for the installed hardware base, Windows is and has always been the most consumer-friendly operating system on the market. It's certainly not perfect, and it might not suit power users, but it more than serves its purpose.
    • pseudonym 14y ago
      >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.
      • 14y ago
• brudgers 14y ago
  >"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?
  • jonhendry 14y ago
    revenue != profit There are estimates that the iPhone business does generate more profit than Microsoft as a whole.
  • beagle3 14y ago
    > 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.
• wmeredith 14y ago
  "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.
  • trimbo 14y ago
    > Who in the world would think that's a good idea. Jack Welch, AFAIK. http://en.wikipedia.org/wiki/Vitality_curve http://en.wikipedia.org/wiki/Vitality_curve
  • tomjen3 14y ago
    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.
    • gaius 14y ago
      Business "education" hasn't really advanced beyond Taylorism.
      • nradov 14y ago
        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.
• wcdolphin 14y ago
  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.
  • drivebyacct2 14y ago
    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.
    • sukuriant 14y ago
      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
  • smackfu 14y ago
    Doesn't that seem like spending an awful lot of time and effort on something completely internal?
    • DaveMebs 14y ago
      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?
• deleted 14y ago
  [deleted]
• akkartik 14y ago
  Google also stack-ranks.
  • tomjen3 14y ago
    WTF. You would expect Google to create a better way to solve that problem.
    • jacobquick 14y ago
      It doesn't have a standard implementation, each company kind of makes it up as it goes. Google's is different from Microsoft's, though it's prone to the same issues on a smaller basis.
• kin 14y ago
  Reminds me of the article a short while ago about the startup culture of the Bing team that lost its momentum because Microsoft tossed a bunch of managers and PM's at it. Or rather, Microsoft crippled Bing with bureaucracy.
• rlu 14y ago
  Plain and simple this article seems like it was written 3-5 years ago. With the recent things Microsoft has been coming out with (Kinect, WP7, WP8, Win8, Surface, New xbox, etc.) that has generated genuine interest...are we really saying that this company is dead? Some good points are made in this article, but it gives off a strong vibe of bitter employees who got bad reviews. Also: >"Today, a single Apple product—the iPhone—generates more revenue than all of Microsoft’s wares combined." uh, maybe but revenue != profit. I like the closing on this post: http://dcurt.is/steve-ballmers-microsoft http://dcurt.is/steve-ballmers-microsoft "we should not forget this very consistently true fact: Microsoft makes around $5.5 billion every three months. In pure profit."
  • mrdodge 14y ago
    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.
• grandalf 14y ago
  Stack ranking is equivalent to having a finite bonus pool, or having Gold, Silver and Bronze in the Olympics. Yeah the 4th place finisher is an amazing athlete, but there are only three medals. Suppose you are a manager who manages 5 employees. If you have $100K to give out as bonuses, you could just divide it up equally. Over time employees would come to expect to get their bonus and it would cease to be a motivator. While stack ranking imposes a bit of an assumption about the distribution of effort/merit on a team, it's also intended to foster spirited competition for the top spots, much like the medal system used in the olympics. If you are managing a meritocracy and the rules of the game are known, nobody will begrudge someone else getting a bigger bonus. Many workers idealize working on a team where they are not the strongest, so that they can learn from others. The point is that it's not just about rewarding people, its about rewarding people for the kind of significant contributions to the team that make a business difference. If managers are letting it get political and it turns into a BS metric, then that's evidence of a larger management problem than a problem with the particular distribution of bonuses entailed by the program. One could argue that any bonus that is uncertain has the potential to alienate the employee if it is not earned. The converse would be to give all employees motivational bonuses, or, in other words, not to give bonuses but to rename some of the guaranteed compensation "bonus" when it's actually just salary. If a corporate culture is so backward that the genius in the next cube getting a bonus is viewed as a bad thing, then it's probably time to think about how/why bonuses (or the equivalent) are given in a smaller business where the bonus comes in the form of options being worth something, etc.
  • tomjen3 14y ago
    Are you a manager? If so you need to keep these two points in mind: 1) The reason the oplympics works is that you can rank people accurately down to within miliseconds. And peoples success doesn't depend on others help. 2) If the bonus pool is fixed, you can give everybody the same one year if that makes sense given the input and one year you can give something to one guy and more to the rest. You can't do that with a fixed band system. That is its key flaw.
    • it 14y ago
      Also, if you are working on a team then the incentives should be based on team performance, not individual performance. You get what you reward.
• gfodor 14y ago
  The reason Microsoft has gone down the tubes, to paraphrase Steve Jobs, is they have no taste.
• nirvana 14y ago
  As someone who has seen stack ranking in action at Amazon and Microsoft both, this is an excellent interview question at any company you consider, especially one founded by ex-Amazon or ex-Microsoft employees. Do you use stack ranking? If the answer is yes then you know they aren't performance based. Microsoft and Amazon both seem to think it is "scientific". It isn't really scientific when, in advance, you decide that %10 should be on a firing track, %70 should be warned and %20 should be promoted-- without regard to actual performance. Bezos likes to run around claiming he only hires "A players", but what it ended up being was C & D[1] players who didn't know how to program or understand technology, ranking their teams, almost completely based on office politics[2] and ones ability to hype their work, rather than the actual technical quality of the work. Of course generalizations like this will have exceptions and I knew some groups who were lead by software developers who got promoted, and the AWS group seemed to be insulated from the amazon culture. But HR and Management at Amazon.com were absolutely atrocious. And that's in comparison to Microsoft (where I also worked) where this "metrics" religion was completely accepted as well. If you're a talented engineer, work for a startup, but if you need a big company and you're in the northwest, pick Microsoft before you pick Amazon. (Maybe google is better than both, but I've not worked there.) Edit to add: In fairness I can compare myself to gates. I saw the Kindle at Amazon about a year(?) before it was announced and wanted to kill it on the spot. (not that I had any say in the matter) I thought it looked like it was designed in the USSR. Still do, but bad design can still make for a good product financially (and it has gotten better.) [1] I'm being generous here. My boss and my bosses's boss and all the HR people I'd give an F. Absolutely the most incompetent people I've worked with in 20 years of mostly working with startups where even really competent people have to struggle with immense difficulties and uncertainty, neither of which was present at Amazon, except to the extent created by incompetence, though this incompetence went all the way to the top. I saw other people leading other teams who were C & D players, so I presume my team was just particularly bad. [2] (Talking about amazon here, saw much less of this at MSFT. MSFT was more misguided than... evil.) In order of decreasing effectiveness: Kissing Bezos's ass, Kissing your manager's bosses ass, kissing your manager's ass, kissing your manager's peers ass, making up initiatives that sounded really effective, even if they had no actual effect and then propagandizing them around the company, sabotaging your co-workers products, knifing your co-workers in the back verbally, deliberately mistranslating instructions from your boss to others in the team, hyping yourself with other teams, conspiring with others at other teams, and just generally lying. I saw all of this occur. If I'm bitter it is because I was not smart enough to accept that this was the companies culture, and I gave them way too much benefit of the doubt. I should have left immediately after they broke a hiring promise to me (in the first month.)
• danielpal 14y ago
  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.
• powertower 14y ago
  > and Cannibalistic Culture That Felled a Tech Giant Someone forgot to show him Microsoft revenue numbers for the last decade.
  • flyinRyan 14y ago
    You mean the long tail? Someone should show you RIM's revenue numbers for the last decade.
• balloot 14y ago
  The problem I have with stack ranking, and one that I would think engineering companies like MSFT and AMZN would share, is that it is just bad science. I can get on board with the idea that it is good to drop the bottom 10% of the company on a regular basis. But they're essentially taking very small sample sizes (individual teams), and assuming their distribution matches that of the entire company. Or to put it another way, let's say you ranked every employee in the company 1-40,000 or whatever. You are trying to drop employees 36,001-40,000. An absolutely awful way to make that happen would be to create 4000 small groups of 10 people and then drop the bottom person from each group. Anybody who's even somewhat proficient in stats can tell you that this setup will yield results WAY off the mark. You could even quantify it with some simple analysis, and though I don't have time to do so, I'm sure the results would be horrifying. And that's assuming a totally random distribution of people, which isn't true, and totally ignoring psychological effects of such a system. But at the very least, stack ranking is just bad science, and that should matter to these companies.
  • grandalf 14y ago
    The idea is to create specific psychological effects. Suppose that of the three attributes motivation, initiative, and talent two of them are very much within the control of the employee and the other less so. The goal of the incentive is to make the employee want to maximize all three rather than doing other things (such as wasting time, etc.). Imagine the slow, cynical organizations that give everyone a 5% bonus year in and year out no matter what. Just show up, put in your 9 to 5, and collect your bonus. Bonus/incentive programs are intended to create more of a dynamic. Yes it's more stressful but the idea is that it's worth it.
    • balloot 14y ago
      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.
• jusben1369 14y ago
  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?
• posteditdelete 14y ago
  Well, if HP wasn't going to use their MovingBrands rebrand, Microsoft might as well steal it.
• cletus 14y ago
  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.
  • wallflower 14y ago
    > 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?] ... and THERE WERE NOTES IN ALL THE MARGINS. ON EVERY PAGE OF THE SPEC. HE HAD READ THE WHOLE GODDAMNED THING AND WRITTEN NOTES IN THE MARGINS. http://www.joelonsoftware.com/items/2006/06/16.html http://www.joelonsoftware.com/items/2006/06/16.html
• antidoh 14y ago
  Stack ranking where you fire the bottom 10% (even though they were supposedly A players when you fired them; what did you do to ruin them?), is just a manifestation of managers that have a hard-on for a brain.
• corford 14y ago
  Downfall is a bit strong. Call me when Windows 8 is out of the door and it turns out to be an enormous flop. Until then, Windows 7 is a very solid os (the best iteration of windows MS has ever released imho); xbox rules the console gaming roost; exchange, active directory and c# dominate in the enterprise space; Office is still the best at what it does. The only parts they really suck at are web and phones. To me that means they have some serious weaknesses (given the ever increasing importance of phone and web) but it doesn't mean they're in a death spiral. RIM... that's what real downfall looks like!
  • flyinRyan 14y ago
    You can't count on xbox for stability. The gaming industry is a drunken battle royal. Just when someone is getting dominant, Nintendo (wasn't he out already?) comes in from behind and clubs them with a chair. AD "dominates" only because Windows OS "dominates" and surely Java is still more used than C#? >The only parts they really suck at are web and phones. You mean the biggest areas of future growth? That doesn't sound too bad.
    • corford 14y ago
      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
• at-fates-hands 14y ago
  I find it fascinating that most people forget Enron famously adopted the stack ranking principles. Look how that worked out for them.
• deleted 14y ago
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• InclinedPlane 14y ago
  This is pretty spot on. The process of reviews is one of the most corrosive elements of working at Microsoft. However, there's more to the story. MS fumbled a huge opportunity in the way they reacted to the financial crisis and recession. They put the vast majority of promotions and bonuses on hold. Keep in mind that this is a company that has tens of billions of dollars in cash on hand. More so, this is a company with an "up or out" philosophy baked into it (and that's a big reason for the review system). Due to fear and lack of leadership the company saved spending who knows how many millions of dollars and in the process drove away a lot of their best talent and lost out on hiring a lot of new talent as well. The way they went about layoffs didn't help either, with lots of little layoffs instead of one big purge and done (so that the remaining folks didn't have to question their job security every day). Instead of projecting strength they projected weakness, and they paid dearly for it. But beyond all that it's the increasing culture of bureaucracy that's eaten away at MS. All the reorgs treating developers as nothing more than assembly line workers. All the incompetent middle managers and PMs that are 10x harder to get rid of than incompetent devs. All the silly out of order budget and management priorities. There's only so many times that an individual can pour their heart into a job and see nothing of substance come of it before they decide to move on to greener pastures. The worst part of the whole thing is that few people realize the significant amount of lag between when a company starts falling down before it hits bottom. Losing a ton of talented devs probably won't stop you from shipping the current version of whatever is in the pipeline, or even the next version. It'll just mean a lot of projects that would have been conceived won't be, and it'll be harder to execute on a lot of projects that should have been a slam dunk. More so, being able to work with more talented devs is a big perk for other devs, which will tend to accelerate the exodus at all levels. And typically people will make up their mind to leave months or even years before they actually do. By the time it's actually supremely obvious that all the good talent has left it's far too late to do anything about it.
  • jacques_chester 14y ago
    > 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.
• runako 14y ago
  Quote from Steve Stone, founder of the tech group at Microsoft: "“We couldn’t be focused anymore on developing technology that was effective for consumers. Instead, all of a sudden we had to look at this and say, ‘How are we going to use this to make money?’” The duality here strikes me because the winners in consumer technology are able to do both at the same time. They make money by shipping technology that is effective for consumers.
• sseveran 14y ago
  While I can agree that stack ranking is corrosive in many respects removing under performers is essential. I was at a company (rather large internet company) that did not get rid of under performers. When I arrived what had collected was mostly senior engineers that in all frankness should not be let near a source control system much less be allowed to commit changes. There was so little engineering talent but thousands of engineers. And this is an impossible problem to fix without wholesale firing entire orgs since competent engineers don't want to work in a team of people with equal or higher level than them who don't know the difference between a compiler and an interpreter. While there we did do stack ranking. Its just another game to play inside a company, just like all the other games that go on. It was easy to play that system as opposed to doing something like aligning with other teams retarded ideas. We did real awesome stuff and made sure we got recognized for that. I think the hard part for many people is the recognition that 80% of people (including maybe you) don't deserve a big bonus and promotion. There will always be politics and politics will always drive these decisions, even in small companies. I don't have an effective way of objectively measuring a software engineer. The most important thing you can do is to pick a great manager (or startup CEO) and align yourself with him. While they will do different things to help you in big companies vs little companies, a good manager will hire good people and ensure that his team is working on big, company impacting problems. Startup CEOs will be doing the same thing. Now a couple of notes to make sure your stack rank goes awesome: 1. If senior leadership does not see your team as directly impacting profit move to a new team. 2. Make sure that now that you are working on something with great business value make sure everyone knows about it. 3. Send out reports to everyone who is interested every week telling them what your team accomplished that week (especially for you budding managers out there). 4. Compile all the congratulatory emails from executives as well as other teams (Directors and managers). Your manager will use these at the stack rank meeting since all the other terrible managers who you no longer work for will not be this prepared. 5. Remember to deliver. When you deliver real value you will be recognized. I know this is hard but I used this strategy very successfully. I can not emphasize enough that you must be working on big, impacting features. Adding a widget to a form, or making some little feature is a butts in seats problem. If you are just a butt in a seat expect to be treated like one.
  • kamaal 14y ago
• woodholly 14y ago
  While he's not right about everything he writes, and if you can separate fact from opinion, younger readers should acquaint themsleves with Cringley's book Accidental [MB]illionaires. It will tell you all you need to know about Gate and Ballmer's management style. Anyone who thinks Gates is both a genius (as in programming genius) and that this genius was responsible for the success of the company is wrong. One of those is not a true statement. Gates and Ballmer were very aggressive and sociopathic, like Steve Jobs. This helped the company succeed. But success is really the result of the young talented programmers who signed on with them, and worshipped these characters. In MS's case it was Simonyi, the man who gave us Excel. And before him, it was Allen who helped Gates get into business. Gates could not write the compiler tools himself. He needed Allen. Some people might not appreciate the way these guys treat employees. Many simply would not tolerate being belittled by a guy who is not as smart as they are. (Gates' famous line "I don't know how technical your are." was supposedly his way of dealing with the many, many others who knew more than he did.) But... many programmers are happy to be treated this way. And this is management formula that works very well. Belittling the young and easily influenced, especially software programmers, works. Perhaps that is Gates' and Jobs' genius. Read Cringley. I think you will come away realizing guys like Simonyi were the true geniuses. Hollywood ending to this comment i.e., the moral question leaft to the viewer/reader: Not all geniuses are good leaders, but is it necessary to be an a-hole to be an effective leader (of geniuses)?
  • zohebv 14y ago
    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/0012365X79900682 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.
• adharmad 14y ago
  This book gives a good perspective of some of the internal feuds at Microsoft (from the dotcom times): http://www.amazon.com/Breaking-Windows-Fumbled-Future-Microsoft/dp/0743203151 http://www.amazon.com/Breaking-Windows-Fumbled-Future-Micros...
• numbchuckskills 14y ago
  I can't think of a F500 company that doesn't do some form of stack ranking, either by job function or work group. It's the nature of the beast.
• tonetheman 14y ago
  Anyone who thinks stack ranking is good, seriously quit your job you are complete dumb cunt.
• hexagonal 14y ago
  What's the point of a paywall if you put all the relevant information in the "teaser"?
• bootload 14y ago
  'In the 40s, 50s, and 60s, Sears had it nailed. It was top-notch, but now it’s just a barren wasteland. And that’s Microsoft. The company just isn’t cool anymore.' Microsoft once was cool. It might be difficult to imagine, but from the time PC's came out with DOS through to MS Windows, you really could do interesting things on commodity hardware with their great tools and large user market. It was obvious to me that MS lost it's cool as the Internet gathered steam at the time the Web was born. Doing Post-grad I couldn't help but laugh, to connect to the Internet using Microsoft operating systems you needed a vital component [0] from a lone programmer from Tasmania. How did that happen? How did MS miss the tidal wave we now call the Web? "Open access to the World Wide Web was not originally included in the classic MSN service at the time of its initial launch" Toys like the Internet simply didn't register to the like of Microsoft. Gates even tried to tame it - remember 'The Microsoft Network?' [1] MS missed the Internet and the Web because of this need for control. Lesson learned: No matter how hard you try, networks can't be fully controlled or contained. You can't tame the beast. [0] Winsock built by Peter Tattam owner of Tattam Software a small Tasmanian software company. Used Trumpet & didn't pay? You can here ~ http://trumpet.com.au/index.php/news/3-latest-news/17-mar-2011.html http://trumpet.com.au/index.php/news/3-latest-news/17-mar-20... [1] https://en.wikipedia.org/wiki/Microsoft_Network#MSN_Classic https://en.wikipedia.org/wiki/Microsoft_Network#MSN_Classic
• deleted 14y ago
  [deleted]
• anuraj 14y ago
  This is the story of every large company out there including Google. With size, comes structure, and with structure bureaucracy. Metrics take the place of intelligence and straight jacketing becomes the norm. Some companies (like some people) live to a ripe old age; some die a premature death. A 100ton truck cannot take a hairpin at 100mph. Decline and death is the norm in industry as in life. The next microsoft would come out of the thousands of startups that are being hatched today or tomorrow.
• jroseattle 14y ago
  It's a bit voyeuristic, so not a lot new in this article for those familiar with the culture. If the article has value, it will serve as a warning to others (cough Google cough Facebook cough) that hubris and bureaucracy and koolaid and everything negatively associated with group-think can happen to you. It's like exercise -- muscle confusion is your friend. Keep it fresh, mix things up. Try to avoid becoming exactly what Microsoft first attacked, then became.
• 6ren 14y ago
  Christensen (The Innovator's Dilemma) has an anecdote that prompted his PhD research: Digital used to be extremely successful with their minicomputers. Highly profitable, their management was lauded by the press. Then, the PC arrived, and quickly undermined minicomputer sales and profits - and Digital. The press ran a series of articles about how Digital management had lost their way, and kept making terrible decisions. But, according to Christensen, management hadn't changed. They were the same people, making the same kinds of decisions, on the same basis, with the same values. http://www.strategy-business.com/article/14501?gko=ca7ad http://www.strategy-business.com/article/14501?gko=ca7ad
• medinismo 14y ago
  even though I like the thought of the article, the author botched it by turning into an unsubstantiated complain fest. We are all curious to figure out how MSFT screwed up so badly, however blaming stack ranking is just amateur. Stack ranking is used by many great companies that are doing v well, thank you very much, such as Johnson and Johnson, Bain, McKinsey, Coke.
• medinismo 14y ago
  even though I like the thought of the article, the author botched it by turning into an unsubstantiated complain fest. We are all curious to figure out how MSFT screwed up so badly, however blaming stack ranking is just amateur. Stack ranking is used by many great companies that are doing v well, thank you very much, such as Johnson and Johnson, Bain, McKinsey, Coke.
• wluu 14y ago
  I think this blog post by a former Microsoftee (Hal Berenson) is also worth reading - http://hal2020.com/2012/07/03/acknowledging-the-aquantive-mistake/ http://hal2020.com/2012/07/03/acknowledging-the-aquantive-mi...
• losethos 14y ago
  I hit a CIA agent in 1999/9/9 and licked the windshield.
• Zenst 14y ago
  First IBM who helped to create Microsoft who then helped to create Apple. Guess Apple helped to create ARM. IBM helping to create Microsoft is well known so lets not dupe that one. Microsoft helping to create Apple, well Apple went thru a bad phase and Microsoft chucked them enough life-lines to keep going and without those they would of gone under. Apple, when they started the Newton project helped put ARM were it is today so we shall see were that goes. Whoever is out infront always gets there head shot at. IBM took major flack for there monoply of the market, then Microsoft and now Apple. ARM just seem to be playing in that nice phase. But early days and not like Apple couldn't indirectly spawn a new leader be it directlly or indirectly. Usualy the pattern is that they will help another company to remove some heat from there ass and that company will outgrown them. Still IBM still around, Microsoft still around etc etc etc. Just a case of everybody loves to hate a winner it seems :(.
• krishnakv 14y ago
  The major point the came out for me from the article is how destructing ranking people "against a curve" is. "Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees" This was originally popularized by GE and borrowed by dozens of companies as a HR best practice. Now every major corporation tries to rank their employees along a bell curve as 1's, 2's, 3's and 4's and inevitably, they lose the 1's who quit in disgust rather than put up with this. My hope is at least a few HR decision makers read this article, look at what is happening in their own companies and come up with a better way to motivate and get the best of employees. Quickly before this cancerous policy eats up the best talent in in the organization.
• goggles99 14y ago
  Saying something like stack ranking is partly responsible for ruining Microsoft completely discredits this article. It makes every word suspect in the whole thing. 1. Microsoft has almost always stack ranked. 2. Companies like Google who has done nothing but grow in the past decade also has almost always stack ranked. Try not to put things in your article that seem so baseless. It makes you look like a hater.