Microsoft's 'Cannibalistic Culture'

theodp writes "In the provocatively titled Microsoft's Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant, Vanity Fair offers a teaser for a story that will appear in its August issue on Microsoft's Lost Decade, which promises an unprecedented view of life inside Microsoft during the reign of Steve Ballmer. '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,' contributing editor Karl 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.' Also discussed is the company's loyalty to Windows and Office, which induced a myopia that repeatedly kept Microsoft from jumping on emerging technologies like e-readers and other technology that was effective for consumers. Having seen an advance copy of the full piece, GeekWire offers its take on what it calls an 'epic, accurate and not entirely fair' tale."

Comments

Re:With downfalls like that, who needs successes?

[Trashcan Romeo]

There's one number that isn't bigger than last time: the amount Microsoft is charging to upgrade to the new version of Windows.

What does that tell you?

stack ranking sounds like the strict curve

[ffflala]

...and it has the same results. Law schools grade this way. It simply adds a very real incentive to undermine those in your group. It forces competing against one another for individual gain, often to the detriment of group progress.

It sort of makes sense for law students whose focus will be litigation, since they are training for an adversarial environment. It also ensures that the lowest performers are consistently swept out.

However it rests on the assumption that the lowest performers are necessarily and always detrimental to a group overall. This of course isn't true, since every single group will have a highest and a lowest performer. The other downside is of course that it promotes individual interests over group interests.

Re:stack ranking sounds like the strict curve

[Anonymous Coward]

AMD does the same thing (forced curve), and it's rolled up at each management level and adjustments are made between teams under the same director, and again under the same senior director, etc etc.

it's pretty lame because a team of 5, awesome people will still have to have 1 grade-A employee and 1 D if not F, and maybe the rest can be 2 Bs and 2 Cs. the one that gets the D/F might be so good that in the larger group (taken as a whole) he could be a B++, but at best he'll get a mid-evel C.

the reason is that each level of rollup involves the managers arguing for their team, and often taking turns at who gets to make their people As, or who has to "take one for the team" and make theirs the low grades. and then the higher level managers can't know everyone on a 100+ person org, so they defer to their favorite managers, make capricious decisions... it's pretty lame.

Re:stack ranking sounds like the strict curve

[b4dc0d3r]

The reasons behind these decisions often make sense, in theory. And as we all know, practice is not theory.

I've worked at Fortune 150 to Fortune 10 companies. This type of ranking comes in when someone at the top is cost cutting, and wants to drive away the worst performers. Forced ranking makes it easier to tell managers to rank people, then later ordering the bottom person gone for all teams above a certain number. That way managers don't have to decide who goes, in the same way as if they were ordered to choose one person.

When the company recovers, employee surveys (and exit interviews) cite this as the reason for leaving, and this system goes away.

I'm not sure we can trust the specifics, but if this plan were in place 5 years or more, it points out a management who is completely unconcerned as to why people leave the company. Microsoft has raise concerns about poaching - maybe they legitimately believe other companies are just making overly high offers to get talent, rather than people leaving because of a hostile workplace.

I think over the past few years this has gone out of style in many places, but it does take a while for the shared MBA pool of knowledge to trickle down as new graduates replace outgoing ones, or someone makes a 20 year stagnant career in the same position, refusing to change their ways.

Which is one reason large companies push career development. If you don't aspire to get a promotion, you are going to eventually get fired - this is the message. Pushing people to move around voluntarily means you can count on at least a few new opinions introduced, But when you push the great architect into a mediocre middle manager, you've hurt the company twice - losing the architect and gaining bad middle management.

Good ideas always have a downside, and good management knows when to recognize when the cons outweigh the pros. Half of the managers are at or below average, so I wouldn't expect much more than following orders.

Re:stack ranking sounds like the strict curve

[NotSanguine]

Exactly. It's as if MS' management are deliberately trying to prevent anyone from actually having an all-star team. They're also completely failing to understand that psychologically, for most people rewarding top performers will produce better results than punishing low performers, even though if you look at it as a math equation, they can be identical.

This stupid way of managing people is one of the main reasons I would never in a million years work at Microsoft, or other companies that use similar methods (Amazon, etc.).

I've been reading these critiques of "stack ranking" and, as a former MS employee, I understand why MS does "stack ranking" even though it's ultimately detrimental to the organization. Microsoft is a sales focused organization, not a technology focused one. When managing sales people, you want to keep the highest performers happy (and selling as much as possible). Nothing motivates a salesman more than knowing that if they don't produce, out the door they go.

Since Microsoft has always been run by salespeople (Billy G. included and Ballmer is the quintessential salesjerk), it makes sense that they should use sales management techniques within the organization. the problem, of course, is that just because you're not one of the top developers on a dev team, it doesn't mean that you suck. It means that you have colleagues that you can learn from and improve your skills -- potentially making a good developer a great developer.

Stack ranking is a piss-poor way to evaluate development groups. It has also created an atmosphere at MS where personal relationships are more important than performance. It has also created an environment where being seen as being involved in "the next big thing(TM)" causes employees to ride the waves of high-profile projects and then jump ship when their visibility is reduced. I saw so many good ideas die while I was at MS just because something newer and shinier appeared and those upwardly mobile types just dropped the ball without looking back. It was kind of sad to watch, actually.

How Time Was Spent On MS teams That I Worked On

[Anonymous Coward]

As a former Microsoft exec, my observation was that most blue badges above level 62 spent 30% of their time on work and 70% of their time maneuvering

Re:It's really obvious

[UnknowingFool]

Steve Jobs led Apple in the direction he wanted. People can disagree with that direction but it was clear who was in charge. Ballmer manages MS so that it doesn't lose their monopolies. That's the big difference I see. If Jobs was in charge, I don't think the Vista Ready/Compatible disaster would have happened. The crux of it was a lower level exec made a decision to reverse course on key hardware requirements that left many consumers with PCs that were not really fully Vista capable but it wasn't clear to consumers what that meant. Ballmer just let it happen instead of stepping on someone's toes.

Re:"Microsoft's Downfall"

[Anonymous Coward]

Yes, but look at the decline. It's shocking, especially if you factor in iOS devices. If you factor in Android, it's even worse.

Stacked ranking at HP

[hamster_nz]

We had the same at HP - if you got the bottom ranking twice in a row you were asked to leave. We had a stable team of 10 engineers, all of which were good at their job but one had to be ranked as incompetent.

We working through the list alphabetically, so everybody got it once in a while but never twice in a row.

Re:Stacked ranking at HP

[Osty]

But then you all have a black mark on your record, making it harder to move teams. And compensation is directly tied to review ratings, so for the review period where you get the short straw you may get nothing -- no raise (not even cost of living/inflation), no bonus, no stock. Just an uncomfortable discussion, a bad mark on your review record that will send up a red flag to other teams, and the hope that your manager doesn't get replaced with someone else who doesn't follow the previous manager's rotation and will pigeonhole you based on your previous bad review.

Jack Welch implemented stack ranking at GE when the company was over-sized and performing poorly. It was intended to be a short-term (couple year) measure to identify and weed out underperformers. It was not intended to be a long-term business standard. Filtering out 5-20% of your work force every year is not sustainable (why do you think Microsoft complains about the lack of H1-B visas?), and the system is ripe for exploitation. Your manager exploited the system in an arguably good way (making the best of a bad situation), but plenty of managers will use stack ranking to get rid of people who are competent but have somehow rubbed the manager the wrong way, or in a misguided attempt to retain talent (give them a good review and they will leave to better things, but give them a bad review and no other team will take them and they're left with the choice of staying where they're at or leaving the company entirely), or as an exercise in empire building (make your way up the corporate ladder by bringing along people below you to push you up at the expense of others who may be more competent but less willing to play politics).

Part of the problem is that stack ranking is so pervasive in the software industry. All of the major companies do it. Smaller companies do it because the big companies do it. Every now and then you'll find someone unique like Netflix, but if you leave Microsoft for Google, or HP for Amazon, you're just going from one stack ranking system to another. The individual details may be slightly different, but the overall system is the same.

Re:"Microsoft's Downfall"

[Billly Gates]

Why is this funny?

It is exactly what is happening. Once consumers start buying more of these devices than PCs the software will start to be ported over and be gradually as good as the desktop versions. Then corporations will notice and leave ship too next.

I admit we are far from that at the office but businesses are 6 to 7 years behind consumers. The lockin is gradually going away and even if Windows 8 catches on MS will be screwed because they do not control the w3c standards like they once did and these apps can be ported over to Andriod and IOS fair easily.

Re:"Microsoft's Downfall"

[dido]

If you are old enough to remember what Microsoft was like around the late eighties and up until about the early-2000's, you would realize that they are no longer the force to be reckoned with that they were back then. Yes, they are still a very wealthy and profitable company, and will probably remain so for decades more, but they are no longer the force to be reckoned with that they were in the time I speak of. Back in those days Microsoft inspired such fear into the hearts of those in the software industry that before beginning a software venture people would ask: "What would Microsoft do in response to this?" and even the vaguest hint that Microsoft was getting into some field would be sufficient to dissuade the faint of heart from even getting started and risking competing with Microsoft head-on. Those days are long gone, and now the companies that have sort of inherited that mantle are Apple and Google (but it seems that even put together they don't have even half of the kind of terrifying aura Microsoft exuded back in those days). Their loss of this kind of power does not mean that Microsoft will cease being profitable or even that they'll stop growing, far from it. It simply means that they've become irrelevant to the leading edge of the software industry, just another stable, stolid, boring company like IBM or SAP.

This is what Paul Graham meant when he wrote that Microsoft is Dead.

Re:"Microsoft's Downfall"

[Anonymous Coward]

I work there, and I can tell you don't have a clue. The biggest problem MS has with hiring is competing for those few people that learned to program in C/C++ instead of Java, or some other interpreted language. We get summer interns that are good all the time, some get offers and work out well, other wash out in less than 4 years. Its not because of stack ranking though, its because of lack of desire or capabilities, Those that perform their job well and consistently get promoted quickly. Some long term employees get to a certain level and then stagnate, and when they're shown the door they blame the stack ranking process because their peers passed them by.

Also note the higher in level you are the broader the ranking becomes. Many of the people in the Vanity Fair article were stack ranked division or corporate wide, not within their own team. Then were let go as part of the dead wood trimming during the layoffs when the economy went south.

Perverse management incentives

[hibiki_r]

When using a review system like this, few things are more valuable to a manager than some really terrible employees.

Imagine I have 2 amazing developers in my team and 3 very good ones, and the ranking system is going to force me to give one a bad review: It will not only make that one very good developer mad, but sour things for the other two, that have to keep beating the poor sob I randomly chose as the one getting the bad review. However, what if I transfer one of my very good developers to a different team in exchange for a worthless chump? Give the chump nothing important to do, and then the rest of your team can continue unhindered and unafraid of getting an awful review just because they are associated with a competitive team.

I used to work at a place like this. If a new hire was just way too good, he was moved to a different team that had lost a top performer, and team quality was kept relatively even: We had to protect the good developers we had. Any team that was too good just had to be split up, or they'd quit anyway.

Re:"Microsoft's Downfall"

[GaratNW]

Excellent point, but the headline is not entirely inaccurate. As someone who worked there from 1998 through to 2004, and with a large number of friends still there, the company has gotten really bad. It has a shadow of the potential that it used to. Not because there aren't amazing elements in some of their products (Metro, love or hate, is a pretty remarkable UI evolution - Please, no posting to that retarded AOL image or whatever it is; plenty of other examples of good ideas surrounded by bad; Forcing metro by default in the desktop, for instance), but the company is its own worst enemy. VPs fighting VPs, a culture that started as productively competitive that has turned into destructively competitive - I'm not talking about the market, I'm talking about internal competition and non-stop backstabbing and product infighting.

To paraphrase the Joker, "This company needs an enema.". And the first step is flushing Ballmer. People often underestimate how much of the culture stems from the top down, even at a 70,000 person comapny, but Ballmer, despite being a brilliant business man, is a horrifically bad visionary and leader.

Re:"Microsoft's Downfall"

[theArtificial]

Microsoft has never been an innovative company. Never.

They came up with AJAX and prior to that Iframes, maybe you've heard of those?
Microsoft had the first console to feature an internal HD eliminating the need for memory cards for save games among other things.
Intellisense is amazing (it's an example of auto completion done well).
The scroll wheel on a mouse. The first optical mouse.
The first mouse featuring backwards and forwards buttons.
First mainstream ergonomic mouse.
While not the first, they're responsible for ergonomic keyboards (due making them affordable, just like PCs)
Teraserver (1998 a precursor to Google Earth)
Involved in the creation of the browser useragent
Video codec innovations which led to VC-1 being the premier codec for HD-DVD and BR discs.
Helped establish TrueType
ClearType
The Taskbar
Ability to alter compiled code while debugging it
Dynamic HTML desktops
Lots of small innovations in .NET that when combined equal large cumulative innovation.
XNA
Alt tab to switch between applications
Photosynth
Microsoft OneNote
First OS to have a 3D Sound api for games
Shadow Copy
Certainly that should qualify as an innovation.

They won the PC-DOS contract in 1981, overlaid it with Windows GUI 4 years later...Apple that were doing the innovating.....

By giving Xerox a bunch of stock in their company for access to their GUI technology, essentially buying technology just like Microsoft?

Re:"Microsoft's Downfall"

[hairyfeet]

Actually the chart is telling, but not in the way you think. Look at the peak, between 2004 and 2006, what happened then? The end of the MHz war because of the thermal barrier and the rise of the multicore, that's what.

I know plenty of folks and even plenty of businesses on first gen Phenom Is and Core duos, are they poor? Nope there is just nothing they do that stresses those chips which are now over 5 years old. look at that chart again and see how quickly it was climbing when AMD and Intel were topping each other in speed with every release, then look at how much faster it drops around 2007 when multicores became cheap for the masses.

In the end the reason why those numbers simply aren't keeping up with Apple is there is no reason to replace PCs anymore whereas Apple is going through their OWN MHz race in the mobile sector. Also thanks to the switchover to intel nobody has to choose "either/or" anymore so they can just pick up a copy of OEM Windows and run bootcamp (which your chart doesn't figure in, only new PCs sold) while still having the hipness of the frankly nicer looking Apple hardware.

Mark my words if you produce a chart for ARM 5 years from now you'll see the same thing, as i predict they will run into their own wall in less than 3, only instead of thermal it'll be battery life. Then just like with PCs people will simply keep them until they die, although naturally their sales will be a little higher as its easier for your dog to eat your phone than your desktop.