Analyzing one of American corporate history’s greatest
mysteries—the lost decade of Microsoft—two-time George Polk Award winner (and
V.F.’s newest contributing editor) Kurt Eichenwald traces the “astonishingly
foolish management decisions” at the company that “could serve as a
business-school case study on the pitfalls of success.” Relying on dozens of
interviews and internal corporate records—including e-mails between executives
at the company’s highest ranks—Eichenwald offers an unprecedented view of life
inside Microsoft during the reign of its current chief executive, Steve
Ballmer, in the August issue. Today, a single Apple product—the
iPhone—generates more revenue than all of Microsoft’s wares combined.
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….”
“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….”
“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.”
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