Resolve and Fortitude : Microsoft's ''SECRET POWER BROKER'' breaks his silence Read online

  Moltke characterized this revolutionary Prussian command doctrine best: “An order shall never include anything a commander can do by himself.” Establishing a mission-oriented leadership style means leaving the tactical details of achieving an objective to lower levels in the chain of command, thus ensuring flexibility and rewarding initiatives. As long as the commander’s original intent is unwaveringly maintained and defined objectives are relentlessly pursued, no permission is required when adapting to shifting battleground (or competitive) situations.

  This was exactly how I judged MS’s early operating style. If you could not license an operating system at list price and a competitive threat loomed on the horizon, sweetening the pot needed zero permission and would not be punished but rewarded. Business first, pride later!

  This style of command management is only successful when all goals are precisely formulated so the intent of the one in charge is unmistakably understood by all subordinates. The commander then has to extend trust to all levels in the chain and believe in the determined execution capabilities of his or her troops. This requires considerable training, confidence in the leadership, and the ability to trust each other. A collective willingness to cooperate, with zero tolerance for conformists or careerist self-protectionism, follows. This is much easier to accomplish with a smaller group than with armies of individuals employed in large enterprises!

  Upon looking at one of my old computer programs, a professor of mine once implored, “Why do you always have to do things differently than other people?” He saw it otherwise; I considered his question a compliment. As long as my version performed better than the one formerly designed—by him—he should have congratulated me. I understood the aim of his assignment perfectly, and had given my best to accomplish the task at hand. This was the spirit I wanted people working for me to operate in! If, in the process, they superseded my own achievements, all the better!

  The final element in this context is the vital importance of speed for an enterprise. As on the battlefield, competitive encounters demand swift decision making and therefore should not be judged later on accuracy alone. This is not to say that I appreciate hasty conclusions and careless responses. Yet delaying decisions does not win the day.

  I soon recognized that managing the still-young tech start-up with such a mind-set was no easy task. The company had just over four hundred employees and the average age was merely 23.5 years. Being over 40 years of age, I was considered a handicap. Energy and stamina was desired; experience counted less. Any lack of it was made up for with enthusiasm and seventy- to eighty-hour workweeks with no consideration of overtime pay!

  What else impressed me? No resting on your laurels! If moss can’t gather on rolling stones, imagine meteors. This management philosophy created not only competitive products, but also ever-successful teams generously rewarding breakthrough contributions, resolve, and fortitude. As a result, we all passionately and tirelessly strived for excellence following the motto drilled into us: “Only best products and services will eventually be victorious!” Best for consumers. Best in industry. Giving up was not an option in management’s parlance. Contentedness with success or status quo? Unacceptable behavior. With the industry moving at lightning speed, falling behind produced fatal results, and even small lapses severely endangered our hard-earned position.

  As on a battlefield, the intense work environment demanded up-to-date information. To facilitate this, MS installed a proprietary messaging system, instantly converting the company into an e-mail-addicted community. At first the German subsidiary was not connected—left out. We tried to keep up via phone, fax, and old-fashioned telegrams (!) but quickly became frustrated suffering unacceptable response times. “E-mail or die!” Only after we got hooked up via an expensive private overseas network did we feel like real Microsofties. This breakout advantage of nearly religious e-mail usage so early in the trajectory of organizational modernism contributed immensely to MS’s success. At once I made it my personal habit to respond to every mail within twenty-four hours even while on the road. The ripple effect of communication momentum proved to be an incalculably powerful tool for me personally.

  E-mail addiction was paired with the less-welcome principle of “bad news travels the fastest.” Bill was the one who had personally instilled his disgust for holding back unfavorable information into everyone. Delaying good news meant corks would be popped later; delaying bad news was a crime, hindering speedy remedies! People learned quickly, and mostly the hard way.

  There were failures and flaws to be sure. Projects were abandoned or delayed, and concepts flopped. But after all the dust settled in those early days, the company had charted an astonishingly successful course over IT territories never before conquered and into places never dreamed of, evolving MS rapidly into one of the most fascinating and successful companies in the history of modern commerce.

  Even with all the freedom I possessed running Germany, I sometimes felt myself being dragged along by the overwhelming gravitational power of the host planet. After four years, I longed to be closer to the power nexus. A chance to run all of Europe had come and gone, and a VP position to run the application group had not materialized. Lotus tried to lure me away with an attractive offer, MS fortunately countered, and I stayed put. Out of the blue, Scott Oki, my ex-boss, contacted me: “The VP in charge of the US OEM group is retiring. Would you be interested?”

  MS’s intriguing OEM business provided huge leverage for the company and was her most profitable one. Running that group demanded well-honed management skills and excellent technical knowledge of computer and OS technologies, as well as strong sales and negotiation skills. Confident I could measure up, I applied and moved on.

  THE BUSINESS

  INSIGHT THE POWER NEXUS

  “We are vulnerable and can disappear in the blink of an eye!”

  This cautionary mantra expressed by MS’s top management still resonates. In the eyes of our top echelons, beating Lotus, WordStar, and DRI in Germany, while impressive, did not matter as much as I thought it would. For them, only relentless pursuit of excellence guaranteed our future.

  As I arrived in Seattle for my new job, Bill’s philosophy and the company’s progressive execution to evolve PC technology with OEMs and independent software vendors (ISVs)—the ones who write the key applications programs needed to make a computing platform a success—was in full swing. This was my chance to have a huge impact on the growth prospects of MS, her OEM customers, and the industry in general. Trusting me with the critical assignment of running the OEM group felt good, but I knew there was a staggering amount of work ahead. I had to prove myself all over again in this new job—no laurels to rest on!

  My first encounter was with my new boss Jon Shirley, a former exec from Tandy/RadioShack who had led her PC division successfully. Jon was a class act manager with razor-sharp business instincts. A solid and astute, always-probing-for-just-the-right-answer executive of the highest credentials! For MS’s tennis-shoes-and-jeans culture, he was a bit too buttoned-up but made up for it with experience and being personal and inviting. When you talked to him, he expected you to be well prepared. And if you weren’t, he didn’t hesitate administering a nice dressing-down, employing his dry but stinging humor. Jon dwelled in a world of numbers and details. His favorite inspection area during a subsidiary visit was the warehouse. Every subsidiary had one in the days before MS’s logistics for Europe got streamlined in Ireland. His walk-throughs were as legendary as his method of spotting excess inventory. If you were discovered, he would demand an immediate explanation of what you planned to do about it. With Jon around, you always had to be on your toes!

  In our first one-on-one encounter, he immediately expressed the need for a thorough analysis and evaluation of my new crew’s performance and every single individual it contained. I liked his straightforward management style and well-meant guidance. He was direct, tough, and intense but never prescriptive.

  I had experienced this p
ersonally back in Germany when our US manufacturing operations had let us hang out to dry by not supplying products in a timely fashion—for several months. Instead of accepting the unacceptable, I decided to produce them locally, only to be caught by Jon during his next warehouse inspection. Right away he spotted minute variances in our local package designs—a touch too small and a slight color deviation. Yes, the man was all detail and always in the trenches. I got an earful and expected to be fired on the spot. Not the way Jon operated. Back in the United States, after investigating the incident, he read our manufacturing VP the riot act. I was forgiven, and he ordered me to obtain his approval before another need to replenish our supplies locally ever arose.

  In doing so, Jon neatly endorsed a principle I firmly believed in. Do not punish well-intending actions, in this case prompted by the singular purpose of achieving healthy quarterly revenue numbers. Therefore, he tolerated the violation of a long-standing policy once and replaced it with a more sensible one, setting a memorable example.

  In our unforgettable first meeting, he encouraged me to consult and discuss any OEM related issues directly with Bill Gates. Since founding the company in 1975 with Paul Allen, he had stayed close to MS’s OEM customers. Selling BASIC5 to these clients had started the company, and in his heart, he sometimes still saw himself as chief of OEM sales. Unfettered access to Bill! I was flattered. I only hoped the arrangement wouldn’t cause conflicts in the chain of command or lead to end-running manipulations. These two guys had wildly different qualities. Jon was a details fiend with an office too neat to be comfortable—typical for an operations guy. The eccentric Bill was some kind of a clutter man, all awhirl in concept, brainstorms, and books to the ceiling kept neat by the enduring efforts of his admin. My original suspicion luckily turned out to be unfounded. Having two bosses offering different perspectives helped me to function in my new position with the best degree of knowledge and insight possible.

  Let’s meet Bill next, Jon’s opposite twin—in looks and in interests. Nonassuming with a strong hint of boyish nerdiness, he couldn’t care less about his underwhelming first impression. He sported outsized glasses and began rocking metronomically in his chair the second the discussion turned technically challenging. Prescient and brilliant, Bill had an uncanny, almost Einsteinian, grasp of the universe of technology—its dimension, velocity, and business implications. He certainly knew numbers, regularly shaping them into context more meaningful than the most prepared managers when probing the depths of their intellects with challenging questions. Projections. Deductions. Logarithmic inquiries. Modern information technology was where he passionately excelled. If he accepted your opinion in the world of tech, you had gained not only his interest but also his enduring respect. More distant than Jon, he could often been spotted floating in a cloud overhead. Never to be underestimated! Leaping from topic to topic, his mind always racing in overdrive, he was less predictable. By comparison, Jon, the methodical, always reached the synthesis of any issue he pursued; Bill got there if the people in attendance stimulated his intellect.

  At age thirty-two, he was already solemnized by the surrounding aura of a visionary guru status. Complementing this was a perceived precociously shrewd business sagacity that inspired some to loathe and others to envy him. Steering the company successfully for twelve years had allowed him to forge close and lasting relationships with top leaders on the frontiers of the PC transformation. He had personally coined the company’s mantra: “A PC in every home and on every desk.” For my colleagues and me, by extension, the slogan meant “With a lot of MS software utilized on them.” Suspecting competitors found it aggressive and arrogant. For the company’s employees, it portrayed an unrelenting commitment to transform the nascent industry into an IT superturbine.

  We all believed in this transformation. In my first exchange with Bill, we therefore focused on the roles OEMs were playing in this bigger picture and what he expected from me in my new role. He opened up by saying, “I consider nurturing and fomenting the OEM customer base a key building block for our aspirations.” He then stated that MS software innovations were impelled by this customer base and their component suppliers and that this lockstep was what created a tsunami force of revolutionary information appliances. He then lectured me that neither of us could prosper without independent software vendors (ISVs). As I knew from my work in Apple, they delivered the applications that enriched these information appliances, like icing on the cake. As such, they fashioned the cutting edge needed to transform PC-based information technology into an unbeatable dynamo. “Powerless without them” sounded quite humble coming from him.

  Our discussion turned even more invigorating, inspiring, and sharply informative when he briefed me on MS’s evolving product strategies centered on the importance of making Windows a success and the challenge IBM posed in this regard. He further outlined his interest in the high-tech endeavors OEMs were engaged in and suggested we meet frequently to share freshly gathered intelligence. Hardware-driving software and vice versa ensured the insight I provided would keep him apprised of key novelties. His challenge to me: “Your new job is not just a sales and marketing job. I expect you to provide me with relevant information and strategic recommendations so I can make better decisions for the company.” The primary reason Jon Shirley had extended me unencumbered access was evident. Obviously, Bill wanted unfiltered reports and an opportunity for sharing his assessments of events directly with the person running the most profitable and strategic group in the company to date. I felt honored to receive such a refreshingly new level of trust and responsibility. And I made myself a promise to answer his calling by pairing the highest level of performance with perfect execution!

  Completing MS’s executive trio was Bill’s closest friend, then in charge of R & D for all operating systems and today’s CEO of MS, Steve Ballmer. He made up for any shortfall through sheer voltage and a personality inimitably his own. I heard people say that he looked like a linebacker with quarterback ambitions. Eventually he made that grade! Burly and nearly bald, he bristled with crosscurrents of energy. When raising his voice and booming with enthusiasm, he became easily carried away. People who did not know him well were scared or intimidated by some of his outbursts. Nevertheless, Steve remains the most intuitive people manager I have ever met. He presented himself as a confident, eternal optimist but played the compulsory doom-and-gloom card brilliantly—effectually offering you a contrary, chilling dimension. He had worn many different hats in the young company’s history. Bill’s “fixer” was one. Supposedly ever loyal, he had straightened out the thorniest predicaments. Holding degrees from Harvard in mathematics and economics, this chest-thumping showman was another numbers guy at heart. Numbers, finally, were what grounded him. I quickly learned how to use the numerical to reach him. The clear absolute language of numbers and their certainty and involuntary warmth had the effect of calming Steve and of speaking directly to his careening sensibilities.

  Over the years, I had gotten acquainted with our exec trio through frequently scheduled review meetings. An ironclad practice that kept the company on track and focused and top management in the loop. Formal and well-structured, these meetings were complemented by casual gatherings where our top guys informed us about sea changes they’d spotted shaking up the industry. Bill’s updates offered a wealth of insight into PC manufacturers’ affairs, their upcoming product announcements, and the horizons of hardware component manufacturers. They also caught up with MS software competitors, their expected directions and potential strategies. Bill was uncannily well-informed, and his alchemistic industry foresights nearly always came through. He used these gatherings as an effective method to foster trust and ignite confidence in MS’s destiny. Participants left pumped up, filled in, and utterly convinced. Leadership at its best! His only shortfall was a virtue called patience. I was in good company.

  Steve kept us abreast of operating system developments, the latest feature changes, embarrassing delays, an
d joint development activities with IBM. He considered himself the guardian of that company’s loyalty, ensuring her support for at least MS-DOS and OS/2—a new operating system jointly developed with IBM to replace DOS and MS Windows. What surprised me the most was that the trio viewed IBM simultaneously as a vitally important collaborator and a potentially deadly cobra! In the mid ’80s, IBM was the largest software company in the world. The bulk of her software was meant for use on her mainframe6 platforms. Nothing prevented her from challenging us with alternative PC software. MS was loaded with tons of talent brimming with ambitions but was tiny and with rather scant resources compared to IBM. The top guys rightfully worried.

  Another competitor we watched and examined closely was Apple Computer. As she went from her earlier platforms to the Lisa workstation and the most innovative Macintosh (Mac), Bill admired her. Nevertheless, she constituted another formidable competitor well ahead in operating system (OS) design. A true threat to the IBM PC platform and potentially MS’s livelihood! We nonetheless supported the MAC with advanced office productivity applications such as MS Excel and MS Word, an experience that helped us when we later adapted them for MS Windows.

  No one in MS ever quite understood why Apple didn’t license her Mac OS to other manufacturers. Back in ’84/’85, Bill suggested this several times to Steve Jobs, one of Apple’s founders, who was in charge of Mac development. If he had acted upon that recommendation, he would have radically altered the PC landscape, MS’s future, and my career.7 Jobs disagreed with Bill because he wanted end-to-end control over all aspects of Apple’s products and despised what made MS so successful—freely licensing OSs. After Jobs got ousted in 1985, the new team did not pursue this unique opportunity either and stayed on Jobs’s course until Mike Spindler, my ex-boss, took over as Apple’s CEO in ’93. Lucky us!