This Vanity Fair Article Blames Microsoft’s Lost Decade on its Employee Review System –
I Hated that System But I Think the Real Problem Was Something Else

Continuing a bit of a tradition of more “reflective” holiday articles, today I thought I’d share some long-simmering thoughts on Microsoft, especially in light of various developments this year (including the recent departure of Steven Sinofsky).  Along the way I’m going to share some of my own experiences that I’ve been meaning to write about.  I think those will give my broader point some “flavor.”  This is a longish post and probably is better described as an “article.”  I think this topic, overall, is relevant to ANY professional enterprise, but the quality of my thoughts is for you to judge as always.

The Vanity Fair article above got a lot of attention this summer.  In it, the author exposes a culture of infighting and rivalries at Microsoft, and he attributes Microsoft’s past decade of struggles to that culture.  The article continues from there and attributes that culture to the performance review system, specifically the practice of “stack ranking.”

I disliked *both* the 2010 political environment at MS *and* the stack rank system, so when a colleague of mine told me about this article that linked two of my least-favorite things from Redmond, I had to buy the magazine and read the whole thing.  But before I share my opinion, we have to explain what stack ranking is.

Stack Ranking – Grading on a Wicked Curve


For about half of my 13+ year career at MS, I was a manager, so I have firsthand experience with this system.

Twice a year, every team at MS would conduct an exercise where each member of the team was ranked from “most valuable member of the team” to “least valuable.”    This was often informally referred to as a “lifeboat drill” – in the sense that “if we only had 10 spots in the lifeboat and 15 people, who would we drop?”

Merely ranking people is one thing, but what was DONE with that ranking was the “lifeboat” part.  Roughly speaking, the lowest-ranked 10% of the team was then told they were failing – this meant no financial rewards for them that year, but it also made it difficult to change teams, AND often put them on a short road to being booted from the company.


Furthermore, another 10% or so were told they were underperforming, similarly given no bonus or raise (or stock), and put in a very uncomfortable spot.  The implicit message to those folks was basically “hey, as soon as we get done weeding out the bottom 10%, next time YOU will be in that group, so kick it into gear.”

So twice a year, we’d tell 20% of the workforce that they were in serious trouble.

But there were often many people in that 20% who were actually performing quite well.  If by chance or by skill, a manager had managed to assemble a fantastic team, 20% of their people would be told, twice a year, that they were underperforming – even though they were valuable members of the team.

It was downright stomach-churning, as a manager, to apply this system.  Year after year I would tell good, valuable, smart, hard-working people that they weren’t cutting it.  Eventually I decided to stop being a manager.  At one point it was hinted that I was slated for the next big manager job on the Excel team but I walked away.  And then on a couple occasions during my last assignment (working on the PowerPivot team) I was offered a manager job but declined.  I was done with it.

When you have a system that punishes good teams, and one in which qualified people turn down career advancement in order to avoid your draconian system, something is very much amiss.  But while I think that is *a* big problem, I don’t think it was *THE* problem, not in the way the Vanity Fair article portrayed it anyway.

To explain what I mean, I need to describe something that I think was very GOOD about Microsoft.

The Cult of the Right Thing

“I never gave anybody hell!  I just told the truth, and they thought it was hell.”
-Harry S. Truman

What do you think of that quote?  Sound like the words of a jerk?  The words of a good leader?  Would you put that quote on your office door, like this guy?


This Guy Has the Truman Quote on His Office Door

Don’t answer those questions yet, hold that thought.  First let me tell you about the Cult of the Right Thing, which is, after all, the point of this post.

When I got to MS in 1996, I stepped into a truly unique little world.  At the time there were about 15,000 employees in Redmond, and the company was about 20 years old.  The vast majority of those 15k employees were engineers – people with degrees in Computer Science, mostly, but also a bunch of Math, Mechanical Engineering, and Electrical Engineering graduates (oh, and dropouts of course).

We were a company of nerds, in other words.  And there’s a funny thing about nerds:  on the whole, we’re absolutely obsessed with Correctness.  With Precision.  With Justice.  With the Truth.  Compared to the rest of the population, nerds have a fixation on these things that borders on unhealthy.

I’m not saying that others do NOT care about these things, only that for nerds, these things have a FAR more outsized importance – if you’re a nerd, you’re nodding right now.  If you’re not, you may still be very smart, but you probably aren’t a nerd Smile

imageIn meetings, debates, and discussions, The Right Thing was sacred.  Sure, everyone went into debates with preconceptions and preferences.  And you’d represent your viewpoint, vigorously, while other people did the same for their viewpoints.  The vibe was a lot like the adversary system in American courts – each attorney presses hard, but the prosecution and defense are often quite friendly to each other outside court.  The Right Thing wasn’t personal, at all – it was about the process, not about the people.

The Cult of the Right Thing had unspoken rules.  There were no dirty tricks allowed.  No lying.  No obfuscation or smokescreens.  No hijacking or distracting from the core issue.  You played hard but you played fair.  You weren’t allowed to ignore conclusions that had been reached – whether the ignorance was willful or accidental, it was forbidden.  You could revisit conclusions if new information came to light of course, but if you just unilaterally reverted to your old stance, or forgot about the agreement, you paid.

The reason these rules were unspoken?  Simple – we all arrived with them pre-imprinted.  The culture merely reinforced and nurtured rules we all possessed anyway.

With each “faction” pressing their case aggressively but fairly, you tended to learn a lot, quickly.  New information or implications came to light.  And usually, as a result of this process, the Right Thing emerged.  Once The Right Thing became clear to the room, you wouldn’t dare oppose it.  If you were wrong, you knew it, and you voluntarily (and often happily!) changed your mind.

Of course, you also knew that your personal reputation would suffer greatly if you became known as someone who would oppose The Right Thing.  Reputation meant as much at MS as it did anywhere else, but reputation was in large part based on how devoted and effective you were at Finding the Right Thing.

The Right Thing’s Gatekeeper:  Brutal Nerd Interviews

I’ll say this right up front:  I was lucky to get in the door at Microsoft.  My full day of interviews in Redmond, back in February of 1996, started with two interviews in Windows Test.  Those two guys tore me to pieces.  They were interviewing me for what was basically a programming job, and I was a “soft” coder – I’d scrupulously avoided programming in college whenever it was remotely possible, and it was surprisingly possible to get a Computer Science degree without, you know, programming all that much.  So that’s what I had done Smile

I was used to skating by, in other words, and these guys weren’t asking me the vague sorts of questions I’d been asked everywhere else I’d interviewed.  They asked me questions from which it was impossible to hide – I either knew how to code that hash table or I didn’t.  And while I understood the principles thoroughly, I simply couldn’t DO it.  I was sweating.  Took off my blazer and literally loosened my tie.  They sent me packing, and rightfully so.  The sweet taste of total failure was a rare thing for me.  For me, “blowing it” had been, say, getting a C+ on an exam maybe once a year.  Those guys gave me an F, and I knew it before I left their offices.  Got my attention.

imageBut luckily for me the day was young and I had a second chance with the Office team.  Furthermore, the team I interviewed with within Office, I would later learn, had some of the softest interview standards in the division.  That was a very lucky break for a mentally lazy “skater” like me.  I sneaked in through the Death Star’s thermal exhaust port.  I skimmed the trench and everything.

Anyway the point here is this:  in general you didn’t make it through these interviews without being on your game, and without being an epic nerd.  So the folks who made it through the door were very, VERY likely to have a borderline-unhealthy fixation on The Right Thing.

Microsoft grew slowly.  The new hires readily assimilated into the Cult of the Right Thing.

I remember, in those early days, how continuously the interview standards were emphasized.  At division wide meetings, Office leadership would say things like “we need to grow, and that means more people.  But we need to keep the quality super, SUPER high folks.  Do not lower the bar at all.”

Over time I came to understand that the interview bar, if properly maintained, was one that I would only have passed maybe 25% of the time.  In 1998, when I transitioned from Test to Program Management (PM), I realized that the 1996 version of Rob Collie would have had a ZERO percent chance of meeting the PM interview bar.  Again, I’d managed to “sneak in” – a PM job had opened up for which few people were qualified and even fewer existing PM’s wanted.  (It was the Program Manager job for Windows Installer v1, and no one in Office wanted to be the PM for an installation engine except me).

It probably sounds like I am being hard on myself.  But what I’m saying is quite simply the Truth, that thing I hold disproportionately sacred.  I WAS lucky.  I WAS overmatched.  Can you imagine what it’s like working every day in a place where you inherently KNOW that you are overmatched?  Maybe you have some experience with something like that.  The flavor of Old Microsoft though was pretty unique.

You see, when you’re frequently wrong, as I was in those early days, the Cult of the Right Thing was murder on your self-image and mental health.

The Cult of the Right Thing Damn Near Broke Me

imageHere’s another word to describe the Cult:  it was Relentless.  Even in Office, which was a pretty friendly environment, you could find yourself in places where your shortcomings were on display all day, every day.  (Back then, Windows was a much nastier place to work than Office, but that’s a tale for another day).

In 1999 I landed in such a place within Office, and it quickly became my own personal hell.  The product I was working on never shipped, so there’s no point in going into the job itself.

What IS relevant is this:  for 6-12 months, I was nauseous, to the point of gagging, after EVERY meal.  But the nausea attacks weren’t limited to meals – they would hit me, for instance, every single morning as I drove in to work.  In this new job I was overmatched and unable to produce the Right Thing.  I knew it, my coworkers knew it, and my management team knew it.  Heck, entire other teams I worked with knew it too (Outlook and Exchange, I’m looking at you guys here).

In response to my ongoing failure, the leadership brought in Zeke Koch.  Zeke was a rockstar, a High Priest of the Right Thing, and he quickly started moving things forward (after many months of zero progress with me driving those same projects).

In hindsight, Zeke was actually quite friendly and quite nice.  But he was maddeningly Correct where I was not.  And he was Relentless in his pursuit of the Right Thing, which meant he was very bad for my ego, which was already on the ropes.  He was doing what he was supposed to do, he was doing what was Right, and he was even trying to teach me, even though he was nominally my peer – someone with no responsibility to help me (and technically my competitor in the stack ranking).  He really was a great guy.

But out of reflexive self-preservation I classified him as a jerk for the first six months.  I adopted the stance that I was too Nice and Microsoft was too Mean.  I started daydreaming about going home to Florida and not coming back.

But a funny thing happened in the fires of Mount Doom.

There, at absolute rock bottom, I started learning.  I started changing.  I started… growing.  And begrudgingly at first, then later with grace, I credited Zeke with inspiring those changes.


WWZD – What Would Zeke Do?  From the Acknowledgments in My Book.

Being “Awake”

It’s a weird thing when someone like me, accustomed to success over my first 22 years of life, starts discovering just how much he’s been missing, just how badly he’s… sucked for his entire life Smile

I’ll keep this short:  despite all my past “success,” I had been sleepwalking.  Untested, undisciplined, and unfocused, I swear I had been no more than 5% as effective as I could be.  *I* was the problem, not Microsoft and certainly not Zeke.  I was just being pushed to be better.

I started thinking more completely.  More precisely.  I stopped subconsciously “mailing it in.”  I switched on and stayed on.  I liken it to a steel bar that got sharpened into a sword.

I got promoted into a lead (management) position working on Excel 2003 and related products.  My 2-year reputation for ineffectiveness fell away.  Management recognized the dramatic changes and it was The Right Thing to give me a shot.  I’d mercifully avoided being tagged as that 20% class in the stack ranking even during the dark times, simply because there were other people on the team who were perceived to be doing even worse – if it had been a team full of Zekes, I may have not made it.  Arbitrary luck.

I wasn’t done though.  Far from it.  Which brings me back to this guy:


David Gainer

Oh my.  David Gainer became my manager a few years later, after Excel 2003.  At this point in my career I was simultaneously high on myself and down on myself.  I still thought I was better than I actually was but my self-confidence was still in the toilet.  In short, I was often confident when I was wrong and reluctant when I was right Smile 

How do you “fix” someone like that, with that impossible mix of opposite problems?  I dunno, but Dave did an awfully good job of both.

The lack of self-confidence was probably the bigger problem.  Check out this sign that he put on my office door, facing out to the hallway:


This Was Who Dave WANTED Me to Be – I Was the OPPOSITE of That at the Time
(It’s a Stalin Quote)

I think Dave deserves the lion’s share of credit for revitalizing the Excel product. Excel 2007 never would have been what it was without his unflinching drive.

It turns out that the fixes to both of my problems were related.  Dave taught me how to be Methodical, Analytical, Focused.  And simultaneously he showed me what the results looked like when you followed his philosophy.


Also from the Acknowledgements in My Book, One Entry Prior to Zeke
(Someone Else Recently Told Me That They Play WWDD All the Time)

In short, Dave’s approach was PHENOMENALLY effective.  His version of The Right Thing was so Right that it made the “Old” Right Thing look… Wrong.  Suddenly I could look around and see how many teams were doing ridiculous things but making it look like they were doing good things.

Microsoft was already a very different place by then.  The Right Thing was no longer quite so sacred.

Head Count Explosion

I would make the case that Microsoft’s “Lost Decade” was the result of its own success much more than it was the result of its completely evil review system.

In the late 90’s, as a result of explosive growth in Office and Windows revenues, Microsoft was starting to amass an enormous amount of cash in its bank account:


By 1999, Microsoft already had $20 Billion just sitting around.  OK, it wasn’t sitting around.  Microsoft had a sizeable team of money managers who traded the markets every day, managing Microsoft’s cash hoard as if it was some private hedge fund.  Microsoft had its own miniature trading floor.

But the big MS stockholders didn’t like that.  The big shareholders were (and are) sophisticated investors in their own right, and they didn’t own MSFT stock so that MS’s investment team could manage their money by proxy.  No, they owned MSFT stock because they expected Microsoft to invest that $20B back into the MS business.  To build NEW productive businesses, in other words, that would return more on that money than any traditional market investment would ever yield.

In other words, the shareholders told Bill and Steve:  “Make the stock go UP.  Fast.  Take that cash hoard and deploy it.”

Oh, and deploy it they did:


In my first year at MS, it looks like we added about 2,000 people.  In my second year, it looks like we added close to 5,000!  We added nearly that many in the next year, and then, in 1999, it looks like we added close to 10,000!

20,000 people in such a short time frame.  How does that happen?  Up until this time, most new MS hires came straight from college – straight from the safe, Correct environment where 1 + 1 = 2.

There was no way to hire 20,000 people in such short order straight from college.  A lot of that growth came from other sources instead – experienced industry hires for one, but also, MS went on an acquisition binge, buying tons of companies outright.

Rob Are You an Elitist Snob?

imageI sure hope not.  I think there were a lot of good things that came in with that hiring wave.  Dave Gainer, for one, was an experienced hire from Andersen Consulting (soon to be Accenture).  That same academic bubble that fostered the Cult of the Right Thing also fostered something else:  the We Are Completely Out of Touch With Reality problem.  Let’s call it WACOTWIR for short Smile

So a lot of good, tangible, real-world experience came in.  I benefited a LOT from that personally – Dave had radical ideas like “maybe we should do the things that customers keep asking for, rather than always just making up cool ideas that we think the customers SHOULD want.”  Seriously, that was pretty damn radical at the time, as silly as it sounds.  (Another radical idea of his “let’s not be one-fifth invested in 5 different features and have none of them satisfy customers, instead let’s build one complete feature that rocks.”)

But overall, the dilution of the culture itself was a HUGE blow.  And I don’t have to impugn the intelligence of the incoming people in order to say that.

These people came from places that were NOT wall-to-wall nerdville.  They came from normal corporate America – places where a nerd could be much smarter then 90% of her peers, much less tested than she would have been at MS.  Places where that same nerd had to learn to play normal office politics.  Places where The Right Thing did NOT reign supreme.

I often imagine what would have happened to me if I had taken a different route.  I could have become the resident nerd at a company full of non-nerds, climbed the ladder there, achieved some degree of seniority, and then been swept up in Microsoft’s huge hiring wave.  Given my position at my former company, I would have been hired several steps higher up the MS org chart than where the real Rob was.  Given my own fiefdom from day one.

Would I have had the humility and introspection to recognize the reality of my situation?  No way.  I would have wondered what the heck was wrong with these argumentative MS jerks, and started hiring people I could get along with.  People who, um, agreed with me a lot.

And that is exactly what happened, on a grand scale.

The Cult of the Right Thing died.  It was quietly replaced by the Cult of Proper Appearances Sad smile

Two Examples

Here are two firsthand examples from the Cult of Proper Appearances.

image1) A new executive joined the company and was placed in charge of a large MS division.  The marketing director already in place in that division was a brilliant guy with a long track record of success, but he dressed like a nerd rather than as a stylish slickster.  The new executive immediately disliked the marketing director and made disparaging comments about him to other execs, equating his style of dress with his effectiveness as a marketing strategist.  He made no attempt to understand his track record.  The die was cast based on appearances alone.

2) A friend of mine went to work for a rising star on one of the online services teams.  The rising star liked to boast that she was the youngest person ever at Microsoft to make it to Lead Program Manager.  She literally gave the following career advice to my friend:  “Never work on anything unless the VP of our division is personally aware of it.  Also, never finish projects.  You should only start projects because most of the exec-level credit goes to people who started the projects.  Make sure someone else gets stuck finishing the project so you can move on and start another.”

I’m not sure whether that reflects a total lack of moral fiber on her part or just an uncommon honesty about the state of affairs, but either way it represents a cancerous environment.  (Actually, it was both – I have many more stories about that person and that team).

The Punchline

My personal theory is that Right Thing cults of a large size are very, very rare.  I’ve never experienced one in “the real world,” that’s for sure.  I think it was a rare historical accident, that something like Old Microsoft (and Apple and Google) came to exist.  And I think it’s just the natural life cycle of successful organizations that eventually they dilute their DNA.

So if you ever happen to find yourself in one, don’t be in a rush to grow it too quickly.

And if you ever leave one, be prepared – you are going to look like an alien in the outside world.  A jerk.  Don’t expect others to understand where you’re coming from or that they will play by your rules.  Be grateful for the experience that shaped you but be prepared for an adjustment.  You will look like something very different on the outside.

The most interesting question of course is how to create one.

A Few More Points

  1. This is all really only clear to me in hindsight.  I did not know that the Cult of the Right Thing existed at the time – it felt completely natural to me.  Furthermore the transition to the Cult of Proper Appearances happened subtly, I only see it when I fast forward several years at a time, retrospectively.
  2. The change is a matter of degrees.  There was definitely some Proper Appearance stuff going on in 1996, and there are still many pockets of Right Thing going on today.  It’s not binary, but I’d say MS went from 70% Right Thing to 30% Right Thing.
  3. Never count MS out.  The Vanity Fair headline used the word “felled” like MS is dead.  Hardly.  They are still very, very formidable, especially in specific businesses.
  4. The stack rank infighting described in the Vanity Fair article is much more rampant at higher levels.  In my experience, the “leaf level” employees were generally still quite friendly and cooperative with each other despite the stack rank pressure.  Two factors behind this:  a) the higher up you went, the smaller the stack rank pools of comparison became and the more personal things as a result  and b) at higher levels you naturally find more ambitious people, AND people who were more likely hired in externally (people who weren’t indoctrinated into the Cult of the Right Thing).
  5. The demise of stock option wealth also played a role.  Early on, we were all getting rich.  It didn’t pan out for me – I joined too late – but in 1996, even low-level employees were retiring with millions after 7 year careers.  A rising tide lifts all boats and fosters a more community-focused vibe.  By 2000 though everyone knew that stock options were gone, and now the only way to become wealthy at MS was to make it to Partner.  A certain kind of individual took to that challenge more enthusiastically than others.  See the previous note.



Hmm…  “Sources.”  Were those sources Acolytes of the Proper Appearances,
or Acolytes of the Right Thing?  It is a Crucial Difference.

Steven Sinofsky left Microsoft this month.  It was a huge shock.  Lately, rumors are that he was actually fired by Ballmer, and fired for not being a team player.

That’s entirely plausible.  But even if we assume it’s true, was it the… Right Decision?  I have no idea.

I met Ballmer once, and I was struck by how nice he was.  A lot nicer than BillG.  I got the impression, from that meeting and over the following years, that Steve might actually be a really nice guy, and that his biggest sin might be that he cares more about MS employees than what is healthy for the CEO of one of the world’s largest companies.  I personally like this theory a lot.  It has a feelgood component.

And Steven…  well, I admit that I was always a little scared of Steven, who I interacted with quite a bit in the late 90’s.  A frightening intellect with a sharp wit and a sharp tongue.  But he, too, is probably a lot nicer than even I believed.  Coincidentally, I sent him an email about ten days before he left MS, and he responded… twice!  As far as Steven is concerned, I was “little people” when I was at MS and I’m still very much “little people” today, but he took the time to respond to me while he was rehearsing for the Win8 launch demos.  The guy probably gets 3,000 emails a day.  If he responds to me like that, he responds to lots of people of similar “little’’ stature.

So I can’t just examine these guys’ characters and say “yep, it was Steve,” or “yep, it was Steven.”  And I suspect that anything we read in the press has the same “oversimplification” angle to it that the Vanity Fair piece exhibited.

Let’s take the “not a team player” accusation for a moment.  If Steven were resisting MS-wide cooperative efforts, I would want to know what those efforts actually were.  One of the rumors is that Steven wouldn’t just outright convert Windows 8 into a pure tablet experience, and that he insisted on retaining a Classic mode, for traditional PC form factors.  If that’s true, well I gotta say I’d side with Steven.

Point is, there are good collaborative efforts and then there are dumb ones.  Steve insisted, for instance, that Bing originally be tied to Windows, and named Windows Live Search.  When you’re trying to compete with Google, a dry and awkward name like Windows Live Search is a huge liability.  Which is more important – integration and cross-division collab, or success in the Search space?  After 2-3 years limping along with the awful name, Steve relented and the product was renamed Bing.

I have similar thoughts about Microsoft’s efforts in the Mobile BI space.  Power View, for example, runs on Silverlight, which means it doesn’t run on iOS.  If the BI teams weren’t required to salute the Windows flag, maybe they would have made a different (and better!) decision.  Several years of ceding the Mobile space to competitors – was it worth it?

Sometimes you have to ignore what everyone else thinks you “must” do, and do the Right Thing.

So it might have been Steve pressing for the Right Appearances, and Steven pressing for the Right Thing.  But it might have just been old-fashioned infighting too.  Pride and empire building.  And SteveB had to stop it.

I really don’t know.  My only point is that there are two different kinds of “not being a team player.”

Which brings me full circle, back to Dave and his Truman quote:


“I never gave anybody hell! I just told the truth, and they thought it was hell.”

That quote represents a defiance, a holdover from the era of the Right Thing, still pushing back, ever resisting the era of the Right Appearances, which too often hides under the banner of “team player.”  Fight on, Brother Dave!

Dave used to put that on his door as a rallying cry for the Excel team – a pocket of Right Thing retro-rebels.  I don’t know if he still does it, but it wouldn’t surprise me.  (He’s back in Excel now, too!)

Thing is, in 1996, such a quote would have been much less novel, less necessary, because everyone would have just nodded and said “duh.”

They would have thought it was the Right Thing.