Vanity Fair contributing editor Kurt Eichenwald has taken a look at Microsoft's turbulent history and its mixed management decisions that have led to the failure of some products. Eichenwald interviewed former employees and obtained access to internal records and emails to paint a picture of life at Microsoft under Steve Ballmer, the company's CEO who famously laughed at the introduction of Apple's iPhone. Eichenwald details a management system known as "stack ranking," a method that existing and former employees describe as destructive and an innovation stifler.
Stack ranking is a process where each business unit's management team has to review employees performance and rank a certain percentage of them as top and good performers or average and poor performing. One employee claims it leads to colleagues competing with each other rather than focusing on competing with rival software firms, as out of a group of individuals some would have to be given poor reviews to match the method.
"Windows was the god—everything had to work with Windows."
This system isn't the only issue inside of Microsoft though. Eichenwald claims the company's focus on Windows and Office has prevented the firm from launching products. One in particular, an e-reader prototype that was ready in 1998, ended up being folded into the company's Office software. The group responsible for the e-reader struggled to adapt its touch-based software into Office, that, even today, is focused on mouse and keyboard input. Steve Stone, a former Microsoft executive, reveals that this loyalty to Windows and Office prevented Microsoft from adopting emerging technologies. "Windows was the god—everything had to work with Windows," says Stone. "Ideas about mobile computing with a user experience that was cleaner than with a P.C. were deemed unimportant by a few powerful people in that division, and they managed to kill the effort."
The revelations aren't surprising. The company's focus on Windows and Office over the years is still evident today, where Microsoft is betting on desktop and mobile computing inside of one operating system: Windows 8. Microsoft is also bundling Office 2013 into Windows RT to help boost its upcoming tablet sales, clinging on to the hope that consumers will opt for an Office and Windows combo. Microsoft's mismanagement of projects and employees, one that former executive Jim Allchin described as "losing our way" in a leaked memo, is well documented in the form of Windows Vista, Kin, Zune, and Courier — all promising products that either struggled to make it to market or were simply too late to compete. Microsoft's next decade will be the most telling as the giant tries to turn things around in the consumer space with Metro, but if the management mishaps continue then it could prove to be harder than expected.