Injustice vs. Innovation

Thursday, August 02, 2012

I have heard that anti-trust law is at least partially responsible for the decline of innovation coming out of Microsoft, and I agree that it is.

But might another form of injustice have also contributed? Vanity Fair's Kurt Eichenwald makes a compelling case:

At the center of the cultural problems was a management system called "stack ranking." 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. The system--also referred to as "the performance model," "the bell curve," or just "the employee review"--has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor.

"If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review," said a former software developer. "It leads to employees focusing on competing with each other rather than competing with other companies."
Predictably, morale suffered and interpersonal dynamics became badly skewed, as Eichenwald shows in detail.

It is never fun to read about failure, but it is often instructive, and it can be interesting. Eichenwald's story is worth reading on both counts.

-- CAV

8 comments:

Anonymous said...

Gus,

I just finished reading that article. It was very disturbing to me. And it also saddened me. That company has been reduced to a giant bureaucracy; its people turning into brown nosers. If one has to worry about Manager A liking you, logically one wouldn't make the extra effort.

I do think the anti-trust mess of the 90's did damper Microsoft's innovation. The fact that they invented the e-book concept is telling. Gates refused to pursue it further. What a shame.

This article shows to me lacking rational philosophic principles can slowly destroy a once vibrant, innovative company. Now Gates wastes his energy and money on silly leftist projects. I think he acquiesed way too easily. To me he looks ridiculous parading around the world talking about some silly fad of the moment.

Bookish Babe

Gus Van Horn said...

Bill Gates and his company are turing into textbook cases of good premises driving out bad.

Snedcat said...

Yo, Gus, you write, "Bill Gates and his company are turing into textbook cases of good premises driving out bad." Do you mean bad premises driving out good?

Gus Van Horn said...

Yikes! Yes, I did. Thanks for the catch.

Steve D said...

When I read these sorts of articles, I naturally become a little suspicious and wonder if the stories are really true. The outcome of stack ranking is so easily predictable that one has to ponder what on earth would possibly motivate upper management to implement it. In my company, each manager is given a certain amount of money to hand out in bonuses and they do have to do some type of ranking but in this case at least there is no set way they have to do the ranking; only they must be cognizant of the total amount. (I.e. if they decide to rank someone very high, there will be less left over for everyone else.)

Gus Van Horn said...

I wish this weren't true, but it isn't the first (or even the second) time I've heard that MS was using stack ranking like this, and I don't exactly go out of my way to follow news about Microsoft.

Your company's system sounds far better.

Anonymous said...

Bookish Babe wrote:
I do think the anti-trust mess of the 90's did damper Microsoft's innovation. The fact that they invented the e-book concept is telling. Gates refused to pursue it further. What a shame.

When I was training as an IBM tech in the early 80's, one of the guys there, who had started with Vector Graphics, was hired away by IBM, and then transferred to Entry Systems Division said that IBM actually invented the "Personal Computer." In 1972. And decided not to pursue it because they were afraid it would cut into their larger computer market. How right they were...

Looks like any sufficiently large organization will inevitably do stupid things to compromise their survival. Maybe that's why the Washington DC route looks so much more attractive?

c. andrew

Gus Van Horn said...

I think every organization will make mistakes and will face challenges due to its size that small companies don't.

However, I think the reason really bad behavior like that is so common is philosophical. I can see stack ranking appealing to both rationalists (because it's mathematically-based and "scientific") and pragmatists (for whom the algorithm would "work", and who don't believe there are objective principles with which to judge others).

Our culture is rife with such nonsense that it stands to reason that many businesses end up being affected.