Resolve and Fortitude : Microsoft's ''SECRET POWER BROKER'' breaks his silence (2 page)

Having zero experience running a subsidiary and considering the daunting challenges we faced, I was forced to learn quickly on the job. To accomplish our goals, I encouraged employees to experiment boldly when exploring new opportunities. I solicited unorthodox ideas and solutions, and after careful critique, we courageously applied them to the contests at hand. It was a golden and compelling time to work for this entrepreneurial enterprise! We all enjoyed the abundance of freedom we had serving customers. If bad decisions were made, people just learned from their mistakes! As long as the offense was inspired by an honest objective to improve the company’s performance and services, forgiveness trumped.

I experienced this when we started selling directly to large enterprises. Assuming that bypassing our distribution partners would cause retaliation and bad blood, my boss was not supportive and recommended against it. Convinced we had to try, we did it anyway! Three months later, our success made all other European subsidiaries jump on the bandwagon. Taboos existed only to be broken—I never got a reprimand. I intuitively realized that my boss, like myself, wanted empowered and impassioned employees who perceived their jobs as vital missions and pursued them with unrelenting energy. In the true spirit of the early American pioneers, instead of winning the West, we set out to dominate the information technology (IT) world.

Lessons learned during my German military service and in former management training sessions helped me master my new assignment. As I observed how the company was run at the corporate level, an unmistakable metric of parallels surfaced. Her leadership was definitely based on the principle of
Auftragstaktik
—a mission-oriented command philosophy that establishes a leadership style
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based on general guidance as opposed to prescriptive supervision. It endorses soldiers’ (or, in this case, employees’) initiatives and encourages independent decision making at all levels. Yes, I know Germany lost two world wars, so on the face of it, her military practices can’t be superior. Yet the core elements of this empowerment philosophy are easily applied not only to the military but to reengineer an enterprise as well.
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The premise of this mission-oriented command philosophy has its roots in the early nineteenth century after the Prussian army experienced painful losses during the Napoleonic wars. Her generals were forced to analyze the reasons behind the multiple defeats, starting by questioning the petrified command structure of the army hierarchy they had created and lived under. They were shocked by what they found. Despite nearly exponential increases in battle complexity and the number of troops deployed, commanders were leading, in centuries-old custom, from behind. At a time when the scope of engagements made all-encompassing real-time observations no longer feasible, they had to rely on an ancient messenger system—on foot or on horseback—to obtain information needed to direct and deploy their troops. With this system being unreliable and lacking speed, commanders could therefore neither maintain sufficient situational awareness nor react fast enough to changing battlefield conditions.

To make things worse, fighting men—per army doct
rine of that time—weren’t empowered to deviate from previously giving orders. You risked your life if you did not follow them unabatedly. When battleground conditions changed and communication failed, soldiers consequently dared not to react except to bolt for their lives. Judging the engineering of their carefully crafted battle strategies as Prussian thorough, the investigators deducted that, by allowing situation-conscious subcommanders not enough autonomy to operate independently, failure, from cumbersome rigidity, was a built in inevitability.

Over the next fifty years, the elite of the Prussian generals—Scharnhorst, Gneisenau, Moltke the Elder and Clausewitz—set out to elevate command behavior to the demands of modern combat. In peacetime, when their armies were bound by a system of strict discipline, management was effective. In wartime when leadership beyond was required, the system broke down. In a 1990
Harvard Review
article, John P. Kotter correctly points out that management deals primarily with complexity, while leadership first and foremost addresses change. The Prussian army, with its deeply layered structure and proven regulations, was highly capable at dealing with the former. Generals, like a lot of corporate executives, excelled in complex managerial tasks such as planning, budgeting, organizing, staffing, and controlling cost. Yet most were ill equipped to align and inspire people toward a common goal and trust them enough to adjust independently in the heat of a battle without taking their eyes off the desired objective.

To change such a deeply entrenched command system was a formidable task. Nobody wanted to endanger the basic disciplinary structure an army (or a corporation) requires to function. Firm belief in a religiously fixed, hierarchically command discipline—working well in peacetime—lay squarely in the way of modernization. Even for these powerful Prussian figures, mastering the desired behavioral makeover presented a daunting balancing act. They never let go! Two generations went by before their work paid off and laid the foundation for winning the Austro-Prussian War of 1866 and the Franco-German War in 1870–71. Later their doctrine enabled the successful Blitzkrieg campaigns during the early phase of WWII.

Only in the late twentieth century, following the collapse of the Soviet Union, did the Anglo-American army officially, yet hesitantly, adopt an Auftragstaktik-like leadership style. With the marine corps being ahead of other branches in the US military as it historically relied on the commander’s intent as a guiding principle for carrying out orders, specifying the desired result while leaving open the method of execution. Nevertheless, exemplary, forward-looking generals—Patton for instance—already studied and applied the concept extensively during WWII, contributing both to his success and to the controversy of his legend.

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.