Resolve and Fortitude : Microsoft's ''SECRET POWER BROKER'' breaks his silence (3 page)

I had experienced this personally 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 BASIC
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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, and 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 mainframe
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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.
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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!

To keep the troops alert, Bill and Steve were fond of depicting an atmosphere of chilling paranoia, of predators waiting to devour us. Monsters in the darkness, a competitor du jour—IBM, Lotus, WordStar, DRI, any of them. Their warnings instilled far more than merely in-depth comprehension of the company’s goals and objectives. They made certain we stayed on our toes, putting competitors on notice while vigilantly attempting to predict their next moves. But the wildfires of fear and obsession sputtered for me at times. The rants became a bit theatric, a match in the wind. The German-born mathematician would have preferred more realistic and analytical evaluations, and many of my colleagues shared my belief. To inspire us to jump in the trenches and blaze away as if our lives depended on it, the top guys led us to believe an army of dangerous Huns was always advancing over the horizon, fully intent on annihilating us. Competing for our execs meant keeping enemies constantly in sight—the favorite tactic from their portfolio of persuasion. The only one! Fearful explicitness was their form of communicating competitive dangers to all employees, painting competitors in vivid black and white; shades of gray did not exist. Did this gladiator goading induce ever-greater aggression and anticompetitive behavior among the foot soldiers? I might never know.

CLEANING HOUSE

“We have an unfair advantage, and we intend to keep it that way.”

This is how VP Jim Harris, the predecessor in my new job, described how he had run the business. I was appalled and wondered what else was wrong with him or my new group. By the spring of ’87 MS had gained a dominant position in the OS market for IBM PCs, and I didn’t believe a market leader needed to express such arrogance when dealing with clients. Yet Jim, the entrenched pit bull—as some called him—insisted.

This intense sales executive had joined MS from Intel in ’83 and, through grit, charm, and exhaustive effort, developed a healthy $50 million OEM business for the company. However, my first meeting with him surprised me. Not only had he cleaned out his desk, but he also indicated his desire to stay at home for the next three months, preparing for his move to a new destination. Sure, he would take my calls and make introductions to key customers, but otherwise, he would be hands off. I was tickled by his confidence. Retreating so quickly nevertheless felt strange!

Getting acquainted with my new colleagues and charges and fully coming to terms with policies and procedures of the OEM branch was next on my agenda. A journey chocked with jolting revelations! What I discovered absolutely rocked me. The OEM group consisted of roughly thirty-five salespeople along with five logistic personnel plus several administrative assistants contributing largely by selling MS-DOS and a much smaller number of MS Windows units. The sales team was divided into four groups. Three were serving the larger customers. The fourth was dedicated to a staggering number of smaller ones. There were no marketing people whatsoever, and no written policies and procedures could be found.

By far the most extraordinary black hole in the OEM universe, salespeople were prohibited from possessing the official price guideline (PGL). Jim had designated the maintenance of this top secret document to one of his lieutenants. No one else had direct access. Management feared the covert document could fall into customer hands. Not having faith in the sales teams relegated them to lowly messenger roles. My first thought:
No trust, no power, no customer respect, change ASAP.
My management style differed sharply when directing people. Right then I realized a little grassroots empowerment in good old German military tradition would go a long way with my new crew!

To test my conclusion, I began dropping into offices to get to know my new cohorts, showing interest for special customers’ projects, their plans, and high-profile challenges. My new teammates, not overly accustomed to management addressing them directly and soliciting advice, initially hesitated to respond. What was going on here? Languishing on this, I rapidly recognized that gazing into history served no purpose. I needed to urgently move on, introduce my kind of trust-generating management style. Auftragstaktik to the rescue!