Microsoft Secrets: How the World's Most Powerful Software Company Creates Technology, Shapes Markets and Manages People - Softcover

Über die Autorin bzw. den Autor

Michael A. Cusumano teaches strategy and technology managment at MIT's Sloan School of Management. He lives in Cambridge, Massachusetts.

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Chapter 1

Organizing and Managing the Company

Find "Smart" People Who Know the Technology and the Business

To organize and manage the company, Microsoft follows a strategy that we describe as find smart people who know the technology and the business. We break down our discussion of this strategy into four principles:

* Hire a CEO with a deep understanding of both the technology and the business.

* Organize flexibly around and across product markets and business functions.

* Hire the smartest managers you can find -- people with a deep understanding of the technology and the business.

* Hire the smartest employees you can find -- people with a deep understanding of the technology and the business.

These principles, in theory, are not unusual or unique to Microsoft. In practice, however, they have had a profound impact on both the firm and the industry. Few companies have chief executives who know their underlying technologyand how to translate this knowledge into a multibillion-dollar business as well as Bill Gates. Many companies organize around product markets and business functions in ways similar to Microsoft, but many companies have difficulty simultaneously maintaining a strong product and market focus as well as a strong set of basic functional skills. For a company in a rapidly evolving and expanding industry, Microsoft has done an excellent job of organizing to match and sometimes lead the market. It has also acquired and nurtured the technical functions needed to build a huge and constantly expanding portfolio of products.

Many firms hire or promote people based solely on their managerial skills, not necessarily on how well they can combine their technical knowledge with an understanding of business and strategy. Microsoft puts knowledge of the technology and how to make money with this knowledge first in choosing managers. While this results in a shortage of middle managers with good people management skills, it has served Microsoft well in the highly technical world of developing computer software. At the same time, through new hires and acquisitions, Microsoft continually broadens its existing skill base such as by adding new groups for consumer software and information-highway products and services.

Microsoft is also particularly rigorous in how it screens people, especially software developers, hiring only 2 or 3 percent of all applicants. Moreover, as with managers, Microsoft looks specifically for people with a deep knowledge of the technology and a very clear sense of how to use this knowledge to ship products for the company.

In many respects, Microsoft's product unit managers operate like the Roman centurions of two thousand years ago. They are sufficiently competent that they do not need a lot of direction and can respond quickly to new opportunities and threats. Their organizations have most of the resources they need to operate independently; the centurions go off on their own and report back only occasionally. But they roam within certain limits, and the leader can rest assured that these centurions -- and their troops -- are fighting for the good of the whole organization. The record speaks for itself: Although not every customer is happy, Microsoft clearly has a leader, a top management team, and an army of employees who deeply understand both the technology and the business of PC software. They also know how to win.

PRINCIPLE Hire a CEO with a deep understanding of both the technology and the business.

Much of a successful company's performance stems from the technical and business acumen, as well as the leadership and managerial abilities, of its chief executive officer. Bill Gates of Microsoft may be the shrewdest entrepreneur and the most underrated manager in American industry today. His talents appear both in a technical understanding of software and computers and in his ability to create and maintain an enormously profitable business. He acquired a reputation years ago as a cantankerous personality who often criticized (and even yelled at) his employees, but Gates has matured along with his company. He continues to guide the selection of new products and businesses, as well as the features that go into key products. Now, however, he relies heavily on several dozen senior executives and technical leaders, and has instituted formal and informal mechanisms to help him direct the Microsoft machinery.

Gates the Person: William Henry Gates was born in 1955 in Seattle, Washington, the middle child in a well-to-do family. (Neither parent was a technologist; his father was a lawyer, and his mother was a teacher.) By all accounts, Gates the child was similar to Gates the adult: His biographers describe him as a "high energy kid" who liked to rock back and forth in his chair, just as he did during our interview. A former teacher described him as "a nerd before the term was invented." His childhood interests included -- but obviously did not end with -- games such as Risk, where players compete for global domination.

Gates's first exposure to computers came during 1968-1969, in his second year at the private Lakeside School. The school had a primitive teletype machine and access to a computer through a time-sharing hook-up. He learned the BASIC programming language and then teamed up with a tenth-grade electronics expert named Paul Allen to learn more about programming. When Gates was fourteen, he and Allen made money by writing and testing computer programs. The duo then established their first company, named Traf-O-Data, in 1972 and sold a small computer that recorded and analyzed motor vehicle traffic data.

In 1973 Gates enrolled at Harvard University. The following year, Allen, who had gone on to study computer science at the University of Washington, left college and took a job with Honeywell in the Boston area. It has often been described how Allen saw an issue of Popular Electronics in 1974 that advertised the new Altair microcomputer kit from MITS Computer, and how he and Gates wrote a version of BASIC using Harvard's computing facilities. Gates left college in 1975 to concentrate full-time on developing programming languages for the Altair (and then for other personal computers), relocating with Allen to Albuquerque, New Mexico, to be next to MITS Computer's office. They formed Microsoft during 1975 as a 60-40 partnership in favor of Gates, reflecting his larger role in developing Microsoft BASIC, the company's first product. (See Appendix 1 for an abbreviated chronology of Microsoft's history.)

Several characteristics stand out in stories about the young Gates. He was intelligent and ambitious, as were his friends. He was able to concentrate intensely on and master what interested him; most notably, computers and how to program them for practical purposes. Perhaps most important, Gates envisioned a world with computers not merely tracking traffic data but sitting on every desktop -- and running his software. This was a great combination of skills and ambitions to have at the dawning of the PC era.

Observers from outside and Microsoft employees paint similar pictures of Gates. They describe him as a visionary with a maniacal drive to succeed, accumulate great power, and make money by taking advantage of his technical knowledge and understanding of industry dynamics. Microsoft the company emerges as an extension of Gates' unique personality and skills.

Gates is a visionary. Very early in the history of the PC, he evolved a strikingly clear concept of where the industry was headed, and he has pursued that vision -- despite many tactical setbacks -- unwaveringly, relentlessly, and ruthlessly.

This guy [Gates] is awesomely bright. But he's unique in a sense that he's the only really...