The Rebirth of Microsoft: Sinofsky’s Departure

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I started following Microsoft in the 1970s largely because they recruited me back then and became the “road not traveled” in my career. I didn’t even go to an interview, as I had already accepted a job out of college. This was a decision I eventually regretted.

Over the years, I’ve seen Microsoft change a great deal from the scrappy little company struggling to find a market in the 1970s, to the company that was everyone’s friend (Apple and IBM) in the 1980s, to the arrogant monopoly of the 1990s, and then to the lost child of the last decade. It often seemed like Microsoft’s transitions were mirroring my own from how I was in my late teens, early twenties, thirties and so on, until they seemed to get ahead of me and move into some kind of geriatric phase.

What Sinofsky’s departure shows us is part of an ongoing reset from what Microsoft became in the 1990s to what it needs to become this decade. The result will be a very different company.

The 1990s

During the 1990s, the industry and Microsoft went through a rather sad transition from teams of people working together towards goals to emphasizing individual accomplishment. The tools of this transition included things like Forced Ranking, and the result was the reinforcement of both good and bad practices that fundamentally changed companies. On the good side, P&L responsibility was pushed down in the organization so that managers could better control their own destiny and success. And on the bad, all employees were increasingly pitted against each other, creating environments where cooperation was nearly impossible and where nearly everyone became a potential backstabbing rival.

At Microsoft there is a phrase that I can’t repeat here that showcases a practice. This phrase, in few short words, points out the standard employee practice of praise during meetings and backstabbing between them. Being surrounded by people who were all either vying for their job, their salaries or their influence created a very insular culture where empires were built as defensive structures and where collaboration was impossible.

Sinofsky

Steven Sinofsky was a child of that age, and he optimized the related practices. A very capable manager in terms of meeting objectives (you don’t advance if you aren’t capable), he was also known for his empire building and being unwilling to cooperate with others. In short, he was the ideal manager for the Microsoft of the 1990s, and, in my opinion, his style of management was a key reason why Microsoft has struggled so hard with new products during last decade.

Microsoft went from monopoly behavior externally to monopoly behavior internally. Some say that people within the company murdered Microsoft’s best ideas in order to prevent challenges to internal empires. While outside the firm it looked like Microsoft couldn’t execute, on the inside, Microsoft was its own worst enemy.

Wrapping Up: The New Microsoft

Steve Ballmer is trying to create a very different Microsoft, one where the working groups collaborate and help drive a central strategy and where nearly all of the product groups are working towards a common goal. That goal is to be the end provider of the services we all touch, from the hardware we buy to the services we connect to. Microsoft wants to be the company we wake up with, that we connect with during the day and that we go to sleep with.

To do this, they need everyone to be working together. Those that want to create isolated empires and work against their peers will be voted off the island. In this regard, Steven Sinofsky is not the first, nor will he be the last, to leave. Steve Ballmer is following the best practice, finally, of changing Microsoft from a company designed around Bill Gates to one designed around Ballmer’s unique skills. The end result will be a very different, and potentially far more powerful, company.