Issue #391 Business in Vancouver

The High Tech Office: After trying to hate Microsoft, author ends up with new respect Apr 22 1997
by Alan Zisman

As one of the richest self-made businesspeople, Bill Gates along with his company, Microsoft, seems to inspire emotions ranging from envy through jealousy to outright hatred. A year ago, for instance, Net-hip 'Wired' Magazine offered a handy tour guide to 'Hate Microsoft' sites on the World Wide Web.

Business historian Randall Stross spent three years trying to cut through the emotions as well as the company's self-promotion. With free access to Microsoft's offices and archives, and with no obligation to preview his findings to company management, he has managed an objective look at what makes this two-decade old company so successful.

In "The Microsoft Way" (Addison-Wesley, 1996), Stross will disappoint the hordes of avid Microsoft-bashers. He sighs "my conclusions tend exonerate Microsoft of the most serious charges leveled against it... I am not happy to find myself in this position, especially because Gates is rich and his company is powerful. It does not seem fair, in the grand scheme of things, that he and his company should be praised to boot".

Nevertheless, Stross suggests that Gates and Microsoft have been successful, not simply by being born into wealth (true, but not a major factor in this case), and not simply by being lucky-being in the right place at the right time (though getting to sell a non-existent operating system to IBM in 1980 certainly helped, it can't account for Microsoft's even greater success throughout the '90s, a decade when they'd broken with IBM). And not by simply bullying the competition or through hyping mediocre products.

Instead, Stross points out a number of techniques that have been followed by the Microsofties that have led to their present, in his view, deserved success:

* Hire smart. Microsoft has long made it a policy to hire the best and the brightest. Gates has claimed that it's easier to deal with an employee who's a failure than with one who is mediocre, but is prepared to speak of having a 'high IQ' workforce. This in itself accounts for much of the resentment-there's a long history in North America of being, at best, ambivalent about intellectuals.
* Build a positive work environment. Stross suggests that Microsoft's tree-lined 'campus', where nearly every employee has a private office with outside windows (and nearly every office is the same size), has helped build team-oriented workgroups. While paying lower-than-average salaries (even Chairman Bill is paid under $200,000 a year), Microsoft has been able to win employee loyalty with a mix of benefits and stock options.
* Be prepared to fail, but learn from your failures, and move right onto the next generation. It's an ongoing joke that it takes Microsoft three versions to get a product right; its strength has been its willingness to persevere, and to be prepared to look at building markets over the long-term. Stross looks ar several case-studies: the seven years between the first, Microsoft-sponsored conference on CD-ROMs in 1986 and 1993 when multimedia 'took off', the effort, nearly as long, to get a digital encyclopedia into production, and then to fine-tune both the product and its marketing. Along the way, Microsoft learned that there was much more profit to be made in selling a $50 encyclopedia than a $399 one.
* Be ready to reinvent yourself. Microsoft has evolved from a company selling programming languages, to one selling operating systems, to one selling applications, to one that is increasingly focusing on the Internet and on selling multimedia content. Previously, no company has been able to remain at the top as the predominant model of technology has changed; by staying paranoid, Microsoft may be able to pull off this feat.

Despite being written by a historian, 'The Microsoft Way' avoids a mere chronology of Gates or his company. Instead, we look at a series of market studies-including Microsoft long-term successes like CD-ROM and multimedia, and failures, such as the attempt to beat and then buy rival personal finance software-company Intuit. We see how Microsoft has been forced to adapt to the changes demanded by the explosion of interest in the Internet, and how this has made startup online service Microsoft Network nearly irrelevant. And we view the US government's abortive use of antitrust legislation against Microsoft, particularly in light of the failed merger with Intuit.

Finally, Stross has some thoughts about Gates' wealth... is it, ultimately, any of our business?
There have been at least half-a-dozen books focussing on Gates or Microsoft in the past few years. 'The Microsoft Way' stands out as thoughtful and open-minded. Worthwhile reading for anyone wanting an inside look at one model of high-tech success.

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Alan Zisman is a Vancouver educator, writer, and computer specialist. He can be reached at E-mail Alan