Archive for the 'Corporate culture' Category

London life – the past and the future

In the same week:

  • A meeting at Google Campus London – a superb space, a hive of activity, buzzing with energy and ideas, casual, and a wonderful vibe.
  • An invitation to a reception at the British Computer Society (BCS):  jacket and tie compulsory for all.

Here we are, one-sixth of our way into the 21st century, and the BCS is still insisting on formal dress?  Do they also require that only unmarried women be allowed to program these new-fangled machines, too?  That social, religious, and intellectual radical, Charles Babbage, would be appalled at such deference to established tradition.

You know that one of the people sitting beside you at Google Campus is the next Zuckerberg or Brin.  Maybe it is even you yourself.  Not  a single person at Google was wearing a tie or a suit, though.  I doubt anyone intent on changing the future – or even the present! – is attending events requiring formal dress, but I guess the past is not evenly distributed either.

NOTE:  An early review of the Google London Campus is here.

Mao Tse Tung, music teacher


Learn to “play the piano”. In playing the piano, all ten fingers are in motion; it will not do to move some fingers only and not others. However, if all ten fingers press down at once, there is no melody. To produce good music, the ten fingers should move rhythmically and in co-ordination. A Party committee should keep a firm grasp on its central task and at the same time, around the central task, it should unfold the work in other fields. At present, we have to take care of many fields; we must look after the work in all the areas, armed units and departments, and not give all our attention to a few problems, to the exclusion of others. Wherever there is a problem, we must put our finger on it, and this is a method we must master. Some play the piano well and some badly, and there is a great difference in the melodies they produce. Members of Party committees must learn to “play the piano” well.”

Mao Tse-Tung [1949-03-13]: Methods of Work of Party Committees. Selected Works, Vol. IV, p. 379.  The hands are those of Hungarian jazz pianist, Szabo Daniel.

The corporate culture of Microsoft

Anyone with friends or associates working for Microsoft these last few years has heard stories of its bizarre internal employee appraisal system, called stack ranking:   Every group, no matter how wonderful or effective, must include some poor performers – by decree, not for any other reason.   One is reminded of Stalin’s imposition of quotas on the intelligence agencies for finding spies in the USSR in the 1930s.    With this system, it is not sufficient that people achieve their objectives or perform well: to be also rated as performing well, others in the same team must be rated as performing poorly.   There are three extremely negative outcomes of this system:  first, good and even very good performers get rated as performing poorly; second, immense effort is spent by almost everyone in ensuring  that others do badly in the ratings; and third, team spirit dissolves.

The August issue of Vanity Fair has a long profile of Microsoft and its current ills, Microsoft’s Lost Decade, by Kurt Eichenwald, here, which discusses this system in detail.     Here is a description of  the system and its consequences:

At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor.

“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” said a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”

Supposing Microsoft had managed to hire technology’s top players into a single unit before they made their names elsewhere—Steve Jobs of Apple, Mark Zuckerberg of Facebook, Larry Page of Google, Larry Ellison of Oracle, and Jeff Bezos of Amazon—regardless of performance, under one of the iterations of stack ranking, two of them would have to be rated as below average, with one deemed disastrous.

For that reason, executives said, a lot of Microsoft superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings. And the reviews had real-world consequences: those at the top received bonuses and promotions; those at the bottom usually received no cash or were shown the door.

Outcomes from the process were never predictable. Employees in certain divisions were given what were known as M.B.O.’s—management business objectives—which were essentially the expectations for what they would accomplish in a particular year. But even achieving every M.B.O. was no guarantee of receiving a high ranking, since some other employee could exceed the assigned performance. As a result, Microsoft employees not only tried to do a good job but also worked hard to make sure their colleagues did not.

“The behavior this engenders, people do everything they can to stay out of the bottom bucket,” one Microsoft engineer said. “People responsible for features will openly sabotage other people’s efforts. One of the most valuable things I learned was to give the appearance of being courteous while withholding just enough information from colleagues to ensure they didn’t get ahead of me on the rankings.”

Worse, because the reviews came every six months, employees and their supervisors—who were also ranked—focused on their short-term performance, rather than on longer efforts to innovate.

“The six-month reviews forced a lot of bad decision-making,” one software designer said. “People planned their days and their years around the review, rather than around products. You really had to focus on the six-month performance, rather than on doing what was right for the company.”

There was some room for bending the numbers a bit. Each team would be within a larger Microsoft group. The supervisors of the teams could have slightly more of their employees in the higher ranks so long as the full group met the required percentages. So, every six months, all of the supervisors in a single group met for a few days of horse trading.

On the first day, the supervisors—as many as 30—gather in a single conference room. Blinds are drawn; doors are closed. A grid containing possible rankings is put up—sometimes on a whiteboard, sometimes on a poster board tacked to the wall—and everyone breaks out Post-it notes. Names of team members are scribbled on the notes, then each manager takes a turn placing the slips of paper into the grid boxes. Usually, though, the numbers don’t work on the first go-round. That’s when the haggling begins.

“There are some pretty impassioned debates and the Post-it notes end up being shuffled around for days so that we can meet the bell curve,” said one Microsoft manager who has participated in a number of the sessions. “It doesn’t always work out well. I myself have had to give rankings to people that they didn’t deserve because of this forced curve.”

The best way to guarantee a higher ranking, executives said, is to keep in mind the realities of those behind-the-scenes debates—every employee has to impress not only his or her boss but bosses from other teams as well. And that means schmoozing and brown-nosing as many supervisors as possible.

“I was told in almost every review that the political game was always important for my career development,” said Brian Cody, a former Microsoft engineer. “It was always much more on ‘Let’s work on the political game’ than on improving my actual performance.”

Like other employees I interviewed, Cody said that the reality of the corporate culture slowed everything down. “It got to the point where I was second-guessing everything I was doing,” he said. “Whenever I had a question for some other team, instead of going to the developer who had the answer, I would first touch base with that developer’s manager, so that he knew what I was working on. That was the only way to be visible to other managers, which you needed for the review.”

I asked Cody whether his review was ever based on the quality of his work. He paused for a very long time. “It was always much less about how I could become a better engineer and much more about my need to improve my visibility among other managers.”

In the end, the stack-ranking system crippled the ability to innovate at Microsoft, executives said. “I wanted to build a team of people who would work together and whose only focus would be on making great software,” said Bill Hill, the former manager. “But you can’t do that at Microsoft.”

And, according to Eichenwald, Microsoft had an early lead in e-reader technology that was lost due to the company’s cultural bias in favour of the Windows look-and-feel:

The spark of inspiration for the device had come from a 1979 work of science fiction, The Hitchhiker’s Guide to the Galaxy, by Douglas Adams. The novel put forth the idea that a single book could hold all knowledge in the galaxy. An e-book, the Microsoft developers believed, would bring Adams’s vision to life. By 1998 a prototype of the revolutionary tool was ready to go. Thrilled with its success and anticipating accolades, the technology group sent the device to Bill Gates—who promptly gave it a thumbs-down. The e-book wasn’t right for Microsoft, he declared.

“He didn’t like the user interface, because it didn’t look like Windows,” one programmer involved in the project recalled. But Windows would have been completely wrong for an e-book, team members agreed. The point was to have a book, and a book alone, appear on the full screen. Real books didn’t have images from Microsoft Windows floating around; putting them into an electronic version would do nothing but undermine the consumer experience.

The group working on the initiative was removed from a reporting line to Gates and folded into the major-product group dedicated to software for Office, the other mammoth Microsoft moneymaker besides Windows. Immediately, the technology unit was reclassified from one charged with dreaming up and producing new ideas to one required to report profits and losses right away.

“Our entire plan had to be moved forward three to four years from 2003–04, and we had to ship a product in 1999,” said Steve Stone, a founder of the technology group. “We couldn’t be focused anymore on developing technology that was effective for consumers. Instead, all of a sudden we had to look at this and say, ‘How are we going to use this to make money?’ And it was impossible.”

Rushing the product to market cost Microsoft dearly. The software had been designed to run on a pad with touch-screen technology, a feature later popularized with the iPhone. Instead, the company pushed out Microsoft Reader, to run on the Microsoft Pocket PC, a small, phone-size device, and, soon after, on Windows. The plan to give consumers something light and simple that would allow them to read on a book-size screen was terminated.

The death of the e-book effort was not simply the consequence of a desire for immediate profits, according to a former official in the Office division. The real problem for his colleagues was that a simple touch-screen device was seen as a laughable distraction from the tried-and-true ways of dealing with data. “Office is designed to inputting with a keyboard, not a stylus or a finger,” the official said. “There were all kinds of personal prejudices at work.”

Indeed, executives said, Microsoft failed repeatedly to jump on emerging technologies because of the company’s fealty to Windows and Office. “Windows was the god—everything had to work with Windows,” said Stone. “Ideas about mobile computing with a user experience that was cleaner than with a P.C. were deemed unimportant by a few powerful people in that division, and they managed to kill the effort.”

This prejudice permeated the company, leaving it unable to move quickly when faced with challenges from new competitors. “Every little thing you want to write has to build off of Windows or other existing products,” one software engineer said. “It can be very confusing, because a lot of the time the problems you’re trying to solve aren’t the ones that you have with your product, but because you have to go through the mental exercise of how this framework works. It just slows you down.”

Vale Robert Oakeshott

The Guardian today carries an obituary for Robert Oakeshott (1933-2011), pioneer of worker-cooperatives and employee-owned enterprises, whom I once invited to speak at the University of Zimbabwe and with whom I then spent an enjoyable dinner in Harare, at a time when the Government of Zimbabwe was sincerely promoting industrial and agricultural worker co-operatives, supported by many western aid donor agencies.

Roughshod Riders

One annoying feature of the verbal commentariat is their general lack of real-world business experience.  A fine example has just been provided by political blogger Marbury, who derides Gordon Brown for not asserting himself when Prime Minister over his Cabinet Secretary on the matter of an enquiry into voicemail hacking at certain newspapers.

Well, to be fair to Gordon Brown, Marbury has clearly never led an organization and tried to force the people below him to do something they adamantly oppose doing.  No doubt, Brown when PM could have ordered the Cabinet Secretary to implement a public enquiry, but every single person in the chain of command could then have: (a) leaked the CabSec’s advice opposing the instruction, and/or (b) exercised their pocket veto to delay or prevent the enquiry happening, and/or (c) implemented it in a way which backfired upon Brown and the Cabinet. No rational manager tries to execute a policy his own staff vehemently oppose, even when, as appears to be the case here, he knows he has morality, the law, good governance, and the public interest all on his side.

Railtrack and the Joint-Action Society

For some time, I have been writing on these pages that the currently-fashionable paradigm of the Information Society is inadequate to describe what most of us do at work and play, or to describe how computing technologies support those activities (see, for example, recently here, with a collection of posts here).   Most work for most people in the developed world is about coordinating their actions with those of others  – colleagues, partners, underlings, bosses, customers, distributors, suppliers, publicists, regulators, und so weiter.   Information collection and transfer, while often important and sometimes essential to the co-ordination of actions,  is not usually itself the main game.

Given the extent to which computing technologies already support and enable human activities (landing our large aircraft automatically when there is fog, for example), the InfoSoc paradigm, although it may describe well the transmission of zeros and ones between machines, is of little value in understanding what these transmissions mean.  Indeed, the ur-text of the Information Society, Shannon’s mathematical theory of communications (Shannon 1948) explicitly ignores the semantics of messages!  In place of the InfoSoc metaphor, we need another new paradigm, a new way to construe what we are all doing.  For now, let me call it the Joint-Action Society, although this does not quite capture all that is intended.

I am pleased to learn that I am not alone in my views about InfoSoc.   I recently came across an article by the late Peter Martin, journalist, editor and e-businessman, about the lessons from that great disaster of privatization of Railtrack in the UK.  (In the 1980s and 90s, the French had grand projets while the British had great project management disasters.)  Here is Martin, writing in the FT in October 2001 (the article does not seem to be available online):

Railtrack had about a dozen prime contractors, which in turn farmed out the work to about 2,000 subcontractors.  Getting this web of relationships to work was a daunting task.  Gaps in communication, and the consequent “blame culture” are thought to be important causes of the track problems that led to the Hatfield crash which undermined Railtrack’s credibility.

.  .  .

These practical advantages of wholesale outsourcing rely, however, on unexamined assumptions.  It is these that the Railtrack episode comprehensively demolishes.

The first belief holds that properly specified contracts can replicate the operations of an integrated business.  Indeed, on this view, they may be better than integration because everyone understands what their responsibilities are, and their  incentives are clear and tightly defined.

This approach had a particular appeal to governments, as they attempted to step back from the minutiae of delivering public services.  British Conservative governments used the approach to break up monolithic nationalised industries into individual entities, such as power generators and distributors.

They put this approach into effect at the top level of the railway system by splitting the task of running the track and the signalling (Railtrack’s job) from the role of operating the trains.  It is not surprising that Railtrack, born into this environment, carried the approach to its logical conclusion in its internal operation.

.  .  .

In 1937, the Nobel prize-winning economist Ronald Coase had explained that companies perform internally those tasks for which the transactional costs of outsourcing are too high.

What fuelled the outsourcing boom of the 1990s was the second unexamined assumption – that the cost of negotiating, monitoring and maintaining contractual relationships with outsourcing partners had dropped sharply, thanks to the revolution in electronic communications.  The management of a much bigger web of contractors – indeed, the creation of a “virtual company” – became feasible.

In practice, of course, the real costs of establishing and maintaining contracts are not those of information exchange but of establishing trust, alignment of interests and a common purpose.  Speedy and cheap electronic communications have only a minor role to play in this process, as Coase himself pointed out in 1997.

.   .   .

And perhaps that is the most useful lesson from the Railtrack story: it is essential to decide what tasks are vital to your corporate purpose and to devote serious resources to achieving them.   Maintaining thousands of miles of steel tracks and stone chippings may be a dull, 19th century kind of task.   But as Railtrack found, if you can’t keep the railway running safely, you haven’t got a business.”


Peter Martin [2001]: Lessons from Railtrack.  The collapse has demolished some untested assumptions about outsourcing.  Financial Times, 2001-10-09, page 21.

Claude E. Shannon [1948/1963]: The mathematical theory of communication. Bell System Technical Journal, October and November 1948.  Reprinted in:  C. E. Shannon and W. Weaver [1963]: The Mathematical Theory of Communication. pp. 29-125. Chicago, IL, USA: University of Illinois Press.

Silicon millenarianism

Here we go again! We have another blogger predicting the end of the office.   Funny how it’s almost always bloggers and journalists and thinktank-swimmers doing this – always people whose work, most of the time, is by themselves, and who therefore fail to understand the nature of actual work in modern organizations.   As I’ve argued before, workplace interactions are primarily about the co-ordination of actions and the assessment of people’s intentions concerning these actions, not (or not merely) about sharing information.  Why did Barack Obama summon the Chairman and CEO of BP to the Oval Office earlier this week?  Why was the CEO also called to testify before Congress?   Why didn’t the President or the Congressional Committee simply place a conference call?  Because it is very difficult, perhaps even impossible, to accurately assess another person’s intentions without immediate physical proximity and face-to-face interaction with said person.

If all you are doing is writing a blog or researching a story, perhaps you don’t ever appreciate this fact about work.  But anyone tasked with doing something other than writing knows it.   Seth Goodin thinks that within 10 years TV programs about office work will seem to be “quaint antiques”.  I bet him they will not at all.  Moreover, I bet the people in those offices will still be using paper, still having meetings, and still talking by the water-cooler.   In fact, while you’re placing my bets, put me down for 100 years, not 10.

Metrosexual competition

Writing about the macho world of pure mathematics (at least, in my experience, in analysis and group theory, less so in category theory and number theory, for example), led me to think that some academic disciplines seem hyper-competitive:  physics, philosophy, and mainstream economics come to mind.  A problem for economics is that the domain of the discipline includes the study of competition, and the macho, hyper-competitive nature of academic economists has led them, I believe, astray in their thinking about the marketplace competition they claim to be studying.  They have assumed that their own nasty, bullying, dog-eat-dog world is a good model for the world of business.

If business were truly the self-interested, take-no-prisoners world of competition described in economics textbooks and assumed in mainstream economics, our lives would all be very different.  Fortunately, our world is mostly not like this.   One example is in telecommunications where companies compete and collaborate with each other at the same time, and often through the same business units.  For instance, British Telecommunications and Vodafone are competitors (both directly in the same product categories and indirectly through partial substitutes such as fixed and mobile services), and collaborators, through the legally-required and commercially-sensible inter-connections of their respective networks.  Indeed, for many years, each company was the other company’s largest customer, since the inter-connection of their networks means each company completes calls that originate on the other’s network; thus each company receives payments from the other.  Do you seek to drive your main competitor out of business when that competitor is also your largest customer?   Would you do this, as stupid as it seems, knowing that your competitor could retaliate (perhaps pre-emptively!) by disconnecting your network or reducing the quality of your calls that interconnect?  No rational business manager would do this, although perhaps an economist might.

Nor would you destroy your competitors when you and they are sharing physical infrastructure  – co-locating switches in each other’s buildings, for example, or sharing rural cellular base stations, both of which are common in telecommunications.   And, to complicate matters, large corporate customers of telecommunications companies increasingly want direct access to the telco’s own switches, leading to very porous boundaries between companies and their suppliers.   Doctrines of nuclear warfare, such as mutually-assured destruction or iterated prisoners’ dilemma, are better models for this marketplace than the mainstream one-shot utility-maximizing models, in my opinion.

You might protest that telecommunications is a special case, since the product is a networked good – that is, one where a customer’s utility from a particular service may depend on the numbers of other customers also using the service.    However, even for non-networked goods, the fact that business usually involves repeated interactions with the same group of people (and is decidely not a one-shot interaction) leads to more co-operation than is found in an economist’s philosophy.   The empirical studies of hedge funds undertaken by sociologist Donald MacKenzie, for example, showed the great extent to which hedge fund managers rely in their investment decisions on information they receive from their competitors.  Because everyone hopes to come to work tomorrow and the day after, as well as today, there are strong incentives on people not to  mis-use these networks through, for instance, disseminating false or explicitly-self-serving information.

It’s a dog-help-dog world out there!


Iain Hardie and Donald MacKenzie [2007]:  Assembling an economic actor: the agencement of a hedge fund. The Sociological Review, 55 (1): 57-80.

Managers of renown

Since we so rarely have the chance to thank those who have influenced us, I have previously listed teachers and non-fiction writers who have influenced me, and listed the public lectures I have attended.  I thought it appropriate also to list the people I have worked with whom I have admired and learnt from as managers, which I do here:  

Victor Barendse, Andreas von Blottnitz, Will Bobb, Gene La Borne, Judy Bradford, Jan Buettner, John Cornish, Don Day, Wanchai Ekraksasilpchai, John Griffiths, Neill Haine, Ben Hancox, Tony Hawkins, Michael Heath, Jin-Young Hwang, Walter Kamba, Mathieu Lasalle, Marian McEwin, Michael Orr, Maureen Piche, Jerry Rossi, Leanne Thomas, Dennis Trewin, Henry Vandemark, Don Warkentin, Richard Wetenhall.

Effective leadership is context-specific:  what works in one domain on one occasion may not work elsewhere or with the same people at other times.   However, in looking across the people whose management skills I have learnt from, I realize there are some common features which most share to a greater or lesser extent.   One is a sharp intelligence, which may be manifest in many diverse ways (verbally, mathematically, organizationally, etc).  A second feature is a marked ability to read the emotions of others and to sense the social dynamics of a group or a meeting.    Good managers know their audiences well.  A third feature is an ability to read their own emotions (a skill which is surprisingly uncommon) together with an ability to control the public expression of these emotions when it so behooves them;   most of the people I have listed would make good poker players.  A fourth feature is an integrity of purpose – enthusiasm, honesty, transparency, directness, fairness, a willingness to argue for positions, and a willingness to consider evidence before reaching conclusions.  Finally, all of these people are effective at getting things done – not a skill to be sneezed at, despite the generally low status that doing things has among the chatterati.

GTD Intelligence at Kimberly-Clark

I started talking recently about getting-things-done (GTD) intelligence.  Grant McCracken, over at This Blog Sits At, has an interview with Paula Rosch, formerly of fmcg company Kimberly-Clark, which illustrates this nicely.

I spent the rest of my K-C career in advanced product development or new business identification, usually as a team leader, and sometimes as what Gifford Pinchot called an “Intrapreneur” – a corporate entrepreneur, driving new products from discovery to basis-for-interest to commercialization.  It’s the nature of many companies to prematurely dismiss ideas that represent what the world might want/need 5, 10 years out and beyond in favor of near-term opportunities – the intrapreneur stays under the radar, using passion, brains, intuition, stealth, any and every other human and material resource available to keep things moving.  It helps to have had some managers that often looked the other way.

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