Microsoft’s management kills innovation

Vanity Fair this month has a great article titled “Microsoft’s lost decade”. It describes how the corporate giant lost its way and changed from being an indomitable technology Titan to a has-been. Just as IBM did a decade earlier. The reason? A management technique known as “stack ranking”. Every business unit had to rank a certain percentage of its employees as “top performers”, “average” or “poor” and this effectively crippled the company’s ability to innovate. In contrast, Apple (for decades underdog to Microsoft) generates more revenue with a single product  – the iPhone – than the whole of Microsoft Corp.

“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,” Kurt Eichenwald writes in Vanity Fair. “If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, 2 people were going to get a great review, 7 were going to get mediocre reviews, and 1 was going to get a terrible review,” says a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”

This internal competition vs external competition is a catataxic debate and it lies at the heart of the resurgent interest in group selection theories of evolution. The question is whether the natural selection that drives evolution acts at the level of the group or at a genetic level. If evolution is the “survival of the fittest”, then the question becomes the fittest what? Is it the fittest group? The fittest species ? The fittest individual? The fittest set of genes ? This question about “which level rules” is the essence of catataxis.

In social animals such as ants and termites you can clearly see a form of individual altruism: insects that sacrifice themselves for the good of the colony as a whole. This seems to imply that natural selection is operating at the level of the group. However, Richard Dawkins in his book “The Selfish Gene” pins natural selection definitively to the genetic level. He explains the “self sacrificing ants” in a bottom-up genetic way. The ants in the colony are all related to each other; they share the same genetic material. So in sacrificing yourself for the sake of the group you are still indirectly propagating your genes. This genetic cause of altruism is summed up in Hamilton’s Rule which states that the degree of altruism depends on the degree of genetic relatedness. It can be summed up in this grim biologists joke :

I will lay down my life for two brothers, four nephews or eight cousins

Other biologists such as David Sloane Wilson see a group selection argument for altrusim which goes like this: If you mix a group of selfish people and altruistic people together, then the selfish people will always win. They act in their own self interest and exploit the generous altruists. But if you move up a level and observe the competition between groups then you see a different effect. Groups that are full of altruists working cooperatively together outcompete groups full of selfish people fighting each other. So at a group level teams of altruists win, but at an individual level selfish people win. So, turning this around, you can say that wherever you see altrusitic behaviour then it is a sign that competition between groups is a stronger force than competition inside groups. Or, as Microsoft has found out, when management emphasises internal competition the group as a whole will fail.

This “level of selection” controversy is still a hot topic of debate amongst biologists. In this June’s issue of Prospect Magazine,  Richard Dawkins wrote an excoriating review of a book by fellow biologist Edward Wilson titled “The Social Conquest of Earth”. Wilson was arguing for the theory of group selection outlined above. Dawkins violently disagreed. His review concludes “…this is not a book to be tossed lightly aside. It should be thrown with great force…”. This vigorous denunciation provoked a huge backlash. The Dawkins article received more responses than any other in Prospect Magazine’s history. In effect, it was the atheist equivalent of watching the Pope beat up the Archbishop of Canterbury on the steps of St Paul’s Cathedral.

The debate also provides a controversial conclusion for management consultants. If you want your company (group) to win then you should embrace the cult of mediocrity. Suppress internal competition and focus on external competition.

In fox hunting circles, when the Master of the Hounds is training a new pack, he takes the dogs for their first outing in spring to see how they perform. He then shoots both the first few pack leaders and the last few stragglers, keeping the mediocre middle performers because he knows they will form the most effective team.

Could this translate across to corporate management. Is the secret to commercial success to sack not just your worst salesmen but also your best? Let me know what you think….

BYOT and the jobs revolution

Do you know the latest trend in the office IT world? It’s called BYOT, short for Bring Your Own Technology. New young recruits into large multinationals are shocked by how awful the corporate IT systems are. This is a generation brought up on facebook, twitter, tablets  and smart phones; personal devices on which you can do a lot of cool stuff. Their first encounter with a corporate IT system makes them recoil in horror. It’s so slow, so clunky and so user unfriendly.

In most other industries, there is professional grade equipment for serious business use and then a cut down, ‘less good’ version for the home hobbyist. But in the IT world this has been inverted. All the cool stuff is at the consumer end of the market. This is catataxis. The level 1 ‘home’ gear runs faster and is more powerful than the level 2 ‘corporate’ gear.  Hence BYOT. You bring in your own laptop or iPad to use at work. You are responsible for maintaining it. You are happy because you get to use the cool gadgets that you like. The company is happy because the cost of equipment and maintenance goes down. Productivity is up and costs are down (by 22% in some pilot schemes). Everybody wins.

Well, not quite everybody. No-one in the IT department likes this trend at all, because having so many different devices gives them a big headache. BYOT is cynically known by IT staff as “the CEO bought an iPad” syndrome. Nirvana for IT staff is an organisation that uses exactly the same equipment everywhere, all under the centralised control of the IT Dept. Under their watchful eye, individualism is stamped out “for security and efficiency purposes”.

This drama is not new. Take a look at the Apple Mac advert from the dawn of the PC era. A female athlete runs through the hall of a political rally and hurls a hammer at a huge screen with the face of Big Brother on it. The final tagline says:

On January 24th, Apple Computer will introduce the Macintosh. And you’ll see why 1984 will not be like “1984”. 

Shot by Ridley Scott, this advert is almost 30 years old but it is still as powerful as ever and encapsulates the whole spirit of BYOT: the catataxic challenge of the individual against the corporate system one level higher. Steve Jobs’ revolution really is a revolution in jobs. And how satisfying that he finally got to see it happen before he died.