Microsoft's downfall: Bureacuracy, over-reliance on Windows, and poor HR management, says Vanity Fair

Microsoft experienced a "lost decade" and lost its leadership to Apple because of bureaucratic in-fighting, a too-heavy reliance on Windows, and a management system that alientates top tech talent, reports Vanity Fair in an upcoming blockbuster article. Titled "Microsoft's Lost Decade," it presents a not-very-pretty picture of what's happened to the company over the last ten years.

The full article isn't online, but a synopsis is, and it doesn't make for pretty reading. The writer, Kurt Eichenwald, interviewed dozens of employees and reviewed many company records including emails to reach his conclusions.

One key problem, he claims, is the company's "stack ranking" employee review system which he says stifles innovation and drives out tech talent. He writes:

"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. '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."

An over-reliance on Windows hurt the company as well, according to the article, notably when it came to mobile computing. The article notes that Microsoft had a mobile operating system well before the release of the iPhone, but Microsoft never managed to capitalize on it, in large part because Microsoft decided the phone had to be Windows-centric. Steve Stone, an eight-year Microsoft employee and a founder of its eMerging Technology Group told Eichenwald:

"Windows was the god -- everything had to work with Windows. 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."

Eichenwald also cites infighting and turf wars as hurting the company, especially related to mobile. Ed McCahill, who was Microsoft marketing manager for 16 years, told the magazine:

"You look at the Windows Phone and you can’t help but wonder, How did Microsoft squander the lead they had with the Windows CE devices? They had a great lead, they were years ahead. And they completely blew it. And they completely blew it because of the bureaucracy."

Without access to the full article, I can't vouch for the total overall content. But the synopsis is certainly damning. Todd Bishop at GeekWire, who managed to get its hands on the article before publication, writes that from his point of view, the article is accurate, although one-sided:

"The piece is not a complete assessment of the company. It feels more like a caricature, highlighting Microsoft's worst qualities and overlooking the stuff that actually has gone well over the past decade."

He says that the article doesn't mention Microsoft's wins, such as the Xbox, Sharepoint, or in servers and business software.

Even if it is one-sided, from what I've read of it, there's a ring of truth to it. The fact is, over the last ten years Microsoft has given up its lead to Apple, and Google is nipping at its heels.

The company is trying to catch up, especially in mobile, and even though Windows Phone is a solid smartphone operating system, Apple and Android have such significant leads, it's not clear Microsoft will catch up there. As for Windows 8, we'll have to see whether the decision to put out an operating system that does double-duty for PCs and tablets will pay off. I don't believe it will.

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