Why is Microsoft really doomed?

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Why are Microsoft and similar large organisations really doomed to fail?

Bad CEO?  Don't think so!

-  It's the system!   - Because of the systemic handicap inherent in large collectives!

Because it is more advantageous for middle ranking management to compete internally undermining their colleagues' departments and project developments, rather than make their company compete on the market!

Undermining a corporate colleague is more career-rewarding, for a "monkey", and brings rewards faster than a successful project management! It is a culture of hierarchical collectivism where a stronger must fight a weaker and must suck up to the higher in ranks. It is a culture of punishing the one who tries to work for a slightest mistake while rewarding her  boss for all successes. It is a culture akin of a herd of primates where everybody is a follower, nobody is capable or willing to show any creativity, and everyone spends all energy on social interaction and power games.

Eventually, normal humans are treated as misfits and leave or are pushed out, and those who embrace that culture, or are of this culture - stay in.

See the article:

“Microsoft’s Lost Decade” by Kurt Eichenwald
http://www.vanityfair.com/business/2012/08/microsoft-lost-mojo-steve-ballmer

Quotes (from Kurt Eichenwald's article):

The story of Microsoft’s lost decade could serve as a business-school case study on the pitfalls of success. For what began as a lean competition machine led by young visionaries of unparalleled talent has mutated into something bloated and bureaucracy-laden, with an internal culture that unintentionally rewards managers who strangle innovative ideas that might threaten the established order of things.
...
Fiefdoms had taken root, and a mastery of internal politics emerged as key to career success. In those years Microsoft had stepped up its efforts to cripple competitors, but—because of a series of astonishingly foolish management decisions—the competitors being crippled were often co-workers at Microsoft, instead of other companies. Staffers were rewarded not just for doing well but for making sure that their colleagues failed. As a result, the company was consumed by an endless series of internal knife fights. Potential market-busting businesses—such as e-book and smartphone technology—were killed, derailed, or delayed amid bickering and power plays. That is the portrait of Microsoft depicted in interviews with dozens of current and former executives, as well as in thousands of pages of internal documents and legal records.

...

More employees seeking management slots led to more managers, more managers led to more meetings, more meetings led to more memos, and more red tape led to less innovation. Everything, one executive said, advanced at a snail’s pace. “There was this institutionalized system, and it was like designing software by committee,” said Prasanna Sankaranarayanan, a former Microsoft engineer. “Things moved too slowly. There were too many meetings.” Just as with e-books, opportunities for major product developments slipped away. …
By 2002 the by-product of bureaucracy—brutal corporate politics—had reared its head at Microsoft. And, current and former executives said, each year the intensity and destructiveness of the game playing grew worse as employees struggled to beat out their co-workers for promotions, bonuses, or just survival.
...

Death by "stack ranking" peer-review system.

Quotes:

Microsoft’s managers, intentionally or not, pumped up the volume on the viciousness. What emerged—when combined with the bitterness about financial disparities among employees, the slow pace of development, and the power of the Windows and Office divisions to kill innovation—was a toxic stew of internal antagonism and warfare.

“If you don’t play the politics, it’s management by character assassination,” said Turkel.

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.”

...
“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.”

Creating wealth versus selling someone's product.

Quotes:

In Walter Isaacson’s authorized biography Steve Jobs, Jobs acknowledged Ballmer’s role in Microsoft’s problems: “The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.… [Then] the product guys don’t matter so much, and a lot of them just turn off. It happened at Apple when [John] Sculley came in, which was my fault, and it happened when Ballmer took over at Microsoft. Apple was lucky and it rebounded, but I don’t think anything will change at Microsoft as long as Ballmer is running it.”

Most interesting, however, is that Jobs put the ultimate blame on Bill Gates: “They were never as ambitious product-wise as they should have been. Bill likes to portray himself as a man of the product, but he’s really not. He’s a businessperson. Winning business was more important than making great products. Microsoft never had the humanities and liberal arts in its DNA.”

Another potentially big issue, from a very different point of view:
A dialogue between the Market Diva and myself

Money matters

I am glad to present another interesting essay written by Dozent (Stan P.), this is a continuation on the subject of Baby Boomers culture (that we fondly refer to as "Monkeys"), this time discussed in the context of economy and money.  I hope you will enjoy it.

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Stan (Heretic) wrote Re:

I found that being too "business"-obsessed in the sense of seeing monetary rewards in everything is also a sign of a "monkey".   The reverse is probably also true. Real people want to be paid real money but they (we) are not too obsessed with it. Playing games with monetary reward, that is withholding it when due and rewarding arbitrarily when it is not warranted, is _their_ signature.

Stan,


I always knew it and I have acted upon it.


What is money (I mean real-money) ? It is equivalent of work or in other terms a rechargeable work-battery   :-)


I like to work. It is normal. Why should I be obsessed with WORK.  If you can not make money then you do work nobody wants.  But the problem is: you NEVER KNOW what will sell.


A few years ago I found your "marketing research.on your sensors a little funny, but "harmless" so I said nothing.  Simply estimating the potential size of the market is a good thing.  But that as far as I would go.


I know "if the product WORKS for me then it will most likely work for others".   I veered off topic. "Monkeys" are obsessed with money because they can not do any useful work. For them money is NOT an equivalent of work. No wonder they print it - they can not not see the equivalence. They either "hustle" money or receive it for being loyal to the boss.  They can not earn it on the open work market because they have no marketable skills.  They can not make things other people need.  They are obsessed wit it because it is their constant problem.

Mind you, this definition automatically defines who is a "human" [in our sense] and who is a "monkey" [figuratively, not literally, in a cultural sense, S.B.].    The critical words are "what people need".


It means that a singer like lady Gaga is a human being because she creates something "people need" and are willing to pay for.   It means she is working for her money. It is a kind of work you and me do not understand, but we can not be Astronauts either.


The definition of "useful work" is that is has a "monetary value" on the market. Loyalty and arse kissing does not have a monetary value on the market though it does have value to the Top Monkey and is rewarded accordingly. However, nothing has been created neither by loyal followers nor the boss.  The money, being an equivalent of work must be stolen by a form of "taxation" or simple extortion.

This defines instantly the role of the government.   What government creates ?   Services ?   What services ? No, the only "product" government "creates" is SECURITY.   Mind you, it is a marketable product and people are willing to pay for it.   Providing security is a full time job.
Now what is a value of a well equipped army.  That depends.  If you are facing Hitler or Genghis Khan, nothing else matters.   The problem is a professional army could not stop Hitler.  If fact, it was wiped out and proved completely useless.   In the end a few million of regular folks had to leave their stores, their factories, their fields, they had to learn to fight and they kicked ass.


So the security it is not worth 50% of MY EARNINGS.   If it is, it is time to make weapons and go to war.

There is a reason why the "monkeys" do not understand the connection between work and money.   For them, there isn't any. No matter how hard they "work" ie talk, go to meetings, make noise and other efforts nothing happens.


There is no product, no buyer, no sale and no money.

Now we can go back and create some definitions.  

[Goods and Services]

To state the obvious: people need things.  In order to survive people need goods and services like food, shelter, clothing, tools etc...     These goods have to be made. For the sake of efficiency and quality work specialization is required so most of the goods we need is made by other people.  By definition services are provided by other people.  Primeval societies "found" things they needed. There was a very high "intrinsic" component in goods.  We hunted land animals and fish, collected nuts, dug roots, used wood, bone, native gold, obsidian and flint.  With few exceptions like fish we have exhausted the available supply of  things we could find.  Now ALL the goods have to be made by human labor.

[Trade and Economy]

The second factor is an economy of scale. It was difficult to kill an animal to catch a fish or to make a bow. It was even more difficult to produce "high tech" product like a bronze axe or a gold ear-rings. It required a skill and a know how.  Once the smith made first good axe, it was easy to make 10 or 20 more.  Then one could trade them for some beautiful sea shells    :-)      You know I am serious there. Trade is as old as humankind.   What was the first trade?   Well, the Bible is probably right: a woman exchanging sex for food though a Snake had nothing to do with it!

[Money, Value, Currency and Fake Value ]

Trade started as barter. Money was invented later to facilitate the exchange.   Money is a concept. It is a measure of "value" humans attach to goods and services.   Value is the desire of humans to "own" or "consume" goods and services.   However, money has an weakness. It needs a medium to be implement in practice.  A medium like sea shells, iron bars or gold and silver.   The medium has to be convenient to carry, indestructible, difficult and expensive to produce,  impossible to fake, easily recognizable and uniform (that is why diamonds are not money).    It has to have value to humans but it can not have any utility value so it will not be destroyed.    It has to be rare and expensive but not too rare nor too expensive.


The only medium of exchange that survived the centuries is gold and silver.   Over time, gold and silver has become money though it does not have any use and little utilitarian value.

Gold and silver money has serious flaw - the supply is limited by the availability of metal.  However, this is alleviated by increasing the velocity of money and creating credit.   Velocity of money is a fancy name for reuse.   A buys from B, B buys from C etc...  the same money facilitated multiple transactions.


Credit is a legal note created by a creditor, and backed by his tangible assets.   It is an obligation to buy back the note after the prescribed time for the principal plus interest.  This obligation must be enforced by law.   Money is an equivalent of labor.   It works like a rechargeable battery.   It "stores" human labor in a convenient form for later consumption.   However, people rarely need a pure human labor like the "professional" services of a doctor or lawyer.   In most cases we need "goods" ie. things which have been made by labor. The labor itself is hidden from consumer  in the "value" of these goods.   The value of the "product" is a measure of a desire of people to consume it.   Thus, "money" is an equivalent of goods and labor and a store of value ie. desire to consume.  


Credit is equivalent of work to be done in the future by the debtor in exchange for money borrowed from the creditor.   To account for the risk to the creditor the borrower has to pay interest.


Currency is a credit note issued by the government as a legal means of exchange.   In theory, the government promises to buy it back at any time for money.  The government is a debtor, the saver is the creditor.  It is a cheap credit as the government does not pay interest [or very little of it].   Money can not be easily created.   It has to be saved and pooled to create capital.  

Money is an asset and will hold value for as long as people desire gold and other rare objects.


Currency is a piece of paper. It has value as long as the government says it does. This "value" can be wiped out with one stroke of a pen. Currency is someone's liability. It holds value only as long as the issuer is credit-worthy and can pay back its debt..


Gold Rubles and gold Krugerrands are money . The Reichsmarks were currency. It lost all real value on 9-May-1945.


In the mid 20 century something curious had happened - currency had become "money".   The liability has become an asset.  The piece of paper acquired value backed by the creditworthiness of entire nations.  It is not the first time it has been tried.  The kings of France tried this.  The kings of England tried this.  The results were rather sorry - the kings lost their heads.  The current massive experiment lasted 70 years for over 3 generations.  One could think it was successful, but the fraud was just so big it took a very long time for the results to first appear.  Now the cows are coming home.  The currency will go to zero again, but that is a subject for another essay.

This simple definition of  "money" and  "currency"  has a very far reaching consequences.  First, it provides a clear distinction between human producers and parasitic consumers.  Second, it provides a clear distinction between money and currency.  Third, it clearly defines the role of the "government".

There are many people who have no skills or no desire to produce anything. Yet they need the manufactured goods and services in order to survive.   I call them "Monkeys" because just like the monkeys they tend to congregate into troupes and many are actually destructive.  The critical statement is this: since Monkeys do not make anything they can not "earn" money.  They have to steal it or extort it.  They congregate in groups of alike individuals and use agression to hustle a living.
The Currency is NOT money. It is a piece of paper. It obfuscates the role and the very nature of money as a deferred labor.  It enables the incompetent, destructive "monkeys" to pretend they also create "value".


However, currency is designed and promoted as the equivalent of money thus the equivalent of labor but unlike labor,  it can be printed at will.   It makes "credit" cheap.   After all, all it takes is to print a piece of paper.   It makes savings an oxymoron.   The banks do not need savings to issue credit.   Sooner or later credit printing gets out of control and the whole fraud unwinds.  We are witnessing it now.

The only products government can manufacture and sell is law and security.   Personal security.  It is a legitimate role and a legitimate products.   In fact, it is priceless.  Laws permit economies to function.  It enables property ownership and civility.   Personal security is the first step to political freedom which has been proven to promote wealth creation.

This has become a book. The real point can be made starting here with the "Monkeys" taking over the government in the times of prosperity and the replacement of  money with currency.  The system starts rotting from the top and the disaster is unavoidable.


I have no desire to write this book.  I know you know the end.  We both know the resulting cycle is very long.  In fact, this may well be the explanation of the Kondratiev's super-wave.  There has to be a longer cycle - about 3-4 generations.  In short, the cycle starts with competent people and real money and it ends with "Monkeys" in charge and worthless paper currency.

See you tomorrow.
Stan P.

(Text in brackets [] and quotes added by Heretic)
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Update 24-April-2010.
More comments posted on this subject, see under the previous article.

Baby boomers' monkey business

What do the following terms have in common: Ardipithecus, monkeys’ social habits, high sugar + cereal diet, Lipitor™, vegetarianism, environmentalism, political collectivism, herd mentality, break-down of family values, excessive focus on entertainment, business-destroying corporate management based on consensus not competence, de-industrialization, engineering decline and medical science failure?

I am going to expand upon that. Existence of some connection in the above listed items was originally postulated by Stan Piotrowski (aka "Dozent") in response to my theory explaining the strikingly (to me) consistent social habits and culture of the generation of people born just after WWII (1940-ties to 1950-ties), in Europe (West + East) and N.America. My theory postulated reincarnation of some ancient technologically-inept collectivist-minded differently-logical people into the midst of our modern technology-based individualistic civilization. On the other hand, Dozent's theory replaced my metaphysics with pure biology, evolution, genetic programming, and atavistic fallback to the social behavior from our very distant evolutionary past.

Here is Dozent’s theory in a nutshell, in his own words:

Recently you have told me that the looters are cavemen. You are wrong. Totally, utterly wrong. If anything, WE are cavemen. We eat meat. We hunt. We build fires and spears. [....]

To explain my thesis I have to go back to the first time I have seen a TV program on "Ardi" - the earliest known humanoid. Ardi walked upright and had small teeth. Just like us. He wasn't aggressive. He was a hunter and gatherer. Males brought food home and shared life with a female. Females choose good providers and husbands, not an aggressive unattached types. The teeth are a proof of it.

Chimps and Gorillas went the other way. We don’t descent from monkeys, Ayn Rand didn’t know that. Apes are a different evolutionary line which rewarded strength and aggression. The big gangster type. Large gun and no respect for his woman. Ardi was not a chimp-like creature. Neither was "Lucy" the Australopithecus. They did not look like an ape and they did not behave like an ape. We can see it from the results. From the size of our bodies, our teeth, our testicles and our penises. They all point to one-to-one stable relationship. Not based on aggression and sex.

If we were like apes, women would have a red protruding behinds and the men would be twice as big with very large teeth and very aggressive sexually driven behavior.

This observation has eluded me for years.

Back to my thesis. The looters are not cavemen. They are Chimps. Mini-skirts and large half-naked breasts are an equivalent of big red arses. Big guns and motorcycles are equivalent of large canines. Aggression and submission are dominant behavior. Everyone tries to be an Alpha dominant male, a "silverback". They can't work. They don't think. They drink beer (carbs) and eat cereals (carbs). They behave like Chimps not like Cavemen. They look like Chimps, they talk like Chimps and behave like Chimps. They are Chimps.

This is a discovery which eluded me. You do not try to befriend a chimp. You stay away and so does he. You do not try to appease an aggressive chimp. […]

This is not arrogance. This is not "I am better then them" etc... I may not be better I am different. I am a Human. They are Chimps.

The most popular movies right now are all about vampires. Vampires are creatures who live among humans look like humans but behave like..., yes you have guessed it, Chimps. You can call them Chimps or you can call them vampires. You do not call them Cavemen. That is offensive to my noble ancestors who lived in natural caves before they learned to build artificial "caves". They did it so as to protect their children and family from the environment.

They also dressed up in animal skins to be warm not undressed up to show their canines and biceps or their red arses. That was before they have learned how to make an artificial skin called fabric. Yes, caves were rare and they had to be shared. They had names, individuality and respect for the skills. They cared for their families, their children, their parents and their friends.

Stan, Cavemen were US, not THEM.

Stanislaw P., a human.