Inside the Bureaucracy That Crippled Microsoft

The once dominant tech company is just now playing catch-up to the hip forward-thinking Apple and now we know what took it so long: bureaucracy.

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The once dominant tech company is just now playing catch-up to the hip forward-thinking Apple and now we know what took it so long: bureaucracy. In company emails obtained by Vanity Fair's Kurt Eichenwald, he details the top-down culture called "stack ranking" that not only stifled overall innovation, but killed both an early 1998 tablet, e-reader deal and a pre-Facebook social network. Under this "stack ranking" system, which this Vanity Fair preview of Eichenwald's article describes as "a program that forces every unit to declare a certain percentage of employees as top performers, good performers, average, and poor," employees were more concerned with impressing bosses than creating things. So we get situations where people like former Microsoft engineer Brian Cody have no incentive to innovate. "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," Cody told Eichenwald.

That same culture is why Microsoft just released a tablet, over two years after Apple put out its game-changing iPad. Or why it has found itself behind in the smartphone wars, too. The times Microsoft did facilitate forward thinking, the top-down style of its management stifled it. Because Bill Gates didn't like the look of a prototype e-reader that wasn't Windows-y enough, the whole team got killed. "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," Eichenwald writes. "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," he continues.

We wonder what -- if anything -- has changed at Microsoft, since as of late,  it looks like it  has got its act together. From a hip marketing campaign, to an anticipated tablet and operating system, to the impressive Xbox, Microsoft doesn't look so behind anymore. Perhaps there's no more "stack ranking" or has the ranking worked? Or, maybe, nothing has changed at all. "I see Microsoft as technology’s answer to Sears," Kurt Massey, a former senior marketing manager told Eichenwald. "In the 40s, 50s, and 60s, Sears had it nailed. It was top-notch, but now it’s just a barren wasteland. And that’s Microsoft. The company just isn’t cool anymore," he continues.

We might have to wait for the full Vanity Fair article to get that answer. For now, head on over to the preview at Vanity Fair Daily for more head-shake inducing details of how Microsoft ruined itself.

This article is from the archive of our partner The Wire.