The 12 Simple Secrets of Microsoft Management
David Thielen
Key Points of Each Chapter:
1. Total World Domination: Go for 100% of every market you are in. Market
Share is everything
2. Top 5%: Hire the smartest people around. Smart employees are your
best asset
3. Bet the Company: Put your heart and soul into every project as if the
entire company relied upon your success to survive
4. Require Failure: If you take a risk you might fail. If you don’t take risks
you won’t succeed. Take bold risks, not reckless risks
5. Managers Are Qualified: Managers can only make good decisions if they
are qualified to do the work their subordinates do because they
understand it well.
6. Perform, Perform, Perform: The only thing that matters is the result.
Focus on doing the best, being the best and performing the best
7. “Shrimp vs Weenies”: Don’t waste money on irrelevancies. By
conserving resources you can actually increase productivity
8. Size Does Matter: Big is bad. Small teams that “own” their project work
better and achieve better results
9. Bill Is Watching: CEOs and top level management must have an
excellent knowledge of what the major problems are so that there are no
surprises
10. Esprit de Corps: Excellent morale produces much better workers – a
product can be superior merely because the people who made it enjoyed
doing it
11. Stop the Insanity: Don’t waste employees time and company resources
on irrelevant rules, processes etc. Believe that employees are smart
enough to make reasonable decisions
12. Home Away From Home: Design the work environment to emulate a
home environment – if the workers are comfortable they will perform better
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Summary of Each Chapter
Introduction: Feel the Energy

Microsoft’s management style is its core strength

Companies either evolve or die – if they are too slow to react, then they will
be devoured by other companies

The company needs to be vibrant and alive in order to succeed
1) Total World Domination
Microsoft is going after 100% of every market that it is in

Nike Maples when he was executive vice president
Every employee at Microsoft has the same aim: to give Microsoft 100%
market share in every market that it is involved in – Total World Domination

You have to ask yourself and all employees, “What are you doing to
increase market share?”

Don’t be satisfied with the safe option and the secure option. Risking profits
to increase market share can be well worth it: losing profits only threatens
security, but gaining market share shows who won (ie: destroy the
competition)

Recklessness can destroy a company just as quickly as caution. Encourage
the bold, not the reckless.

Hire type A people who are driven by conquest, not by security

Go after a market with the view to dominate it because owning a strategic
market gives you a cash cow.

Lead by example: make a learning situation out of an employee’s mistake if
it was a genuine mistake. Ask for direct reports on a daily and then weekly
basis
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2) The Top 5 Percent

The single most important contributor to productivity is the quality of the
employees: Hire only the very best people.

No matter how good the manager is, if the employees do not have talent,
the team will not win

The best managers are the ones that do the least damage to the teams they
have working for them

It is irrelevant what your perception of the quality of your employees is, what
matter is what the level of quality truly is

A company cannot thrive without excellent employees

Microsoft only hires those who are in the smartest 5%: how smart that is
depends on the job.

“Smarts” is the ability to turn the brain on and think. A worker with smarts
will catch errors sooner, come up with more efficient ways of doing
something and save time, effort and the company’s money

Rather than hire from the second top 5%, Microsoft chose to limit the
expansion of R&D

Interviews at Microsoft are done by the group doing the hiring

The entire purpose of interviewing candidates is to push the candidate in
every direction until he fails. By doing this it is possible to learn exactly what
they are and are not able of contributing

A new employee should raise the mean of the team

Employers should be concerned about how the new employee will perform,
rather than concerned about management

The employee needs to be committed to the common goal. Contractors do
not have a meaningful relationship with the company that hired them and
temps are not going to be in the top 5% or even top 10% of smart people.

Hiring the right person is the most critical decision that a manager makes:
No matter how desperate you are to fill a position, do not compromise.
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3) Bet the Company

Very few companies are willing to bet their future unless they have no
choice.

After capturing an island, Vikings used to burn their boats to show that they
have made a commitment and that defeat is not an option

Microsoft tries to kill their own products for two reasons:
1.
If Microsoft doesn’t, someone else will;
2.
To force a paradigm shift and cause confusion which creates
opportunity

You must be able to see that there is going to be a change, embrace it and
restructure your plans around the change – don’t be afraid of the change or
try to maintain the status quo because the losers are the ones who fight to
maintain the old way of doing things

If you are not willing to make bets at good odds, then you can’t win

You must be able to react quickly: don’t wait until someone else makes your
product obsolete, do that yourself

Not making the bet can cost you the market and is often not the safe option
4) Require Failure

SNAFU stands for: Situation Normal All Fouled Up: a company that is
capable of responding to rapidly changing market will aspire to do better
and often will.

Failures, as long as they are not excessively stupid, should be expected and
forgotten: you can’t expect people to be perfect and not ever make mistakes

Identify failure as quickly as possible

No failure is unacceptable – it means that people are not trying hard
enough, they aren’t pushing the envelope

If you can predict failure, then do not proceed with the project – change path
and try something new (logical but often ignored advice)

It is critical that you understand why failure occurred
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
If (reasonable) failure is seen to be a result of attempting to succeed, and
employees are rewarded substantially for success, then it stands to reason
that employees will risk failure in the pursuit of a successful outcome.

In this environment, while you experience more failures, you will also
experience more successes.

Have a post-mortem discussion about the project: discuss what went wrong
and what could have been done better to figure out how to improve for next
time. These sessions are not meant to be judgements on individuals and
thus encourages the team members to dissect their efforts and critically
review them

Report problems immediately: recognise that the problem may exist,
determine what is being done to research it and when you will know how
serious the problem is and suggest solutions to the problem.

Managers should not get upset when they are faced with bad news because
then no bad news will be delivered to them and they will not have a true
picture of how the project is developing (thank the messenger, don’t shoot
him!)

Push decision making down. Put the power in the hands of the employees
because they are the ones who deal with the project daily, not upper
management. Decisions for upper management are reserved for “Big
Picture” issues (i.e.: how it will affect the rest of the company), not “Local”
issues (i.e.: how it will affect the rest of the team/project etc).

Because employees at Microsoft believe in their product, they will fight for
what they believe to be correct and have no compunction about disagreeing
with management

Because employees have the power to make almost any decision relating to
the work they are responsible for, decisions can and are made quickly (they
never leave decisions pending until the next meeting)

There must be a free flow of information so that people can make good
decisions.
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5) Managers are Qualified

Managers should understand the work that the people who report to them
do eg: managers of programming teams are, themselves, excellent
programmers and the people managing the marketing teams are marketers.

Managers who do not understand what the people who they are responsible
for are doing cannot be effective in their position for a number of reasons:
-
They will not earn respect from subordinates
-
How can they make decisions on issues that they don’t
understand?
-
How can they understand the status of their group if they are
susceptible to being blinded by smoke and mirrors?

The primary qualification for managers at Microsoft is their expertise in a
particular field. Other management talents are taken into account but are
not the focus of the decision to promote someone to a management
position.

Don’t promote people to management just because “they look the part”

Management positions and promotions at Microsoft do not go to those who
have been there the longest and who are next in line, but to the best
available person for the job. This a “Darwinian” environment where the
effective managers are promoted and ineffective ones are demoted or “sent
on a permanent sabbatical”. This selection process encourages people to
do the best job that they can (competition produces productive workers).
6) Perform, Perform, Perform

At Microsoft, those who perform today cannot rest on their laurels because
someone who is not resting will pass them by. Those who burnout on a job
will be replaced because they will no longer be of use to the company

The result of this heartless approach is that employees are constantly
challenged to do the best job possible – the company is looking at what you
are doing NOW and not what you have done in the past

Excuses slow down problem solving. Solutions are required, not excuses
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
If a product is not being shipped, then all the excuses in the world will not
ship it, if a marketing campaign is failing then excuses won’t fix it. The only
critical question is: What is going to be done to fix the problem?

This may be unfair, but Microsoft is not concerned with fairness but with
success. All that matters is winning.

Discomfort with being measured on success usually stems from the fact
they those people are not successful. This success oriented environment
self-selects employees

In order to succeed you have to fail. An employee’s rating is based on
accomplishment. If the project is a failure then that will affect the employee’s
rating negatively but, because it can occasionally be expected, it is not a
permanent black mark on the person’s record (unless failure is continuous).
It is just a measure of the work the employee most recently completed

People are not judged by whether the project that they were involved in
failed or not, but how they performed within their scope of responsibility.

How you look or talk is largely irrelevant. It’s how you perform.

Comparing yourself to your co-workers and trying to be as good as them, or
better, can drive employees to substantially improve

Work smarter, work harder, innovate more

The choice is not how to do as little as possible, but rather to do as
spectacular a job as possible

Just because one person or team has completed their specific role, it
doesn’t mean that the job is done. People take ownership of the entire
project and, with Microsoft, the project isn’t complete until it has been
shipped.

People will not fight or die for imposed goals, but if they helped to create the
goals they will eg: the schedules for release of products must be run by the
employees at Microsoft before being implemented.

Figure out the fastest way that a job can be done and shoot for that
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
3 key components that make employees at Microsoft want to perform at an
optimal level:
1. The work is largely exciting and interesting. They enjoy what they are
doing
2. Their value is measured by performance. Better performance = success
and reward
3. Peer pressure keeps people performing. You cannot stand high in your
peer’s eyes unless you do an excellent job.

There is a downside: employees are wrapped up in their jobs, the success
of the group and the company. So if they see that something the company is
doing is stupid or wrong or is a bad move, they will tell their managers.

Employee concerns must be directly addressed and CEOs and high level
management must be responsive to employee concerns
7) Shrimp vs Weenies

Microsoft has maintained a “penny pinching” philosophy: buy weenies
(sausages) not shrimp

There are no special parking spaces, no larger offices (only regular and
double) and Bill gates flies economy class (because then everybody else
has to)

Just because Microsoft has billions of dollars to spend, it remains frugal to
stop unnecessary spending which slows down the company which makes it
inefficient.

Lack of bureaucracy lowers costs

There are no secretaries at Microsoft. Bill Gates does his own typing and
reads and responds to his own e-mails (He has an Admin. Assistant who
keep the groups running and who are empowered to make a substantial
number of decisions on their own). Artificial layers have been eliminated.

Not keeping “dead wood” and obsolete employees, no matter how long they
have been with the company, is ruthless but economically efficient.
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8) Size Does Matter

The major functions at Microsoft are creating, testing, marketing and selling
software. These functions are performed seperately for each and every
project. This is because Microsoft wants to maintain that vibrant “smallcompany” feel and not become a stagnant large corporation

The same methods of creating, testing, marketing and selling are not the
same for all projects

The process is established by the group and it is therefore most likely to be
followed

Some elements are “monolithic” eg: mail, phones, Microsoft Internal
Services etc. Every one of these services could be handled by an outside
company and Microsoft would be the same company that it is now

Where the company meets the public you will find a single organisation

Wherever possible, the work be kept at the project level

While each project has its own destiny, it must be part of the company’s
overall direction. Bill Gates and senior executives always know what is
happening within the company and all projects, marketing etc must be
approved by them first so that it fits in with the direction of the company

Group members will pass on what has worked for them to other groups and
thus share information throughout the company

Sometimes groups work together to solve problems (such as a common
user interface for all Microsoft applications

You can’t have separate business units that are still controlled by the central
authority who directs each specific unit, you have to have separate business
units that are able to make most of the decisions on their own within the
framework of the big picture
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9) Bill Is Watching

Bill Gates’ philosophy, approach and strategic vision permeates the entire
company. If you don’t like it, leave.

Project managers send regular reports to Bill about the status of their
projects – the reports must state the current status of the project and the
problems that it faces. This ensures that Bill knows what is happening and
will not be surprised by sudden problems that spring up

Upper management must have an excellent idea of what is going on in their
company

There is pressure from above to fix the problems and they encourage this
by providing real support

Bill Gates has a half hour meeting with each VP once a week so that he can
gain a very clear understanding of what each department is up to. Because
these meetings are regular (weekly) Bill doesn’t have to be constantly
updated on the situation, he is aware of it from last week and the meeting
can focus on real day to day problem solving

There is an annual meeting every year for Microsoft employees that
includes entertainment as well as business. The idea is to keep all 25,000
employees informed about what is going on in the company and the
direction that it is taking

Bill often listens to presentations by project managers. He quizzes them
endlessly on technical points and non-technical issues. The project
manager is expected to either know everything about the project (to the
finest detail) or bring along those who can answer the questions. This
means that there will be no glossing over issues or “feeding upper
management a line” – BILL WANTS TO KNOW

Bill Gates often walks among the workers to see first hand how the project
is progressing. By talking to the workers, he gains a good understanding
about what is going on with that project – other management staff do the
same thing
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
Management must give workers the freedom to create and work properly,
but must at the same time be very aware of the problems within and status
of the project
10) Esprit de Corps

True esprit de corps is found among small groups of highly trained and
highly motivated individuals

People don’t knock themselves out for things they do not have ownership of.
Give workers a sense of ownership and they will try harder

Give workers freedom to make decisions and they usually come through
with the goods because they are directly involved in the project and they are
responsible for its outcome

Keep employees focused on one task or project so that they don’t get
distracted – employees can eat, live and sleep their project. Focus enables
productivity

Assign a team to a project and keep them on the team even if they are not
needed for a part of it. This tells them that they are truly part of the team,
they are important and they won’t be looking out for something else and get
distracted by what might be. They remain focused and committed to the
effort

Meetings and retreats are important for teams to bond together and feel as
one. Entertainment at Microsoft retreats is essential so that the people
remain energised and, more importantly, are able to laugh together

Humour is essential in the workplace. People should have fun at work and
thus keep them interested in what they are doing. They must enjoy their
time in the workplace

Awards are good as a motivational exercise, but they are limited in that
once an award is received, the recipient may think that the job is completed
and no additional effort is required

Stock options and a good salary are also motivational tools but if the work
environment is not an enjoyable one, then they will not be productive
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
Each company needs to find its own way to boost morale and esprit de
corps (eg: a downtown law firm cannot have nerf-ball wars in the corridors
because clients just wouldn’t understand!)
11) Stop the Insanity

Don’t waste time and money on stupid things such as 4 page memos about
the correct way to wear your security badge or rules about every
conceivable situation an employee might face. Assume your employees are
smart enough to make reasonable decisions

Only hold meetings that are necessary. If you don’t need the meeting, then
don’t have it just because it is Monday morning and you always have a
meeting on Monday morning

Hallway meetings between key members of teams often solve many
problems

Keep your meetings focused and make sure that a decision is reached
before the end of the meeting (don’t leave decisions hanging if possible)

Disseminate information – share as much information as possible among all
work groups. Information is power – but only if it can benefit the company
and that is done by sharing that information with those who could make
good use of it

Insincerity wastes time and effort. Be sincere, direct and mean what you
say. By following these rules, you focus more on the work and less on trying
to fool your subordinates into thinking that their ideas are good when they
are not or that you like their style, when it is clear that they don’t fit in

Companies should have people working there who want to get the work
done – not smooth talkers

Volvo executives are given a free car which is serviced for them and
upgraded every year or two. They have no concept of how the consumer
feels about the car (same car for 5-8 years, regular servicing,
inconveniences etc). If you produce a product make sure that you use it
regularly prior to releasing it to the public. You will know how the users will
12 / 14
implement the product and you will have an understanding of the
consumers’ gripes

Everybody who is involved in the producing the software must use it so that
there are no misunderstandings about how ready the product is for shipping

Products are shipped with bugs. You can improve products until the cows
come home, but it has to get to the consumer otherwise it is useless
producing it!

Don’t make something a regulation if it is not going to be followed! Make
rules few and far between and the ones that are there must make sense
12) Home Away From Home

Look to the home environment for inspiration in designing an office
environment – the home is supposed to be the most comfortable place so
why shouldn’t the work environment use some of the principles?

Have offices, not cubicles. Cubicles are demeaning and send a negative
message to the employees (the boss doesn’t care how I feel, he is in a large
office of his own and I am stuck in a 6x4 cubicle – prisoners get larger cells
than this!)

At Microsoft, the employees have an office each – identical but with the
option to decorate it as they like – how they feel more comfortable

Try to have as many windows as possible. Natural light stimulates thought
(small buildings usually have more natural light per office than do larger
ones, so have a series of small offices if possible)

Dress codes stifle individuality and creativity. It also gives employees
something else to worry about. Let them walk around bare-footed if it helps
them to work better

Free soft drinks, water and coffee help to boost morale but it also makes it
easier for employees to grab a drink and get back to work – they don’t have
to waste time yelling at a broken vending machine that gobbled up money.
Soft drinks and coffee are also excellent pick-me-ups for those late nights at
13 / 14
the office – their high sugar content is sometimes necessary to help
employees get through long hours!

Keep an open supply room and don’t worry if employees take stationery
home with them – at Microsoft, they purchase extra stationery at the
beginning of the school year to accommodate those with kids. The logic is
that the parents won’t have to waste time worrying about buying stationery
for their children! This philosophy also eliminates stealing because if
everything is free, you can’t steal it!

Employees at Microsoft can work any hours they choose – not a set 8 hours
a day but any 8 hours, rather any hours at all. If they can achieve the same
or better than expected results by working only 5 hours a day, then that is
okay with Microsoft. It’s the results and the work that matters, not the
amount of time spent on it. Mostly people end up spending more time at
work rather than less time

Immediate access to food at Microsoft means that employees don’t have to
leave the building for lunch. Microsoft has a number of cafeterias that serve
different types of food and with different themes. This gives the employees
ample choice and less wasted time travelling to and from outside
establishments for lunch
Epilogue: Wolf in the Henhouse

Microsoft has tried to combine the positive aspects of large companies with
the management styles of small companies

Although Microsoft is not perfect, it strives to live up to its management
philosophy on a daily basis

Microsoft’s products may not be superior to the competition, but its
management style and philosophy towards employees has made it a strong
company – one to be reckoned with
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