Lessons From Computer Firms

November 1996

BOOKSHELF

Lessons From Computer Firms

s the search continues for real-life examples of "new" management ideas in practice, one place to look is the computer industry, which has long been characterized by flat organizations, speed, flexibility and teams. Probably the most famous computer company in the world is Microsoft, founded by the renowned Bill Gates. While Microsoft is well-known for its software products, the company is also known for its unique management style.

Four recently published books provide a glimpse into that management style, yet provide dramatically different views of Microsoft.

Microsoft Secrets is a well-researched, academic tome by two university professors, Michael Cusumano, who teaches strategy and technology management at MIT's Sloan School of Management, and Richard Selby, who teaches information and computer science at the University of California, Irvine. Cusumano and Selby conducted intensive interviews with Microsoft employees and reviewed several thousand pages of confidential internal documents and project data.

I Sing the Body Electronic is a firsthand account of Seattle Weekly journalist Fred Moody's year as a participant and observer on a Microsoft team creating a multimedia encyclopedia for children.

In Business Wisdom of the Electronic Elite, management consultant Geoffrey James presents 34 winning management strategies from Microsoft and other computer companies. The Road Ahead presents Bill Gates' vision for the future of the information highway.

In addition to the books on Microsoft, two other recent volumes provide insight into the management style of the computer industry. In The HP Way, the late David Packard describes his experiences creating and leading Hewlett-Packard to the No. 20 spot on the Fortune 500.

And, in Inside the Tornado, Geoffrey Moore describes the marketing and leadership strategies used by leading hardware and software companies.

Lessons Learned

One comes away from Microsoft Secrets and I Sing the Body Electronic with vastly different pictures of Microsoft. That's because the authors, like the blind men and the elephant, each touched a different part of the the company and therefore came to different conclusions about the animal. Cusamano and Selby found their Secrets in the software applications side of the house. In I Sing the Body Electronic, Moody became a team member in the multimedia division while it was undergoing constant reorganization and leadership changes. The well-oiled Microsoft "juggernaut," described by Cusumano and Selby, appears much less well-run and prone to human frailty in Moody's account. The team in which Moody participated is rife with personality conflicts, culture war (between computer programmers and everybody else), poor communication and missed deadlines.

Hire the best. The first of the Microsoft "secrets" is finding outstanding individuals who know the technology and the business. Gates devotes only part of a chapter of the The Road Ahead to the history of Microsoft. There, he describes his 1979 instructions to Steve Ballmer, the Microsoft chief operating officer, shortly after Ballmer joined the company. "Just keep hiring smart people as fast as you can," instructed Gates. According to Cusumano and Selby, the policy is still in effect. The Microsoft recruitment and hiring process is described in process terms by Cusumano and Selby and brought vividly to life by Moody in his account of a Microsoft hiring interview. The principle of selectively hiring the best people is a worthy goal for all organizations. Geoffrey James reports that the computer industry's emphasis on hiring a diverse population of employees and searching for highly self-motivated people is key to the industry's success and differentiates it from other industries.

Trust your people. The HP Way, as described by David Packard, is built around the concept of trust. Packard recalls an early pivotal event in the history of Hewlett-Packard when Bill Hewlett went to the HP plant one weekend, stopped by a company storeroom to pick up a microscope and found the equipment cage locked. He broke open the latch and left a note insisting the room not be locked again. HP was not going to be a company that distrusted its employees. Packard concludes, "the open bins and storerooms were a symbol of trust, a trust that is central to the way HP does business."

Match the right people to the right job. Moore, in Inside the Tornado, describes the life-cycle of computer companies and effective marketing strategies for each stage in the cycle. While these strategies will be of increasing interest to government entrepreneurs as the concept of franchising expands (see "The Competitors," June), Moore's final chapter on leadership should be of great interest to all government managers. Moore describes the different sets of skills required in each stage in the life-cycle of an organization. The key to an organization's success, he concludes, is matching an individual's skill and personality to the tasks required by the organization at the appropriate point in its life cycle. To make his point, Moore contrasts the start-up phase of an organization, when what's needed is hands-on leaders who will roll up their sleeves, to the later stages, when "you want executives who can stay above the fray, see the forest rather than get caught up in the trees, and eschew firefighting in favor of fire prevention."

Continually learn. Microsoft has built a learning organization within the company focused on improvement through continuous critiquing. In Microsoft Secrets, Cusumano and Shelby describe the intensive process by which Microsoft learns from past and present projects and products through post-mortems, process audits, retreats and cross-group sharing. Customer feedback serves as another aspect to Microsoft's learning process, through its customer support lines, which provide crucial information to programmers who constantly fine-tune the software. In The HP Way, David Packard credits customer feedback with the success of HP printers.

The most intriguing part of James' Business Wisdom of the Electronic Elite is his description of the cultural mindset of the "electronic elite." He says the electronic elite view business as an ecosystem, the corporation as a community, management as a service, employees as peers, and change as an opportunity for growth. They also believe in motivation by vision. The mindset is different, says James, from traditional, bureaucratic organizations which view business as a battlefield, the corporation as a machine, management as control, employees as children, and change as pain. This philosophy promotes motivation by fear. That traditional mindset sounds familiar to the one many would describe in the public sector today.

A look at Microsoft and Hewlett-Packard, as well as other hardware and software companies, provides an alternative organizational model to the traditional, hierarchical bureaucratic model. While not perfect, the new model offers lessons for the future. As our society moves toward more "knowledge work," the type of work performed in hardware and software companies, the relevance of management in the computer industry to other industries will increase.