Here’s one hypothesis: asystem called “stack ranking.” The system forces each functional unit to rate every employee as a top performer, a good performer, average or poor.
Current and former Microsoft employees cite stack ranking as being a destructive force that drove people out. Says one former developer, “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.
“It leads to employees focusing on competing with each other rather than competing with other companies.”
Some say the policy crippled the company’s ability to innovate.
For example, former engineer Brian Cody says his reviews focused on how he could become more visible among other managers—not how to become a more awesome engineer.
When it came to new products, higher-ups had such intractable loyalty toward the Microsoft user interface that they couldn’t consider any other technology. An e-reader prototype received the thumbs-down by Bill Gates in 1998 because it didn’t look like Windows. It had a touch screen. A few powerful people made the decision not to make the leap toward emerging technology.
The combination of poor management decisions by Microsoft could serve as a b-school case study on the “pitfalls of success.”
— Adapted from “Microsoft’s Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant,” VF Daily.