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January 1, 2001

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New Blood At Microsoft

The old guard is leaving Microsoft. That means generational change. Where many naysayers see the Microsoft franchise unraveling with the departure of all those old-timers, Stuart J. Johnston sees the possibility for real cultural change

By Stuart J. Johnston

he news last month that Joachim Kempin, Microsoft's senior VP of original equipment manufacturer relationships, is stepping down was greeted by cheers and jeers in the industry. Kempin, a rather low-profile figure who doesn't often make news, is known as a ruthless competitor who will stop at almost nothing to get the sale, as well as make the best deal for Microsoft. As such, he has been at the center of many controversial moves in the past 17 years.

Bill Gates and Steve Ballmer didn't personally light the matches that gave big PC vendors such as IBM and Dell Computer the hotfoot when they didn't do exactly what Microsoft wanted. That included everything from not bundling Netscape all the way back to forcing vendors to pay for MS-DOS licenses for every PC shipped, whether it had DOS on it or not. As you may recall, that's what started Microsoft down the long antitrust road in the first place.

Senior management surely encouraged and strategized about how to make six-ton gorillas like IBM heel. But the guy jerking the leash was Kempin. That's why he was one of the central witnesses in the antitrust trial. His new job will be to head up "special projects," which in my experience usually means he's been given the chair closest to the door. But Kempin's role change illustrates a more fundamental shift at the company.

The old guard is leaving. That means generational change at the company, which is often the only type of long-term corporate cultural change that actually works. As I'm sure you've read, many Microsoft senior execs retired in the last couple of years.

Last year in this column I said that's not a bad thing, despite the apparent brain drain at the top. Microsoft still has plenty of IQ points and management talent that can move up to fill the gaps left by gazillionaires' departures.

Microsoft has been successful partly because it's always willing to change if circumstances change, and change they have. Too much tenure among senior management institutionalizes behaviors that may have been appropriate to a young company on its way up, but are not what a mature company, whose market capitalization is one of the highest in the world, needs going forward. So having senior managers step down or retire--particularly ones who have been at the locus of Microsoft's past troubles--is a good thing.

Where many naysayers see the Microsoft franchise unraveling with the departure of all those old-timers, I see the possibility for real cultural change. To continue to thrive, a company such as Microsoft must constantly be shaken up and rejiggered so it can successfully confront new onslaughts and capitalize on new opportunities. It's evident from many of Microsoft's recent moves toward embracing open standards, most notably in the company's still unsteady .Net initiative and its newfound enthusiasm for XML, that this is the course that the Microsoft supertanker is trying to chart.

Today, Microsoft's future seems more uncertain than at any point in the last 10 years. No one knows whether .Net will succeed, whether anyone will buy Whistler when Microsoft tries to move the Windows user base wholesale to Windows 2000 next year, or really whether the new administration will try to break up the company. But at least with new blood moving up to take senior positions, we're seeing the ascendancy of a new guard that wasn't drilled in Microsoft's early culture, where making standards moot through the "embrace and extend" model was the norm. The guys I've been meeting with lately seem to be earnest evangelists of open standards such as XML.

They understand that Netscape was right: The advent of the Web means that the world is changing rapidly. This is apparent from the fact that, for the first time in my memory, standards are winning out, and vendors are adhering to them. The world suddenly has become bigger than the desktop, and nothing Microsoft can do will slow the change. So like the cynical old saw says, "To get along, you've got to go along."

Gates and Ballmer are as good as anyone else at reading tea leaves. They know this is a tide they can't beat, so they're going along. And the arrival of a bunch of new, forward-looking management talent, from both inside and outside Microsoft, is a welcome change. Perhaps someday soon, they'll even fix Windows so it doesn't crash every other day.

Stuart J. Johnston has covered Microsoft for more than 12 years. He can be reached at stuartj@halcyon.com.

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