Resolve and Fortitude : Microsoft's ''SECRET POWER BROKER'' breaks his silence

by Joachim Kempin

  I never forgot that the success of MS’s OEM business, and therefore, my own depended on a successful team. Nothing motivates a team more than being empowered. I extended my trust generously—letting go. As a leader, you set the pace and the expectations. Ambitious challenges make people follow you. People get bored and lazy when the yardstick is set too low. I was always honest with them when evaluating their performances, understanding they hated conciliatory or mollifying judgments.

  There is no need to know everything that goes on in an organization. First of all, you can’t, and last but not least, you shouldn’t; it distracts from your aim and makes you a spymaster instead of a leader. Trust and knowing all show no positive correlation. Putting people under a microscope does not help them grow! Auftragstaktik does. Order them to take the steepest hill without detailing the terrain. That is how they learn to follow you.

  Once upon a time, one of my business managers sent me an e-mail while on the road, asking for a decision. To make my life easier, he listed two options. A and B. I was known to formulate even shorter e-mail answers than Steve’s supertight telegram style provided. In this case, it was just a single word. “Yes.” Unsure, he consulted with my admin. Nothing unusual—a lot of people did after receiving a handwritten note. Only she could decipher my physician-style writings. Now she was asked to interpret my cryptic and ambiguous response. Her prompt advice: “He means A. He did not bother with B after finding option A OK to implement.” The oracle of Delphi had spoken, and her advice was abided by. The actual truth was quite different. I did indeed read both options proposed and decided to leave the decision to my business manager. No babysitting needed with neither option a bad suggestion. Smart guy he was—why would he posit his second choice first?

  As fiscal year ’01 ended and I prepared to depart the OEM division, I found a copy of an old PowerPoint presentation on my home PC, the one I had given to the board outlining my ten-year-old business projections. Reviewing my old forecast, I asked my controller to find out how much Windows business had been pulled in by the enterprise division, and as we added these numbers to ours, we had a nice surprise. The combined revenue figures exceeded my now-ancient predictions by approximately half a billion dollars. I felt super good about the astonishing result. Having produced best-case scenario results, I had not let the board down.

  That June, I attended my last annual group meeting in Las Vegas, Nevada. We stayed in a hotel outside the main city center and, in good old OEM fashion, combined the nightlife and a visit to the fabulous Siegfried and Roy show with team-building exercises, including a challenging hike through the local mountains. An excursion to the Grand Canyon ended for me in an incredible and terrifying helicopter flight so I could catch the flight back to Las Vegas. The annual awards dinner the same evening promised to be special and, for the first time, even a black-tie event—just to honor me. I appreciated the gesture, but deep down, I resented the ensuing formality, and my crew knew that very well. Nevertheless, they had a terrific time roasting me. Bill and Steve were present by video; my friend Richard Fade had made sure of it. The session brought a warm wash of sentimental tears in my eyes. The remembrance was truly funny, rewarding, and a good snapshot of my time leading the team. Except I had the last word, and this was how I addressed the assembly of my battle-hardened cohorts with a quickly prepared handwritten farewell speech:

  My dear friends and comrades in arms, I would have loved to finish fiscal year 2001 way above budget. It just did not happen. The economic downturn caused by the bursting dot-com bubble denied us this last feat.

  After nearly fifteen years, I hereby pass the scepter of my beloved OEM division onto Richard Fade. You will be in good hands. Let me remind you what I said when announcing my retirement last December: “OEM has never been a one-man show—OEM is a well-fused and oiled team.” With the incumbent fighter or better resident rebel moving on, he can help you no longer; good or bad, only the future will tell! Tears, regrets—not me. The only thing which bugs me is losing my trusted team.

  While learning a lot in all those years and giving a lot at the same time, trust and empowerment have been the pillar of our working relationships. Paired with forward-looking thought leadership, they were the main forces helping us to achieve the incredible and unthinkable we daringly set out to confront and achieve. Trust, in particular, will remain the foundation for our customer relationships long after I have gone. Without, none of the bonds we created could have held together in challenging times and to the better of PC users and the entire IT industry. Just listen to some numbers:

  During my time, we sold 60 million pure DOS licenses, over 520 million Windows copies, nearly 150 million little critters, brought in $40 billion in revenue, and made a lot of shareholders happy with nearly $25 billion in profit before taxes. In addition to the traditional OEM business, we built a by-now $150 million CE business and an astonishing $1.5 billion system-builder business the subsidiaries have envied and loathed us for. Unfortunately, most people who did the hard work and made that business a roaring success no longer reside in our group; nevertheless, let me salute them for their great effort and dedication to our cause and how vigorously they fought the pirates on the high seas.

  Why did we win that impressively? We understood that striving for uncompromising product excellence and tenaciously building and defending market share could enact a self-accelerating economy of scale. If our competitors would have understood this better and attacked us earlier in the game, designed better OSs, and recruited a higher number of independent software vendors, we would have had a much harder time succeeding. We worked hard and played hard; with me around fun, was always part of the equation, and because of the lucky stars we were operating under, all of us eventually got rewarded. Seriously, where are our competitors now? They are all history, eating our dust as we left them behind on the various battle fields:

  DRI / Novell / Caldera, Lotus, WordPerfect / Corel, IBM, etc.,

  etc., etc.

  In summary, let me say thank you for helping me to shape the spirit of this division. Give yourself a great applause for all your accomplishments. They are by no means mine alone. Let me finish with what General McArthur said about soldiers leaving the army: “Old soldiers never die, they just fade away.” With all my heart, I wish you under Richard’s leadership a lot of success for years to come, promising you two things in parting: I won’t get bored and—and just in case you are afraid—I won’t come back. Good-bye and good luck.

  As I climbed down from the stage under roaring applause, Richard Fade, in his tuxedo, rushed toward me, shook my hand, and thanked me for what he called “a nice passing of the flag.” Both a bit teary, we looked at each other, and before I could respond, he frankly admitted, “JK, you will be a damned tough act to follow!” With a big encouraging grin on my face, my prompt response was straightforward: “If anyone can do it, you can!” And just as I started to turn around, he addressed me one more time, smirking: “Hm, already retired?” He must have just now recognized that I was the only guy in the room wearing khaki to make a point. A tux has never and will never be a preferred outfit for me. Amen, be true to yourself to the last second!

  When leaving my post after eighteen years of holding key executive positions, I took a treasure trove of experiences away with me. Something the company did not want to lose right away. So I found myself with a new assignment helping to redefine MS’s Linux strategy. Steve referred to me as his Linux czar. The press got hold of this new moniker and leaped into reckless speculation over my ensuing evildoings, my personal life, and any other available gossip someone could dig up. My scant familiarity with Linux and the closeness of my final exit did not warrant any of this.

  While running OEM, I had observed the progress and success of Linux astutely from a distance. For Steve, wanting to gain ground for our PC-server business, Linux was a much bigger thorn in the hide of MS’s galloping ambitions. By ’01, Linux had gained an undisputable foothold in the server arena a
s the new concept of blade computing took hold. These are stripped-down servers on a single board deployed in clusters and connected up through specially designed mounting racks to increase raw computing power for data centers. Linux, a lean, adaptable, and modular OS with a small footprint, was ideally suited for such application. By comparison, MS’s monolithic NT servers were deemed too large, harder to maintain, and neither dependable nor secure enough. Our server group was deeply humiliated by these attributes and tried a variety of avenues to inhibit Linux’s breakthrough. Immune to the usual tricks our marketers flourished, the volunteers fearlessly stood their ground—like minutemen under British attack.

  After careful perusal of the complex Linux situation, I came to several conclusions: Linux will continue to be attractive for certain server applications for at least the next five to ten years. Hardest to predict was how genuine of a threat and at what time a move to the desktop might occur. There were several strategies available to combat its progress. My challenge in my new role as a consultant was how to effectively influence MS’s actions. A tough assignment considering this was a company in transition. One that was drifting into some kind of migratory listlessness and questioning the fierce collective passions that once had catapulted her to exhilarating new frontiers.

  We could not use a direct, head-on strategy to win. As mentioned before, we had a respectable offering but no means a cutting-edge solution. Convinced that we could eliminate our disadvantages over time, a pure containment strategy could not be pursued either. For that to succeed, we would have needed a reputation of hitting launch schedules dead-on and having the resolve to create a considerable leaner, meaner, and supermalleable NT version targeting blade applications at a reduced price. With price being the lesser of an issue, I discovered no appetite to do the needed development work. With inertia ruling our immediate culture, MS’s development nerds just continued to add features. Lack of former competitive vigor, induced at least in part by our legal quagmire, was another hindrance. An indirect strategy would have worked only if we had an ace up our sleeve. Changing the ground rules on Netscape had allowed us to eventually win the game with higher integration and through buying time until other tech advancements became available. Not obtainable for Windows server, it seemed. A strategy of peaceful coexistence, another viable option, ran counter to our former cultural belief system but was what, at the end, roughly evolved. I came to the conclusion that we needed to apply several of these options over time to counter Linux on the server and prepare for a desktop assault. Complicated to execute, and hard to convince the MS’s marketing and development folks of.

  Starting my new assignment, I immediately felt a power gap. I had no direct reports, no marketing budget, zero staff, and hardly any admin support. I suddenly had to deal with dozens of uncontrollable cooks in different parts of the development and marketing kitchen. A lot of them pursued their own ideas and were not accustomed to listen to or follow an outsider. I had led an effective and well-oiled team who respected me for my judgment and joined accomplishments. In my new position, deference was in short supply, replaced by a surfeit of egos, each knowing more than the next and probably in need of a lesson in effective team play and discipline. With the company in legal jeopardy, the former speed-of-light velocity downshifted to one of cautious circumspection, not a terrific prerequisite for winning against courageous, inspired volunteers. Public image and avoiding questionable publicity were more important than winning with unpopular measures such as suing over patent infringements.

  Having no track record with this new group, I came up short. Failing an assignment wasn’t commonly found in my resume. I admit I early on lost the drive to sort through a labyrinth of diverting opinions and was tired of the political gamesman ship now required to succeed. Despite being offered a bonafide nonconsultant position, I left the company at the end of 2002 at last. This chapter of my life was closing, and after all I had accomplished in OEM, I knew I could no longer top my career in this by-now transformed company. I had better plans for continuing an active life. My professional phase was over, and a new cycle of the private Joachim Kempin was about to begin. I never regretted my decision and still very much enjoy my life after Microsoft.

  A STATE OF DISORDER

  “Fortitude is the marshal of thought, the armor of the will, and the fort of reason.” —Sir Francis Bacon

  WHAT L’AUDACE?

  Shortly after I left the company, I ran into Richard Fade and was surprised to hear that Steve Ballmer, in several OEM business reviews he had attended, continued to pose a simple question: “What would Joachim have done?” Being remembered that way felt rewarding, and maybe my old boss truly missed me, but I saw no reason to reverse course and go back to work. MS had changed dramatically compared to when I had joined up. She now employed a workforce of over fifty thousand people. I had been about the four hundredth when I joined. When I left, only ten others if I excluded Steve and Bill had served longer. My old comrades had voted with their feet following the exodus of others who had joined the company much later. At the end of my career, I felt like a relic from a bygone era, a dinosaur missed by the meteorite and its afterglow. Back when I arrived, the whole company was enthusiastically marching to what the French revolutionary Danton often quoted and what Frederick the Great, Napoleon, and General Patton appeared to have thematically adopted in abbreviated versions and acted upon in spirit:

  “Pour les vaincre, messieurs, il nous faut de l’audace, encore de l’audace, toujours de l’audace et la Patrie sera sauvée!” (In italics is the shorter form; Patton used the condensed form of “l’audace, l’audace, toujours l’audace.”) All of these versions express the same philosophy in a military sense, for which they were originally meant and applied for. Danton’s original remark roughly translates into the following:

  “In order to overcome them, gentlemen, you need audacity, extra audacity, and audacity forever, and the Fatherland will be saved.” Danton used this powerful slogan to fire up the French population and its military during the revolutionary wars, as did French emperor Napoleon, hardcore Prussian king Frederick the Great, and my other hero General Patton.

  When I joined MS, the above slogan characterized our shared understanding of how to be victorious—unspoken, but in spirit. “To win against competitors, employees, we need audacity, extra audacity, and audacity forever, and we will defeat them.” The top two guys had instilled and drilled it into us. (After reading the above you might think that Steve Jobs was spot-on when he once said for MS it was all about winning and not about great products. Sorry, but without them there, what was there to win?) A modern interpretation of the meaning of Danton’s words and the way I always thought they should be understood can be found on the Wasabi Venture website:

  “A bold commander never gives up the aggressive initiative to his enemy. As a start-up, even when you have great success, you have to keep going. Great sales success is not an excuse not to do more marketing. Great new features in a product are not an excuse not to build the next great thing. This probably means extended time of 15 hour days, doing sales calls on weekends, answering support tickets at crazy hours, and never losing the audacity that got you success in the first place. It is in this effort that you will win. Your competitors are not your friends. They are the enemy, and you must step on their throats and cut off the very air they breathe.54 Every customer/user they add is one you never are getting. Start-up life is a Blitzkrieg land grab, and you need to push every day to steal the next inch of ground. Winning is what this game is about, and that is what determines who gets to cash the big checks at the end of the day.”

  Organizing a relentless pursuit is the best way to decisively finish a battle and win the war as the Prussian general Carl von Clausewitz once wrote. This was what the company I knew practiced. The company I was leaving had her wings clipped. An important part of her business was now regulated. Blitzkrieg was no longer in management’s vocabulary. In this context the result of the Feds action ag
ainst MS can best be described with the famous words of Joseph Fouché, Napoleon’s police minister when characterizing the unjustifiable murder of a political enemy ordered by Napoleon: “C’est plus qu’un crime, c’est une faute!” (It was worse than a crime, it was a blunder—unfairly diminishing America’s number one IT Company!)

  In the aftermath of the Feds strike, openly venal attorneys representing opposing parties encircled MS like scavengers ready to maul her bandaged carcass. They engaged the company in a host of class action lawsuits. Companies like Gateway and IBM posing as injured parties went for another part of the kill. The lion I had faced only partially accomplished what his extended pride eventually finished. The finding of facts by the discredited judge served as a scent trail for the blood-thirsty predator bunch. After the dust settled and the mop-up crews had shut the lights and left the building, the legal foragers had extracted approximately six billon US dollars, including the fines paid to the notoriously off-the-wall EU bureaucrats.

  The company, wanting to get rid of these distractions and the resonating hell and damnation of the press, caved and settled most matters out of court. The total settlement sum, in perspective, was roughly the profit my group had generated during my last year at the helm of OEM. The conspiratorial pack of wolves and leeches certainly did have their pay-day nicely lining their pockets. MS dug into her cash hoard and paid up. Having lost her edge, she did so without mounting too vigorous of a defense. Neither the remaining management team nor our own lawyers were willing to slug it out at length. The historically combative mode was drifting toward political appeasement.