December 12, 2004

One of the most fascinating legal as well as economic battles of the past few years was the massive antitrust lawsuit that the US Justice Department pursued against Microsoft. Even in late 2002, many people questioned whether the behemoth company would be able to recover from the case. However, Microsoft was not irrevocably damaged by the antitrust suit, nor was it notably affected by the global recession. Despite fears that the Titan may actually be forced to be “split in two”, the end verdict enabled it to remain “more or less the same”. In fact, Chairman Bill Gates and CEO Steve Ballmer reinvented the company and former Time magazine reporter Robert Slater details this revitalization in his new book Microsoft Rebooted: How Bill Gates and Steve Ballmer Reinvented Their Company.

Just like in his previous two bestsellers The Wal-Mart Triumph and Jack Welch and the GE Way, Slater digs deep into the culture and philosophies of the company he is investigating. He spent over 18 months researching the book and conducting interviews with insiders as well as industry experts, gaining access to key executives because of Ballmer’s familiarity with and respect for Jack Welch and the GE Way.

In Microsoft Rebooted, Slater explores why Gates stepped down as CEO and the various cultural shifts taking place in the company. The case changed Microsoft forever and according to Slater, Gates accepted and worked with the change. We see the aftermath of the trial and its affect on the corporate mindset of the company.

Microsoft’s “monopolistic” practices were the heart of the case, and the antitrust settlement severely restricted the company’s ability to use its “monopoly on the operating systems of PCs to gain an unfair advantage over competitors or to retaliate against computer manufacturers that favour competing technologies”. However, instead of simply complying with these basic terms, the company’s executives prioritized changing the company’s corporate image and decided to work hard to become a more “responsible member of the industry”. In fact, you may recently have read about the latest iMac G5 with its “Virtual PC for Mac” which “tricks the Mac into thinking it’s a Windows machine”. Such alliances only exist today due to the 180 degrees change in Microsoft’s thinking. Prior to the antitrust suit, Microsoft’s philosophy was cut-throat, “be as competitive as possible”.

Other recent initiatives include programmes to facilitate communications between employees and customers, as well a $75 billion cash distribution plan to please investors.

At times the book is truly insightful and certainly inspirational. Slater relates to the reader the priority Gates placed on hiring the best people — “Other companies hired for the job. Microsoft was hiring for the big picture” — and the weaknesses in its stock option policies — “Eager to keep the cultural emphasis on the individual, the company used the stock option programme along with bonuses to create incentives for one’s performance As options became more valuable, employees were rewarded whether or not they had achieved anything in their work someone could get fabulously wealthy regardless of the quality of that person’s work, which was clearly not what the system had been intended to do.”

Slater also does a very good job of detailing the transition of Gates from CEO to Chairman. He aptly compares Gates to a “king far too young to abdicate, yet far too controversial to cling to monarchical authority” and states firmly that “abandoning power did not come easy to Bill Gates”. However, once the change had been made, “It was not that Gates had become less visible, executives indicated; it was simply that Ballmer had become more visible.” Slater describes the two men “more like brothers than business partners. They fought like brothers, finished each other’s sentences, and anticipated each other’s thinking. Most important, they had a deep admiration for the others’ special skills set. Ballmer appeared truly awe-stricken at Gates’ grasp of technology; Gates, in turn, spoke of Ballmer’s business skills only in superlatives”.

In that vein, the author details how the company has adapted in the past few years and its strategy for future cultural transformation, and how that positive attitude and persistence has served them well — “rebooted” the sagging company — in the face of adversity.

However, despite these genuine company policy changes and Gates’ admirable decision to relinquish some of his power, at times Microsoft Rebooted reads a bit like an advertisement for Microsoft. For example, repeatedly, Slater quotes Ballmer stating the changes are “kindler and gentler” and “open and respectful”. Such words signal a marketing strategy rather than a hard-core investigative report and slightly diminish the overall effectiveness of the book, which is a genuine examination of the company.

Microsoft Rebooted is a post-trial book and as such, does not give much information of the genesis of the global Goliath. If you are interested in reading specifically about Gates’ vision for Microsoft, you’d be better off reading his biography by Stephen Manes. However, for a better understanding of the way Microsoft is today, there is no better insight than Microsoft Rebooted.

Slater’s next project is reality television star and real estate tycoon Donald Trump. Check it out if you want to learn more than he teaches his “apprentices.”

Microsoft Rebooted: How Bill Gates and Steve Ballmer Reinvented Their Company
By Robert Slater
Portfolio Books. Available with Paramount Books, 152/O, Block 2, PECH Society, Karachi-75400
Tel: 021-4310030. Email: paramount@cyber.net.pk
ISBN 1-59184-039-2
257pp. Rs895

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