How to manage the Microsoft way

Most people have a strong view of Microsoft and its technologies and business tactics but less well known is what goes on behind the doors of the world’s largest software company.

However, at a recent London conference with the Institute of Directors, company founder Bill Gates gave some rare insights into how Microsoft has managed its remarkable rise from late-1970s startup to global commerce icon.

Asked by an audience member how Microsoft managed “geniuses”, Gates, currently winding down his day-to-day involvement with the company, said, “It’s more important how you hire the people in the first place, and how you organise them.

t’s not so much [that it’s necessary to be] an expert in all the areas ­ it’s how they work with people. In the early days we said [to new managers] ‘Read this book and be nice to people’. Sometimes that worked and other times it didn’t.”

Later, he said, Microsoft became better at understanding structure.

Often cited as the great geek-to-chief executive success story, Gates was surprisingly robust on the subject of how egos and unusual minds might not suit a management environment.

“IQs can subtract rather than add up. There is still room for geniuses somewhere. You have to follow the rules, work hard, talk to customers. If you are just a genius, we will pay you very well, equivalent to a vice president, but we will not give you broad responsibility. A lot of non-engineers turn out to be good at asking ‘How do we make this better?’”

Gates has also had close-hand experience of moving from engine room to a true management role, having started Microsoft with a handful of staff and seeing the company grow to the current 78,000-plus headcount.

“In the early days I would look over all the code and I was ruthless about the quality. Once we got past 20 people I couldn’t do that anymore. We’ve had about 10 times when we had to rethink,” he said.

Gates admitted his company often made structural adjustments late in the day. “We probably made them only when it became obvious, two years too late,” he added.

He also displayed a very American attitude to failure. “We’ve had a lot of people who had failures and that taught them more than successes,” he argued.
Gates still believes that software is a huge opportunity for people setting up new businesses but sees other areas of excitement.

“In energy there’s a need for something that’s cheaper and has no environmental effect. The size of the opportunity is a Microsoft-sized opportunity,” he advised.

Finally, Gates handled the old chestnut about dealing with stress. Asked how managers could sleep, well at night, he quipped, “There have certainly been moments of stress. I would say try not to get sued by anybody, especially your own government.”