Out of Control: The Rise of Neo-Biological Civilization, Kevin Kelly (Reading, Massachusetts: Addison-Wesley, 1994). Built to Last: Successful Habits of Visionary Companies, James C. Collins and Jerry I. Porras (New York: HarperBusiness, 1994). Showstopper! The Breakneck Race to Create Windows NT and the Next Generation at Microsoft, G. Pascal Zachary (New York: The Free Press, 1994). Consider the following experiment in self-organization borrowed from Kevin Kelly’s eye-opening book, Out of Control: The setting is a darkened auditorium in Las Vegas. The cast includes 5,000 people attending a computer conference. The producer is graphics wizard Loren Carpenter. The goal is to achieve coordination without control, form without structure. Here’s how it works. Each of the 5,000 people holds a cardboard wand that is red on one side, green on the other. A video camera linked to computers scans the room and displays the precise location and color of each wand onto a giant video screen. As the audience flips its wands, the screen displays a tapestry of ever-changing colors and locations—red or green pixels that record 5,000 spontaneous, autonomous decisions. This initial state is one of bouncy chaos. Then Carpenter sets some targets. He boots up a giant version of Pong, the grandfather of video games that sends an electronic ball back and forth between two paddles, and barks out instructions: “Folks on the left side of the auditorium control the left paddle. Folks on the right control the right paddle. If you think you are on the left, then you really are. Okay? Go!” Kelly describes what happens next: “The audience roars in delight. Without a moment’s hesitation, 5,000 people are playing a reasonably good game of Pong. Each move of the paddle is the average of several thousand players’ intentions. The sensation is unnerving. The paddle usually does what you intend, but not always. When it doesn’t, you find yourself spending as much time trying to anticipate the paddle as the incoming ball. One is definitely aware of another intelligence online: it’s this hollering mob.” A game of Pong is simple enough for mob intelligence. So Carpenter raises the stakes. A map of the auditorium appears on the screen, and Carpenter uses electronic chalk to draw a huge circle around the seats in the middle. “Can you make a green ‘5’ in the circle?” he asks. For a moment, the crowd stares blankly at the sea of pixels. Then something begins to stir. Kelly describes the process on the screen: “Wiggles of green pixels appear and grow haphazardly, as those who think their seat is in the path of the ‘5’ flip their wands to green. A vague figure is materializing. The audience collectively begins to discern a ‘5’ in the noise. Once discerned, the ‘5’ quickly precipitates out into stark clarity. The wand wavers on the fuzzy edge of the figure decide what side they ‘should’ be on, and the emerging ‘5’ sharpens up. The number assembles itself.” Not bad. Why not raise the stakes again? Carpenter activates an airplane flight simulator. His instructions are simple. “You guys on the left are controlling roll; you on the right, pitch. If you point to anything interesting, I’ll fire a rocket at it.” Sitting in the cockpit of this virtual plane are 5,000 copilots. The group sizes up the instrument panel, takes control, and tries to land the plane on a simulated runway. But flying a plane isn’t like playing Pong or making a 5. The mental calculations are more demanding, the feedback between action and effect less immediate. The plane wobbles, looks as if it’s going to crash, then begins to lurch violently. Somehow, though, the group gains control, pulls up the nose of the plane, turns it around, and tries the landing again. As it lands, the plane demonstrates its capacity to tilt and spin. Then the entire group of 5,000 copilots, as if inspired by a single thought, sends its plane through a graceful 360-degree roll that would make a Top Gun proud. The room erupts into a standing ovation. “There is something both delicious and ludicrous about the notion of having the passengers of a plane collectively fly it,” Kelly writes about his evening with Carpenter. “The brute democratic sense of it all is very appealing. As a passenger you get to vote for everything; not only where the group is headed, but when to trim the flaps.” Still, the question remains, How did this group of 5,000 people turn around a plane? “Nobody decided whether to turn left or right or even to turn at all,” Kelly answers. “Nobody was in charge. But as if of one mind, the plane banks and turns wide… The conferees did what birds do: they flocked.” The image of 5,000 passengers copiloting a jet neatly captures the promise of work and organization in the New Economy. In the “company” created by Carpenter, everyone makes his or her own decisions, everyone has fun—and the enterprise doesn’t crash and burn. It’s the ultimate goal of building companies around networked computers, mobile communications, and self-managed teams: to marry the competitive demands of business with the desire for personal satisfaction and democratic participation; to achieve productive coordination without top-down control. At some level, that goal is materializing all around us. The story of the last decade in business has been the triumph of distributed brains over centralized brawn. The renegade competitor, the lone knowledge worker equipped with a laptop, a modem, and an inspired idea—these are our heroes, the change agents who are reinventing industries, reshaping the economy, creating vast wealth. Giant IBM gets toppled by upstarts Compaq, Sun Microsystems, and Silicon Graphics. A Harvard dropout writes the first programming language for the personal computer, hires an army of misfit hackers in his own image, and creates a company—Microsoft—whose market value eventually surpasses that of General Motors. But these democratic impulses keep bumping up against hardheaded realities. For example, there’s the problem of scale. As our heroes get smaller and smarter, our products and aspirations get bigger and more complex. Windows NT, Microsoft’s newest operating system, contains nearly 6 million lines of code—more lines of code than there are words in a 3,500-page dictionary. No solitary genius or small team can aspire to write such an enormous program. There’s also the increasing ferocity of competition itself. In the New Economy, nothing is more powerful than a great idea. And nothing is more deadly than its poor execution. Too often, democracy still looks like a luxury that most organizations can’t afford. The challenge for business, of course, is to have it all. How do we build organizations that are skilled enough, smart enough, and, most of all, enduring enough to maneuver through a treacherous competitive environment—without choking on the systems and procedures that help create that strength? How do we ensure crisp execution and flawless performance—without suffocating the democratic spirit and individual creativity that are the heart of innovation? These are the questions that will occupy organizations and managers through the end of the twentieth century, for they strike at the heart of business and life in the New Economy. They are also the central questions in the three books discussed here: Out of Control, Built to Last, and Showstopper! The Bio-Logic of Organizations Out of Control, the exciting book by Wired magazine’s executive editor, Kevin Kelly, shares many personality traits with that cyber-culture bible. The book is sprawling, kinetic, self-indulgent, and self-important. It is also overflowing with original insights, fascinating characters, and provocative themes. For businesspeople who want a genuine shock to their system, Out of Control offers surprise after surprise—even though the book deals only fleetingly with business. Indeed, the value of Kelly’s book for business readers is that it provides them with a new language, a new way of seeing the world. After all, you can’t understand the promises and challenges of work in the New Economy unless you understand the techno-logic that’s transforming it. But decoding that techno-logic requires radically new models and metaphors that go well beyond the stale rallying cries of “teamwork” or “empowerment.” Out of Control provides just that: a treasure trove of revealing metaphors, chock-full of reports on experiments as offbeat as the researchers conducting them. Decoding the techno-logic of the New Economy requires new metaphors that go beyond the stale rallying cries of the past. Consider just one metaphor: the upside-down, inside-out logic of telecommunications networks. A fiber-optic network connecting Kansas City, San Diego, and Seattle requires 3,000 miles of cable. How much more cable, Kelly asks, is required to add Salt Lake City to the network? Answer: None at all. In fact, by adding Salt Lake City as a hub, and running lines to the three other cities through Salt Lake, the total amount of cable required is 2,850 miles—5 % less than to link the original three. “The total unraveled length of a network can be shortened by adding nodes to it!” Kelly exclaims. In other words, in the New Economy, less can be more if you open your mind to the logic of the networks that connect it. And more can be less. Dietrich Braess, a German operations researcher, has demonstrated that adding routes to a congested network can actually slow it down—a proposition known to scientists as Braess’s Paradox. Kelly reports that city planners in Stuttgart tried to ease downtown congestion by building a new street. But traffic got worse after the new street opened. The planners then decided to block off the street, and traffic improved. “Nets have their own logic,” Kelly explains, “one that is out of kilter to our expectations.” The reality, of course, is that most of the business world today is out of kilter with our expectations. Ideas about work and organization born in the Age of the Machine just don’t fit the Age of the Network. Take an example that, though not included in Kelly’s book, underscores the high-stakes impact of the changes he chronicles. Earlier this year, in a speech to the annual meeting of the Planning Forum, Ray Smith, CEO of Bell Atlantic and a network pioneer in his own right, explained why his company’s much-celebrated merger with cable giant Tele-Communications, Inc. (TCI) fell apart just four months after it was announced. Bell Atlantic had agreed to the merger with TCI so that it could build a nationwide network capable of delivering interactive content to the home. But the merger plan, heralded as dramatic evidence of the coming of the information superhighway, triggered a massive wave of infrastructure announcements from other companies. This wave of investment meant that the new Bell Atlantic/TCI would face more competition than its plan anticipated. More important, it reduced the strategic urgency for Bell Atlantic to build its own transmission network. “We could ride on the systems built by other telephone companies,” Smith said. Talk about out-of-kilter expectations! A bold strategy to shape an industry’s future triggers a chain of events that within months renders that strategy’s very rationale obsolete. The answer? Adapt to the new developments, scuttle the deal, develop a new plan—and overhaul the way you think about strategy. Smith, widely considered one of the most dynamic, change-oriented CEOs in the United States, was not prepared for the new logic of the world in which his company was maneuvering. He is not alone. The new world of business requires new models of how to organize and compete. But where to find those models? Kevin Kelly believes you find them in nature—in the swarming of a beehive, in the flocking of birds, in the evolution of a butterfly. The best way to understand the technological world we are building is to understand the biological world that came before it. “The world of our own making has become so complicated that we must turn to the world of the born to understand how to manage it,” Kelly writes. “That is, the more mechanical we make our fabricated environment, the more biological it will eventually have to be if it is to work at all. Our future is technological; but it will not be a world of gray steel. Rather our technological future is headed toward a neo-biological civilization.” It’s not hard to draw lessons for management from the biological world Kelly describes. Biological systems are adaptable, resilient, and capable of generating perpetual novelty. That’s not a bad list of attributes for the company of the future. To achieve these qualities, however, biological systems make sacrifices—in efficiency, controllability, predictability, and immediacy. That’s not a bad list of attributes for the company of the past. The challenge for business, Kelly argues, is to appreciate the strength of natural systems and design organizations that embrace their logic. But that logic turns on its head almost all of what we thought we knew about how large systems work. The genius of nature, Kelly believes, is its capacity to “create something from nothing,” to build systems of masterly complexity without a master plan. He goes on to identify the core principles behind this genius: Natural systems distribute intelligence outward and reject central authority. They control from the bottom up. “Whenever we find something from nothing,” Kelly writes, “we find it arising from a field of many interacting smaller pieces.” But those smaller pieces interact without top-down orders, not unlike Carpenter’s flight simulation: “A mob can steer itself, and in the territory of rapid, massive, and heterogeneous change, only a mob can steer. To get something from nothing, control must rest at the bottom with simplicity.” Natural systems achieve complexity by creating multiple layers of simplicity. They grow by chunking. “The only way to make a complex system that works is to begin with a simple system that works,” Kelly explains. “To assemble a prairie takes time—even if you have all the pieces. Time is needed to let each part test itself against all the others. Complexity is created, then, by assembling it incrementally from simple modules that can operate independently.” Natural systems survive by encouraging diversity, eccentricity, instability. They maximize the fringes. “A uniform entity must adapt to the world by occasional earth-shattering revolutions, one of which is sure to kill it,” Kelly writes. “A diverse heterogeneous entity, on the other hand, can adapt to the world in a thousand daily minirevolutions, staying in a state of permanent, but never fatal, churning… A healthy fringe speeds adaptation, increases resilience, and is almost always the source of innovations.” Natural systems, even stable systems, seek persistent disequilibrium. They don’t just manage change, they encourage it. “A good creation, like good jazz, must balance the stable formula with frequent out-of-kilter notes,” Kelly says. “Equilibrium is death. Yet unless a system stabilizes to an equilibrium point, it is no better than an explosion and just as soon dead.” Natural systems thrive on “persistent disequilibrium—a continuous state of surfing forever on the edge between never stopping but never falling.” Natural systems not only change, they change how they change. They organize around self-changing rules. “Change can be structured,” Kelly writes. “This is what large complex systems do: they coordinate change… If the rules of the game are composed from the bottom up, then it is likely that interacting forces at the bottom level will alter the rules of the game as it progresses. Over time, the rules for change get changed themselves… To get the most out of nothing, you need to have self-changing rules.” Kelly’s paean to biology offers an alluring vision for businesspeople trying to navigate a world marked by accelerating change, unforgiving competition, and democratic participation. At their best, natural systems are self-generating and self-organizing; they thrive on individual choice and spontaneous creativity. At the same time, they are robust, capable not only of stability but also of self-renewal. And isn’t that the promise of the New Economy? We want companies that are distributed, decentralized, and collaborative. We also want companies that are enduring and adaptive, capable of healthy change without violent turmoil. Still, natural systems have a blind spot. The democratic power of biology—its capacity to “create something from nothing”—is a one-dimensional form of democracy. Nature, after all, is indifferent to outcome. It doesn’t much care who wins and loses. Species rise and fall; prairies flourish and perish. In the self-generating beauty of nature, there lurks an unthinking cruelty. The missing ingredient in biology is values. That’s an awfully important missing ingredient when it comes to business. Just as people want to control their work, they also expect the impact of their work to transcend the workplace. Business isn’t just about making a living anymore. More important, it’s about making a difference. In other words, why people work is becoming as important as how they work. The biological metaphor, for all its power to illuminate the hows of adaptation, doesn’t help with the whys of commitment and persistence. The Company as a Values System The values imperative is at the heart of Built to Last, a book that looks to the quintessential companies of the industrial era for lessons on the organization of the future. James C. Collins and Jerry I. Porras, professors at the Stanford Business School, explore the roots of sustained corporate greatness or, to use their language, “visionary companies.” Their back-to-the-future approach is welcome. Indeed, it is remarkable, in this age of the “overthrow of everything,” that General Electric, more than 100 years after its founding in 1892, can still be a teacher to companies around the world. Or that 3M, founded in 1902, can still set the pace for business innovation and product development. These companies dominate their industries, create wealth for their shareholders, challenge their employees to excel, and have done it for decades. They have truly been built to last. In their style and storytelling, Collins and Porras are miles away from the appealingly weird cyber-ethic of Kevin Kelly. For instance, Built to Last exudes an immodesty that all too often infects the business-book genre. “We believe every CEO, manager, and entrepreneur in the world should read this book,” the authors declare. “So should every board member, consultant, investor, journalist, business student…” Anyone else on that list? Moreover, the authors surround their findings with a social-science methodology that is meant to enhance their authority but often serves to turn off the reader. Collins and Porras did not choose any great companies, they want us to know. They surveyed a “carefully selected representative sample” of CEOs to nominate their visionary companies, gathered “crates of data” and spent “months of [computer] coding” to evaluate the nominees, and used “organization stream analysis” to sort the information. Their research involved “60,000 pages of material” that “filled three shoulder-height file cabinets, four bookshelves, and 20 megabytes of computer storage space.” How can we not be convinced? Still, Built to Last does offer valuable insights about the roots of sustained corporate greatness—insights that square amazingly well with, and build on, the neo-biological principles developed by Kevin Kelly. The 18 visionary companies that form the core of this book are no surprise. They include Boeing, Disney, General Electric, Hewlett-Packard, Johnson & Johnson, Merck, Motorola, and Nordstrom. But what is a surprise, or at least a refreshing new line of thinking, is the book’s core finding. Visionary companies, it turns out, don’t have much “vision”—if, by vision, we mean a big idea about how to dominate the future through revolutionary new technologies and products. Nor do they have especially “visionary” leaders—if, by visionary, we mean the all-knowing CEO who leads his or her people to the Promised Land. Instead, Collins and Porras argue, the staying power of visionary companies is internal and intangible. Great companies don’t try merely to achieve great wealth or dominate their industries. Their first achievement is to create shared meaning, a foundation of values that answers the all-important questions: Why do we want to work together? What are we trying to achieve together? What does this organization stand for? The staying power of great companies is internal and intangible: they create shared meaning, a foundation of values. Indeed, the people who build great companies, Collins and Porras write, “concentrate primarily on building an organization rather than on hitting a market just right with a visionary product idea and riding the growth curve of an attractive product life cycle. And instead of concentrating on acquiring the individual personality traits of visionary leadership, they take an architectural approach and concentrate on building the organizational traits of visionary companies. The primary output of their efforts is not the tangible implementation of a great idea… Their greatest creation is the company itself and what it stands for.” It may seem odd, in a world turned upside down by transformational technologies, global competitors, and demanding customers, that the first rule of visionary companies is to look inward. But Collins and Porras agree with Kevin Kelly that an organization works best when it works as a system, not just as a collection of people. And a system works best when it is encouraged to adapt and evolve, often in ways that no one can predict. “Visionary companies make some of their best moves by experimentation, trial and error, opportunism, and—quite literally—accident,” the authors write. “What looks in retrospect like brilliant foresight and pre-planning was often the result of ‘Let’s just try a lot of stuff and keep what works.’ In this sense, visionary companies mimic the biological evolution of species.” With companies, then, as with nature, the secret of survival is self-renewal; the secret of self-renewal is surprise. But renewal must pivot around something that endures: a moral center. If that sounds paradoxical, it’s because Built to Last is all about mastering paradox. Great companies, Collins and Porras write, rise above the “Tyranny of the Or” to embrace the “Genius of the And.” They preserve their core values and stimulate constant progress. They maintain ideological control and promote operational autonomy. But first, every visionary company starts with a core ideology—a values system that separates it from run-of-the-mill rivals. The core ideology creates “a sense of purpose beyond making money that guides and inspires people throughout the organization and remains relatively fixed for long periods of time.” Core ideologies are hard to describe but easy to recognize. Boeing’s ideology revolves around its commitment to push the envelope of technology, to tackle huge challenges, to take big risks, to “eat, breathe, and sleep the world of aeronautics.” Citicorp’s ideology revolves around expansionism, aggressiveness, and meritocracy—a take-no-prisoners approach to strategy and culture. Admittedly, when reduced to a few phrases, these core ideologies sound simplistic, even trite. But anyone who knows Boeing and Citicorp knows that these organizations exude the spirit of their ideologies. They feel different from their competitors. They look at the world differently. They make different strategic bets. And ideology doesn’t just separate these companies from the pack. It also holds them together. Values are the glue that keeps a fluid organization from evolving beyond recognition. Collins and Porras write: More than at any time in the past companies will not be able to hold themselves together with the traditional methods of control: hierarchy, systems, budgets, and the like. Even “going into the office” will become less relevant as technology enables people to work from remote sites. The bonding glue will increasingly become ideological. People still have a fundamental human need to belong to something they can feel proud of. They have a fundamental need for guiding values and a sense of purpose that gives their life and work a semblance of meaning. They have a fundamental need for connection with other people, sharing with them the common bond of beliefs and aspirations. Visionary companies don’t just proclaim a core ideology. They immerse their people in it to a degree that can be obsessive, almost strange. Many of the organizations profiled in Built to Last feel more like secret societies than companies. They have their own myths and legends, their own rites and rituals—even their own languages. At Disneyland, for example, people aren’t employees, they are cast members. A work shift is a performance. A job description is a script. Being on the job is onstage. Being off duty is backstage. These distinctions don’t mean much to those of us who don’t work at Disney. But they reflect a corporate vocabulary that is drilled into recruits from the day they join the company and reinforced over years of training. That language separates Disney employees from the rest of the world and brings them closer together. Collins and Porras go so far as to argue that visionary companies have more in common with cults than with their competitors. “If you’re not willing to enthusiastically adopt the HP Way, then you simply don’t belong at Hewlett-Packard,” they write. “If you’re not willing to be ‘Procterized,’ then you don’t belong at Procter & Gamble. If you don’t want to join in the crusade for quality…then you don’t belong at Motorola and you certainly can’t become a true ‘Motorolan.’” It sounds unpleasant. More important, it sounds like a formula for stasis. But here’s the paradox—and the source of self-renewal. Ideology is powerful, Collins and Porras argue, because it allows for coordination without control, adaptation without chaos. People who internalize a strong set of beliefs don’t need commands from above to be able both to “do their own thing” and “do the right thing” for the organization. Companies can build themselves from the bottom up without crumbling. They can engage in change and experimentation without forgetting who they are. Nordstrom is a case in point. Life among the Nordies can be downright bizarre, about as cultlike an environment as you’ll find anywhere. At the same time, Nordstrom is one of the most radically decentralized companies ever created. Care to read the Nordstrom employee handbook? It won’t take long: it’s one five-by-eight-inch card. Care to memorize all the required procedures in the handbook? There’s only one: “Use your good judgment in all situations. There will be no additional rules.” Visionary companies combine tough ideological control with radical operating autonomy. Visionary companies are unwavering in their core ideology. But they are willing, even eager, to overthrow everything else: strategies, structures, procedures, measurements, and incentives. They understand the difference between “what we stand for” and “how we do things.” They combine tough ideological control with radical operating autonomy. They create an organization of true believers and then believe enough in the organization to let go. In short, they draw on some core principles of evolution and natural systems—but only after they build a foundation of values. Software Without Soul If there is any young company that we might expect would marry the power of biological resilience with the enduring values of a core ideology, surely it would be Microsoft. Microsoft is the flagship organization of the New Economy, the most powerful force in the most important industry in the world. Showstopper!, G. Pascal Zachary’s riveting account of four years with a Microsoft programming team, allows us to peer inside the company and draw our own conclusions. Showstopper! is a welcome book for several reasons. It’s the first book on Microsoft that tries to explain how the company builds what it sells rather than how it outmaneuvered IBM to control the computer industry. It’s also the first book to focus on the company’s employees and culture rather than on its CEO, Bill Gates. In fact, the only real star of the book is another programming genius, David Cutler, who joined Microsoft in 1988 after a stellar career at DEC. Cutler’s challenge is to oversee the creation of Windows NT, Microsoft’s effort to extend its dominance from the desktop to corporate networks. The story of the making of Windows NT is the story at the heart of the book. And what a story for exploring the challenges of work and organization in the New Economy! At one level, software is nothing but pure knowledge, the expression of abstract ideas on functionality and design. At the same time, its intricacy and details require draining drudge work. Software is a tribute to the power of individual creativity—the hacker as hero. But no single programmer has the creativity or stamina to write the millions of lines of code required for a system like NT. So software is also the ultimate team product. It requires rules, discipline, coordination, and communication. Little wonder, then, that writing software remains one of the least understood and most poorly managed parts of corporate life. Zachary explains: The mystery of code bedeviled even astute practitioners. It was far from certain why some programmers wrote better code than others. The best ones were at home with abstractions and saw problems in terms of symbols. They were either adept at formal mathematics and logic, or they instinctively grasped the principles of these disciplines. They enjoyed speaking the private language that only their computer really appreciated… [But] no matter the degree of their experience or competitive zeal, they acknowledged an element of serendipity in their work and tended to view themselves more as artists than craftsmen. They often hung around the keyboard waiting for inspiration much as a painter held fast to his studio. Like the software whose creation it chronicles, Zachary’s book is an exercise in persistence and detail. We learn every twist and turn in the lives of the people who sacrificed family and friends to create Windows NT. We sweat over every major bug that threatens to undo the program. More than anything else, we come to appreciate what a miracle software really is: a unique blend of artistry and drudgery, mathematical order and creative chaos. Indeed, Zachary could have appropriated Kevin Kelly’s title for his own book. Everything about the making of Windows NT seems “out of control.” From the beginning, the project was plagued by missteps and miscalculations. The team decided to use Intel’s i860 chip as its first target microprocessor, but the chip proved flaky and flawed. The group responsible for Window NT’s graphics capabilities chose to write its code in the hard-to-learn C++ programming language—a decision that almost everyone regretted from the moment it was made. These and other miscues produced tension, confusion, and missed deadline after missed deadline. In fact, there were no fewer than four written-in-concrete timetables for finalizing the NT code, testing it thoroughly, and releasing the Golden Master version to manufacturing. The team missed each timetable by a country mile. David Cutler met with Bill Gates in October 1989 to present the first NT timetable. He promised a minimal version by the end of January 1990 and a Golden Master by March 1991. The schedule started slipping within days. By January 1991, Cutler set a second timetable: the code would be finalized by October 1991, the Golden Master released by June 1992. And so the project went through several more schedules and slips. Ultimately, Windows NT’s Golden Master was released to manufacturing in July 1993, more than two years after the original deadline. The point here is not to suggest that Showstopper! is the chronicle of a project gone bad. The fact that Windows NT exists at all is a management triumph of the first order. NT is “the largest, most complex program ever created for a personal computer,” Zachary says. It required a team of 250 programmers, testers, and program managers. It cost a staggering $ 150 million, more than the annual revenues of most software companies. It was so technically demanding that Microsoft had to design and build its own computers in order to design and test the software. So how did Microsoft pull it off? The making of Windows NT is a case study in the power of management-as-biology. In many respects, Microsoft’s success relied on embracing the principles sketched in Out of Control: distribute intelligence, control from the bottom up, grow complexity via layers of simplicity, and maximize the fringes. The first principle was radical autonomy. From the beginning, members of the Windows NT group organized themselves into small units with their own rules, styles, and ways of working. Tom Miller, who was responsible for designing the program’s file system, wrote its all-important specs during a two-week sailing trip. The graphics team simply disappeared to do its work, taping a poster to its office door that read, “Sorry, we’re dead.” The Windows NT group, in other words, was really not a group. Instead, it was a collection of soloists and small teams—most of whom did not know one another, some of whom did not like one another. The second principle was minimal top-down coordination. The NT group did have a modest hierarchy, but it didn’t mean much. Each team of five or six programmers had a technical manager, or lead. Below each lead were one or two senior code writers, called architects, who designed the most important parts of the program. But this hierarchy was in name only. Architects rolled up their sleeves to fix bugs; implementers had the chance to design code. In reality, Zachary writes, reporting was “a crazy quilt, not a hierarchy. Formal reporting lines were often ignored. Programmers weren’t expected to seek approval from their leads whenever they made a decision. Many ignored their leads altogether. The leads, meanwhile, had their own coding to do, so they sometimes lost track of their code writers. In the end, people sought help from whoever could give it to them—within or without their immediate group.” The Windows NT group had a modest hierarchy, but it didn’t mean much. According to Lou Perazzoli, one of Cutler’s top lieutenants, the NT project ran “right on the edge of chaos,” which was precisely how it had to run. “It seems like a little dose of management is needed,” Perazzoli tells Zachary. “Yet you can never give a little management. You always give too much. It’s a very precarious position, undermanaging. Yet you have to [do it] to succeed.” It’s easy to embrace undermanaging if your challenge is to maximize the productivity of small teams. But software succeeds only if each of its disparate (and undermanaged) components operates seamlessly with the others. Stand-alone brilliance doesn’t amount to much unless it is also consistent. How to achieve consistency without stifling creativity? That was the core dilemma facing Cutler. The solution he devised, which he dubbed “eating your own dog food,” was perhaps his most important contribution to the NT effort. The power of the technique (whose strange name Zachary never explains) was its bottom-up approach to consistency and coordination. It imposed discipline without control, accountability without bureaucracy. Here’s how it worked. For the first year of the NT project, programmers wrote their NT code on computers running under the well-established OS/2 operating system. The intellectual challenge was tough, but the tools were powerful. It was the equivalent of writing a novel on a fully equipped word processor. Then Cutler laid down his “dog-food” edict. Henceforth, he declared, programmers would write their NT code on computers that ran on NT itself—that is, on the crude and unfinished version of NT that existed at any given point in time. Suddenly, the only way people could write new chapters for their novels was to cut and paste words from earlier chapters. Cutler’s order created a center of gravity for the NT project without centralizing control. Once a week, the soloists and small teams working on the many different pieces of NT would submit their code to the so-called Build Lab. Builders would electronically stitch together everyone’s work, guarantee that it functioned properly, and then redistribute it as the operating system on which the team would write the next week’s code. The self-reinforcing logic behind the weekly build—“We are going to create a product using only the early versions of that product”—was the ultimate in bottom-up discipline. And it created two powerful incentives that helped 250 individualists operate as one self-organizing system. First, the weekly build stimulated progress. The more functionality that programmers could write for NT, the more they could use that functionality to write the rest of the program. “As more programmers ate dog food, they were astonished by NT’s crudeness,” Zachary reports. “‘I was totally flabbergasted by the difficulty of getting things done with NT,’ said one. ‘It seemed like every time you typed a command [NT] didn’t work, and you had to go off and find out why.’” The self-reinforcing logic behind the weekly build was the ultimate in bottom-up discipline. The second powerful virtue of Cutler’s system was that it created a fierce opposition to bugs—the mortal enemy of successful software—without requiring top-down monitoring or bureaucratic second-guessing. Every group knew that if it submitted code riddled with errors or if its code didn’t work with another group’s code, it would break the Wednesday build, thus jeopardizing everyone’s ability to write code the next week. “If you break the build,” Cutler lectured his programmers, “your ass is grass. And I’m the lawn mower.” But the real genius of the dog-food diet was that it motivated NT’s programmers to oppose bugs even without Cutler’s threats. Zachary immerses himself in the making of Windows NT and comes away impressed. “The saga of NT,” he writes, “is a compelling instance of how one organization balances order and chaos, rules and serendipity, innovation and tradition. The task is messy, irrational and often painful. Born of conflict, innovation is dangerous because it hastens change, which is the main source of an organization’s instability in the first place.” But he is honest enough to illuminate the dark corners of Microsoft’s biological world. “Every worthwhile creation,” he writes, “is at once an act of love and an act of violence.” In Zachary’s account, there is precious little love and far too much violence. It’s hard not to despair at the spiritual wreckage that accompanies Microsoft’s programming advances. Walt Moore, a member of the graphics team, is a broken man. He spends his days locked in an office playing computer games. His colleagues dub his affliction Waltzheimer’s disease. The wife of Jonathan Manheim, one of the group’s testers, frets over her husband’s strangely robotic behavior. Arden White, who runs the Build Lab, suffers chest pains at work and muscle seizures whenever something outside of work reminds him of the lab. It’s not a pretty picture. To be sure, there are plenty of urgent projects at plenty of tough companies for which people sacrifice family and friends. But the warped lives depicted in Showstopper! speak to a much more disturbing question that haunts this book: If Microsoft is such a wonderful company, and Windows NT such a transformational product, why are so many people so unhappy? Much of the answer seems to lead back to the NT group’s leader. Zachary tries hard to make Cutler a heroic figure. Cutler’s substance and style were central to the success of NT, Zachary concludes. “Cutler sustained a mythic realm for both himself and his followers, in which the ambiguities of life were transformed into black and white, good and evil… Cutler divided the world into Us and Them. This opposition echoed the profound distinction between sacred and profane: We are clean; they are dirty. We are the chosen people; they are the scorned. We will succeed; they will fail.” But Cutler ultimately comes across as vulgar, boorish, and at times just downright mean. In the middle of the NT project, his father, with whom he had never been especially close, died of a heart attack. He skipped the funeral. During his search for a secretary, Cutler ended every interview with the question, “What do you think of the word ‘f—’?” The answer from the winning candidate: “It’s my favorite word.” Ultimately, the picture of Microsoft that emerges from Showstopper! is of an organization whose unforgiving biological principles are simply not sustainable—unless we believe the company can chew its people up and spit them out forever. By the time Windows NT is released, Bill Gates is one of the few people left with any sense of exuberance. Many members of the team, Zachary reports, “felt curiously empty” about their achievement. Several of the team members chose to leave Microsoft. Others, like the sad Walt Moore, were forced out. Most simply continued on to the next huge software project, code-named Cairo, and postponed their day of reckoning. David Cutler became Cairo’s champion. “There is no rest,” Cutler says when asked about his newest obsession. “How can you rest?” Such is life at Microsoft. The company is overflowing with wealth, talent, technology, and toughness. But something is missing—a soul. Its goal is dominance. Its method is brute force. Its currency is money. And Microsoft’s leader, CEO Gates, is the digital-age version of one-dimensional man. If you take seriously the values-driven message at the heart of Built to Last, this lack of soul may be the company’s undoing. During their discussion of the failed promise of General Motors, Collins and Porras offer a critique of Alfred Sloan. The most powerful chairman in GM’s history, they write, was a master organizational architect. But the company he built reflected the blind spots of his character: “cold, impersonal, inhuman, pure business, and totally pragmatic.” Bill Gates’s rivals often denounce him as the John D. Rockefeller of his generation. But Alfred Sloan may be the better point of comparison. One wonders how long it will take for Microsoft, despite all its strengths, to become the General Motors of software.
