Yahoo buys Aviate, focuses on context and content on mobiles

Can Marissa Mayer make Yahoo more relevant at a time where mobile usage is skyrocketing and consumers are bombarded with information? The jury is out but several initiatives give her a chance: New digital magzines and apps for easily digestible content.

Microsoft drops stack ranking system: Did the incoming CEO make that happen?

We’ve heard that Microsoft’s board is eager to bring on a new CEO before the end of the year to replace outgoing Steve Ballmer (see Who’s calling the shots?), and there is a short list of people being discussed: Stephen Elop (former Microsoft exec, former CEO of Nokia), Alan Mulally (now CEO Ford), Paul Maritz (former Microsoft exec, now CEO of Pivotal), and Tony Bates (former CEO Skype, now Microsoft’s head of evangelism and business development).

I believe that those that have deep experience at Microsoft may have a correspondingly deep aversion to the company’s stack ranking approach to employee evaluation and compensation. The approach — where managers are required to fit their direct reports against distribution targets, so that a certain proportion must be considered as not meeting expectations for their job, independently of whether or not the manager agrees — has led to wide-spread dissatisfaction among managers and employees. In fact, many attribute the company’s ‘lost decade’ to the internal stresses, outright competition and sabotage that the approach creates, such as Vanity Fair contributing editor Kurt Eichenwald.

Yesterday, Microsoft changed its long-standing policy, as was revealed in a memo from Microsoft Human Resource lead, Lisa Brummel, in which she stressed moving away from ranking on a curve, the need for more feedback to employees on their performance, and a transition to greater levels of teamwork and collaboration.

Ballmer has been CEO for quite a while, and he’s supported stack ranking all along. He could have changed that at any point, but did not. It’s reasonable to support that others in the organization, like Brummel, have been advocating for a change for a long while. Ballmer is a lame duck, so it’s conceivable that Chairman Gates gave Brummel the go ahead on the change.

There are a number of aspects of the reorganization that was started in June 2013 that have not been completely solidified, and the status of Stephen Elop is one aspect of that. As the Nokia deal is finalized, Elop would be taking control of the Microsoft devices group, which will include Nokia devices. But if he comes in as CEO, that would have to be rejiggered.

Leaving aside Elop’s status, is it possible that a CEO has been picked? One that wants stack ranking dropped immediately? My feeling — and it’s just that, a feeling — is this: one of the candidates has been picked, and he’s made it clear that stack ranking is a terrible system, one that is linked to a great deal of the dysfunction going on inside Microsoft. That would argue for someone with deep experience at Microsoft, like Maritz or Elop. And of the two, Maritz has had exposure to more modern software companies’ talent management models, like VMware and Pivotal.

Taken from another angle: it would be bad to make this change prior to a new CEO coming on board who wants to take some other approach to talent management. The board would be tying the hands of a new CEO. So you have to figure that at least all the candidates being considered are opposed to stack ranking, even if they haven’t made a final choice.

This transition will the start of a positive change at the software giant. The next step is to announce the new CEO, and begin the long process of finding a new vision and focus for Microsoft.

An aside: the news of Microsoft’s abandonment of stack ranking comes right on the heels of Marissa Mayer’s newest black eye: a brouhaha arising from the company’s stack ranking system (see Apple Q4, Gates disses Zuckerberg, Mayer’s Cultural Revolution, and Chautauqua) and the griping that it is causing there, for all the same reasons.

 

Who’s calling the shots?

Who Will Be Calling The Shots At Microsoft?

I wrote this week about Stephen Elop’s willingness to ax some of Microsoft’s products if he were to get the CEO role at Microsoft (see Stephan Elop supposedly thinking about making big changes at Microsoft). In particular, people with access to Elop told Bloomberg reporters that Bing would likely be shuttered, Xbox spun out, and other consumer-oriented products reconsidered.

Most cogent to the business orientation of the firm, Elop would move to make Office actually workable on other mobile devices, like iOS and Android. Some commentators made the case that Office Mobile is already available, but they seem to forget that it requires an Office 365 subscription, at the least. Here’s an interchange I had with Henry Blodgett and Mary Jo Foley on that:

Screenshot 2013-11-10 10.46.59

So, Elop may only be advocating a speed up, but it’s been a long time coming.

However, others have started to wade in, notably, Paul Allen, the billionaire co-founder of Microsoft. The chief investment officer of Allen’s family investment office Vulcan Capital is Paul Ghaffari, and he spoke at The Financial Times Investment Summit recently, and according to Stephen Foley of the Financial Times he said this:

Mr Ghaffari said the overwhelming majority of Microsoft’s earnings were generated by selling software and services to business customers.

“The search business and even Xbox, which has been a very successful product, are detracting from that. We would want them to focus on their best competencies,” he said.

“My view is there are some parts of that operation they should probably spin out, get rid of, to focus on the enterprise and focus on the cloud.”

The Microsoft board has shown a new “receptivity to getting outside views,” Mr Ghaffari said, adding that the search for a successor to Mr Ballmer was being handled well.

If the board opts for rumoured candidate Alan Mulally, currently chief executive of Ford, Mr Ghaffari suggested he be paired with another executive with technology product experience. Other shareholders have questioned the recruitment process, including the issue of whether Mr Gates may circumscribe future strategy.

Note that this presentation preceded the Bloomberg reports about Elop.

Other reports suggest that the Microsoft board wants to replace Ballmer before the end of the year, partly to deal with the issues surrounding its Nokia acquisition, the release of the Xbox One console, and to complete the company’s reorganization (which is still a work in progress). The same names keep popping up —  Elop, Ford’s Mullaly, former Microsofty Paul Maritz, and current evangelism and business development head, Tony Bates, the former CEO of Skype — with no dark horse appearing on the horizon.

So far, Elop is the only one that has presented a new vision for the company to the outside world, and it lines up with what investors like Allen seem to think is a wise course. But the others may be quietly presenting plans for Microsoft to the board, but not leaking it to the world. Personally, Paul Maritz might have a better claim for successfully leading large and successful business software companies, like VMware and Pivotal.

‘Because Marissa Said So’

There is a growing furor at Yahoo about Marissa Mayer’s Quarterly Performance Review system, instituted last year around the time of the ‘No Remote Work’ mandate. In essence, Mayer’s created a review approach that attempts to systematize reviews of employees: reducing the role of the manager in evaluating an employee’s performance, and placing employees along a curve.

This is the most recent example of the human resources issue: should all employees be evaluated using a companywide, ‘objective’ approach, or should employees be measured for the effectiveness in the work setting they are part of? On one side, the company is seen as a large monolithic collective, and all are ranked based on company-wide metrics and considerations, such as the degree to which they align with corporate culture. On the other side, an employee would be measured based on how their efforts supported localized goals, like getting their product designed and out the door on time. In place of corporate goals, localized goals would dominate.

Mayer is in favor of the former, which comes along with the need — apparently — for managers to find a certain percentage of their teams ‘missing’ goals: to match the curve, and to serve up candidates for firing. Mayer has denied this in a 7 November Yahoo Q&A, as Kara Swisher reported,

Mayer highlighted that a part of the quarterly process called the “bucket” ranking allows for a divergence of plus or minus one to three percentage points. According to sources, this still apparently requires mandatory calibration, using the rankings: Greatly Exceeds (10 percent) Exceeds (25 percent), Achieves (the largest pool at 50 percent), Occasionally Misses (10 percent) and Misses (five percent).

There are rumors that these ratios may be relaxed, but there is no suggestion that the QPR regime will continue, as part of that glorious ‘entrepreneurial’ culture that Mayer is trying so hard to impose at Yahoo.

Are Millennials Calling The Shots?

I interviewed Avinoam Nowogrodski this week, the first in an ongoing series called The New Visionaries, where I plan to talk for entrepreneurs building social tools (see The New Visionaries: Avinoam Nowogrodski). He had piqued my interest by suggesting the businesses could learn a lot from Millennials, which he defended in the interview

According to a recent Forbes article, by 2025 more than 80 million Millennials are projected to be in the workplace. On the one hand, some feel this brings a wave of ambitious individuals with high expectations. On the other hand, I believe Millennials, more than any other generation, stand to democratize collaboration, which in turn can empower individual workers of all ages.

Because Millennial workers were raised in the digital age of transparency, they are accustomed to posting their activities online and having their progress followed. For them, success at work is about proving their worth to the team and the project. They must have an online voice and be constantly augmenting that voice and adding clarity to the team. Millennials thrive on transparency and a sense of team cohesion, which is something that social media provides. Because they are used to interacting online regardless of their physical locations and the time of day, they will provide the impetus companies need to embrace workforce mobility.

I read a story by Tom Agan in the New York Times today that provided additional support for Avinoam’s argument, and some specific examples:

I worked with one executive who was starting a big I.T. project — and she was shocked and a little embarrassed to learn that her mostly-millennial team had identified a lack of support for the effort among higher-ups. How? During her introductory presentation, they sent instant messages among themselves and to others in the company and figured it out.

[…]

When I worked at Nielsen, I led a quantitative study of major consumer companies like Kraft and Procter & Gamble — research that demonstrates the link between learning and innovation. The study found that employees were likely to generate more revenue if they held mandatory meetings to identify the strengths and weaknesses of new products after their introduction, used a consistent set of questions to do so, and recorded what they learned.

 At some companies and universities, smart leaders are already tapping into millennials’ abilities. For instance, when leading conference calls, one senior executive I know asks younger staff members to introduce the instant messages they send during the meeting directly into the discussion. Rather than keeping the two streams of information separate, he is intentionally encouraging and inviting the parallel conversation into the mix.

At Northwestern University, teams of undergraduate and graduate students — guided by older, experienced faculty members and alumni, and often paired with senior-level researchers — create plans for start-ups in an interdisciplinary series of classes called NUvention. Over the last two years, three of these teams have won first- or second-place awards in the Rice Business Plan Competition, to the tune of more than $1.5 million in prize money. And the winning teams have gone on to raise over $1 million each.

Mike Marasco, the leader of the NUvention program, puts it this way: “Millennials work more closely together, leverage right- and left-brain skills, ask the right questions, learn faster and take risks previous generations resisted. They truly want to change the world and will use technology to do so.”

In another example of Millennials’ preferences, Goldman Sachs recently announced that they want their junior bankers to work less, so they don’t burn out and quit. They also dropped their efforts to prohibit first year bankers talking with headhunters, and dropped the initial two year contract arrangement, making new hires full-time, regular employees from day one.

Millennials are starting to change the world of business, one text message at a time.

HP’s Meg Whitman follows Marissa Mayer’s lead: All Hands On Deck

Meg Whitman’s turnaround has not been going well. In late August Whitman told analysts that she doesn’t expect the company to grow its revenues in the coming fiscal year, and she reassigned Dave Donatelli, who had been running HP’s enterprise business for five years.

HP is still making half of its revenue from its PC and printer business, which is being slammed — like every other company in that sector — by the rapid shift to tablets, falling 9% from the same quarter a year ago. But all parts of HP are in decline, like its customer server business.

All of which is a preamble to today’s news that Whitman is revising HP’s policies around remote work, echoing Marissa Mayer’s claims that the company needs “all hands on deck” in order to affect a cultural transformation. Here’s the text of a document that supports the new policy:

My Workplace, My HP Community. What is the goal of the effort?

As part of the company’s overall turnaround strategy, there is an effort underway to bring employees who currently work from home to work from the office. This effort is part of the company’s cultural shift and will help create a more connected workforce and drive greater collaboration and innovation. In some major sites thereto large amount of underutilized workspace and we want to make the best use of our space. HP will maintain flexible work arrangement options, but with greater clarity and consistency about how to use them.

Why now?

During this critical turnaround period, HP needs all hands on deck. We recognize that in the past, we may have asked certain employees to work from home for various reasons. We now need to build a stronger culture of engagement and collaboration and the more employees we get into the office the better company we will be. Belief in the power of our people is a core principle of the HP Way Now. Employees are at the center of what we do, we achieve competitive advantages through our people. HP has amazing employees who are driving great change. We believe the more employees we have working together, the better for HP and our customers.

How does this support the company strategy end culture?

We want to make HP a great place to work and build a stronger HP Way Now culture of engagement and collaboration. Employees who are more connected tend to be more collaborative, productive, and knowledgeable. They will also have a greater sense of the company goals and experience a greater sense of pride in HP. We believe that having employees work from the office will unite and inspire them to achieve higher levels of operational excellence and innovation.

Which employees are affected?

The overall effort is designed to increase collaboration among all employees, including employees who regularly work from home despite having an assigned desk at a site, telework employees who are near HP sites, and those who regularly work in an office now. Employees with part-time or job share arrangements are expected to work from the office. Where legally permissible, contingent workers also are expected to work from the office.

I won’t recapitulate all the arguments I made earlier in the year about the downside of a “no remote work” policy (see Yahoo’s Mayer thinks that remote workers are… too remoteWhat Marissa Mayer’s ‘no remote work’ dictate meansNowhere to run, nowhere to hideThe polarization around remote work comes as no surprise, and Jennifer Magnolfi on Marrisa Mayer’s ‘no remote work’ edict).

Unlike Yahoo — where only a relatively small number of the firm’s 12 thousand staff worked remotely — HP employs 300,000+ employees worldwide, and HP’s remote work policy was general and actively promoted by the company as a way to reduce costs. In fact, it is unclear that there is room to house all the employees and consultants it employs in its current office space, despite recent layoffs. So it is likely that this will affect a lot of people, and there may be a lot of folks who will continue working remotely because of office constraints, long commutes, or other extenuating circumstances.

At the superficial level, the “all hands on deck” argument is that the company has developed a plan for its recovery and everyone has to align with that plan and work hard to achieve it. However the company has been communicating that plan and working to rally people around it in the past is inadequate for the degree of change needed at HP, which is more than a simple realignment of priorities and direction. The HP Way — which started as a set of core values and has morphed into a new HP Way Now framework of ideas that theoretically is creating a new culture at HP — apparently require more indoctrination, despite the supposed core value: “We have trust and respect for the individual”. But that trust requires the individual to do their work in one of HP’s offices, apparently.

The real, deeper push at HP isn’t intended to make people more collaborative, productive, and knowledgeable. This shift in practices is so that first-line managers can monitor people’s work more closely, and find out who is most — or least — aligned with the stress factory culture that HP has become. That will make it easier to decide who to cull in the inevitable rounds of layoffs coming in HPs next few quarters, as it sinks toward the bottom of the abyss that once was the enterprise server and PC market, and which — for all intents and purposes — is effectively dead, at least as an area of growth.

The real downside of this episode is that it casts a negative light on remote work and flexible working schedules, which HP was a pioneer in. As Peter Burrows wrote in BusinessWeek in 2004,

They shunned the rigid hierarchy of companies back East in favor of an egalitarian, decentralized system that came to be known as “the HP Way.” The essence of the idea, radical at the time, was that employees’ brainpower was the company’s most important resource.

To make the idea a reality, the young entrepreneurs instituted a slew of pioneering practices. Starting in 1941, they granted big bonuses to all employees when the company improved its productivity. That evolved into one of the first all-company profit-sharing plans. When HP went public in 1957, the founders gave shares to all employees. Later, they were among the first to offer tuition assistance, flex time, and job sharing.

But the company has veered backwards, with a more reactionary style of management, and undoing the culture that Hewlett and Packard started in a one-car garage in Palo Alto in 1938.