Stack Ranking: The Management Technique that Cost Microsoft Its Creativity

Why has Microsoft fallen flat so often? Stack ranking, a “devastatingly destructive” management technique, may be at the heart of the company’s problems.

You don’t often find the words “Microsoft” and “creativity” in the same sentence together, unless of course “total lack of” is included, as well. The perception that the company is dull is something it’s hoping to shake most recently with its brightly-colored keyboard-equipped tablet, the Surface. But the question remains — how exactly did it get this bad in the first place? As Kurt Eichenwald points out in an article in the August issue of Vanity Fair titled “Microsoft’s Lost Decade,” it may all come down to a Microsoft management technique known as “stack ranking”.

Forbes Leadership Editor Frederick E. Allen summarizes the article nicely in this post, citing quotes from Eichenwald’s interviews with former Microsoft employees, every one of whom listed cited stack ranking — “a program that forces every unit to declare a certain percentage of employees as top performers, good performers, average, and poor” — as a major problem that “leads to employees focusing on competing with each other rather than competing with other companies” and “effectively crippled Microsoft’s ability to innovate.”

You might also like ...
Finance & Operations
Founders, Extend Your Cash Runway by Taking These Steps Right Now

Use this as a guide for controlling costs, getting to cash-flow positive and extending your runway as quickly as possible.

by Jeff Curran
Finance & Operations
Listen
SaaS Metrics: Making Tradeoffs to Maximize Enterprise Value [Podcast]
Thinking about your valuation? You should talk to Sean Fanning—our very own Director of Corporate Development. In this episode of...
by Ariel Winton
Finance & Operations
Companyon’s SaaS Benchmarks Modeling Tool

Companyon Ventures enhanced our Expansion SaaS Benchmarks Data Explorer by building the accompanying SaaS Benchmarks Modeling Tool to measure the current and projected performance of their portfolio against other high-performing SaaS startups. Check out the tool here.

by Parthib Srivathsan