Microsoft Moral Malaise

Robert Scoble has tripped off a moral whirlwind on the Redmond campus this weekend. For those not in the know, Robert works for Microsoft PR and has a huge blog following in the Websphere. Also his blogging has helped establish a blog-voice for hundreds of Microsoft employees. Finally his and the other employee blogs provide a more human insight into the inner workings of 1 Microsoft Way – the “Your Potential, Our Passion People”.

The moral issue is whether Microsoft should support Washington state bill 1515s admendment which would ban discrimnation based on sexual orientation. Steves letter to employees is here. The following is Robert Scobles response(third posting down). And here are two different takes on the same question: A Microsoft blogger and an outsider looking in.

What makes this debate of particular interest are a number of currents running through theWorld ZeitGeist at this time:

1)As the US brings democracy and separation of Church and State to Iraq it seems to be falling back into that quagmire itself. The Religious Right is taking enormous credit for the victory of President George W. Bush and the Republican party and is now demanding a lot of so-called Christian beliefs be implemented in public policy. Which is fine as long as Christian right recognizes that the Republican slight majority(simple majority of 3 votes in the Senate and 12 votes in the House) is itself composed of many diverse viewpoints and members including upwardly mobile Blacks, Catholic Cubans, Gray gays, and at least two dozen other large and identifiable groups. Some of these diverse groups might take exception to the Christian Right speaking for them.

2)Corporate good citizenship, especially Corporate America, is under serious question for moral , social, and economic dysfunction. Specifically, the Sarbanes Oxley financial compliance requirements is at the heart of this malaise. This act compels CEO and corporate boards to prove that they are being financially circumspect (something that at least 100 years of Business School and Accounting tradition and training was the accepted norm)because major corporations from Andersen Accounting and Enron, to Adelphia and Tyco through to Worldcom and Hollinger allowed cooking the books and executive bypassing of financial limits and control to run amuck – resulting in $100s of billions of dollars in bankruptcies, lost pensions, and deprivations of various stakeholders. More broadly, Corporates are being seen as unresponsive to basic broad societal needs. For example, since 1975, the need for the US to break away from its dependence on foreign oil has been recognized both economically (huge balance of payments costs and an increasing drag on the economy) and politically (large dependence on governments with attitudes towards the US that range from openly hostile to very ambiguous). Yet despite promises from the oil corporates to become “broadly based energy companies” and the automobile industry to provide energy efficient transportation – nothing has really happened from these two leading corporates. They have engaged in tokenism and allowed the US to move from 1/4 dependence on foreign oil to 2/3 on their watch. It is so bad that 10 of the past Presidential security advisers (both Republican and Democrat) have written an open letter to the Bush administration to make energy independence an urgent national priority. Instead the President is taking on a problem, Social Security, which wont even start to be a real financial burden until 2042.

3)Corporate governance is coming into question. Supposedly CEOs act for the benefit of all their stakeholders – employees, customers, suppliers and shareholders/stockholders. But for many corporates, the distinct impression is that shareholders trump all other groups combined. And not all shareholders, but just a select group of large ones – say the 5-10 largest shareholders – which may represent well below 50% of all shareholders. The representation and responsiveness of the executive suite to minority shareholders views has been a never ending debate at the HBR-Harvard Business Review. The problem is that minority of shareholders is often now a majority of shareholders by sheer numbers but not in large effective voting blocks of shares. Hence corporate boards have a problem of governance and lack of strategic focus as they play to an ever smaller set of large block shareholders and their often parochial quarterly results.

4)As the economic pendulum moves towards Asia (think of the emerging services and manufacturing powerhouses that are India, China, Southeast Asia, etc) the developed countries are in inevitable economic decline as jobs and industries are being exported to lower cost producers. Yet Americans cannot be blamed for lack of effort – they currently work the third longest hours in the developed world with nearly 60% of households having two-wage earners. But what is the reward for all this effort – one of the highest per capita debt rates in the world and a growing discontent with the associated social and moral upheaval. As Geoge Fukuyama has tracked in his book about The Great Disruption (his equivalent to The Great Depression) – the industrialized West but particularly the US has seen for the past 40-60 years a rise in social and moral disruption. The number of unwed mothers has steadily increased from less than 5% to above 20% in key age groups, the disparity of income between the highest and lowest reversed itself in the early 1980s and has steadily increased since then, the divorce rate has steadily risen from less than 20% to nearly 50% of all marriages, US rankings in education standing of high school graduates has steadily declined in world rankings while the cost of a college education has increased 1000% in the past 30 years in relative terms and 400% in absolute terms. In short, there is ample room for social and moral unease and therefore calling into question the axiom US corporate well being translates into US individual economic and social well being.

And its this disconnect that is at the heart of the Moral Malaise on the Microsoft Campus. Microsoft employees have seen their company be brought up and convicted in the Antitrust case as an economic thug – found guilty of “Cutting off the oxygen” to Netscape and having to settle with AOL, Sun, and others to the tune of billions of dollar. They have seen their company become the Partnering Pariah as Microsoft treats erstwhile partners in the BI, utilities, Office, Small Business Systems, etc to cut throat and absolute giveaway pricing and/or absorption of key components into the Operating System or Office or whatever. But most telling of all, employees have seen their workloads remain the same or maybe even “go hardcore” a little more often or a little longer than before. But at the sametime their stock options have stayed stagnant for the past 4 years because the stock has also stayed stagnant as well. Meanwhile Employees have also had to absorb cutbacks in benefits and percs. Finally, they see that the gals and guys at Google are now doing what they used to do: growing in revenues and profitability at a dizzying rate while innovating and beating Microsoft and many other ISVs with a Linux and cross platform strategy that puts the lie to Windows as SuperSoftware (of course, 8-12 critical security patches to Windows and related software per month for the past year should have been a hint).

So as seen in the many posting by Microsofties – they want to see at least moral worth for their efforts. And suddenly the leadership and their actions do not compute in a case of redirected attention/valuation. A Microsoft employee cannot question the shortcomings of Microsofts economic or technical strategy – even though they have had to bear the brunt of its shortcomings in the last 3-4 years. But they certainly can do the moral arithmetic on the anti-discrimination bill and pass judgement there.

(c) Jacques Surveyer 2005

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