Microsoft Stock Plan Sends Welcome Signals

By Peter Coffee  |  Posted 2003-07-14 Print this article Print

Coffee: Enterprise IT portfolio planning needs people with long-term perspective.

Microsofts shift in its compensation plans, from granting stock options to giving employees actual shares, holds up a mirror to the IT industry and challenges it to admit that theres a little bit of distinguished gray at the temples. Once a business with nothing to lose and everything to gain, IT has become a domain in which seasoned management and risk-averse engineering are needed to build systems with lifetimes of years or decades--rather than cranking out novelties with product cycles measured in months or quarters.
When PBS NewsHour called me last week to discuss what this story really meant, my comments to their development editor focused on two things. First, I observed that some of the most important people at Microsoft these days are people who came from IBM, or other "big iron" IT builders, or even from "user" industry careers where they had decades of experience in traveling incremental development paths.
These are people, I said, who dont think in terms of living on pizza and credit-card debt while waiting for their stock options to make them rich. These are people who think in terms of portfolios of assets, probably carrying that perspective into their personal lives as well as on the job. This is not just a subjective, touchy-feely, "Peters on the daddy track" viewpoint. Yes, my personal perspective on the meaning of a decade was fundamentally different after I had children than before: "Ten years from now" becomes a concrete image when it means, for example, a second-grader being ready to graduate from high school. There are concrete implications to this change of perspective: People who never imagined that the code they write today might still be in use ten years later might actually start writing code that others can read, and even maintain, when ten years becomes an imaginable time span. The other point that I made to the NewsHour people, though, was an almost unnoticed footnote in most comments on the Microsoft change. While everyone was huffing and puffing about the risk assessment involved in pricing options, and the incentives that options create, it seemed as if almost no one (except eWEEKs Peter Galli) noted Steve Ballmers statement that incentive compensation for hundreds of top Microsoft people will now be based on measures of customer satisfaction. I can take a devils advocate position on this issue, and indeed I recently have: In one of these letters at the end of last year, I suggested that "make them happy" may be a feeble strategy compared with "make them ours." But perhaps Microsoft is acknowledging that customers technical mobility, their ease of moving from the companys own solutions to those based on non-proprietary standards, has become dangerously great: that the company cannot take the risk of a catastrophic exodus that might be triggered by a few high-profile defections. It has to be a good thing that Microsoft managers pay packets will be driven, at the margin, by customer happiness rather than by financial indicators; that development staff will be paid in units of the companys long-term future health, rather than with volatile measures of the noise on that signal. And if it sends a message to other IT organizations that we have to think like grown-ups now, and recruit and compensate people with that requirement in mind, so much the better. Tell me what options youre considering.
Peter Coffee is Director of Platform Research at, where he serves as a liaison with the developer community to define the opportunity and clarify developers' technical requirements on the company's evolving Apex Platform. Peter previously spent 18 years with eWEEK (formerly PC Week), the national news magazine of enterprise technology practice, where he reviewed software development tools and methods and wrote regular columns on emerging technologies and professional community issues.Before he began writing full-time in 1989, Peter spent eleven years in technical and management positions at Exxon and The Aerospace Corporation, including management of the latter company's first desktop computing planning team and applied research in applications of artificial intelligence techniques. He holds an engineering degree from MIT and an MBA from Pepperdine University, he has held teaching appointments in computer science, business analytics and information systems management at Pepperdine, UCLA, and Chapman College.

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