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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

February 8, 2010 at 10:00 AM

The Dick Bass manifesto and high stakes for the Seattle economy

Top of the News: The scariest thing I’ve read about the Puget Sound economy came from last week’s New York Times, in an op-ed piece about Microsoft by retired executive Dick Bass.

The Seattle Times‘ Brier Dudley rightly described it as a “thoughtful essay outlining how Microsoft’s culture stifled creative work, including some that was later mirrored in successful products from Apple.”

Among the points by Bass, who led the company’s e-reader effort:

Unlike other companies, Microsoft never developed a true system for innovation. Some of my former colleagues argue that it actually developed a system to thwart innovation. Despite having one of the largest and best corporate laboratories in the world, and the luxury of not one but three chief technology officers, the company routinely manages to frustrate the efforts of its visionary thinkers.

And:

Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence.

If even half of what Bass writes is true, the long-term consequences for the region go beyond a back-and-forth among the technorati. Microsoft and its success has been the single biggest reason why Seattle was able not only to reinvent itself from the old Boeing dependency, but also to leapfrog most other American metro areas into being a rare net winner in the globalized economy. Even with our enviably diversified economy, Microsoft’s fortunes are more critical to the region than those of Boeing.

Microsoft’s behavior bears some similarities to what happened for decades at General Motors, another company blessed with dominant market share, huge wealth and lots of smart people whose best ideas were often compromised or shelved. In the long history of corporations, it’s a common denominator: bureaucracy replaces innovation, piles of cash are used to buy competitors rather than continue the organic and creative growth that created the company’s success, and decline invariably sets in.

Out at Redmond, the bigs told the TimesSharon Chan, “Obviously we disagree.” Followed by a smiley emoticon. I’ll admit, in the years I covered GM, Chief Executive Roger Smith never sent me a smiley face.

Today’s Econ Haiku:

An Olympic task

How much real economic

Gain, minus the costs

Comments | More in Microsoft

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