Robert Herbold’s Shared Delusions

July 19, 2011

In a recent essay in the Wall Street Journal Robert Herbold, former chief operating officer at Microsoft, uses a recent trip to China to offer his opinion on what ails the United States. First, Herbold gushes about the success of China’s “five-year plans:”

In every meeting we attended, with four different customers of our company as well as representatives from four different arms of the Chinese government, our hosts began their presentation with a brief discussion of China’s new five-year-plan. This is the 12th five-year plan and it was announced in March 2011.

Of course, central planning is not compatible with the decentralized decision-making that goes with free markets. Yet, Herbold writes, “The autocratic Chinese leadership gets things done fast (currently the autocrats seem to be highly effective).”

And so, how to dig the U.S. out of its hole? Among other things, you guessed it, Herbold advises “start approving some winning plans.”

Herbold seems to be completely ignorant as to how “winning plans” really evolve. Are they really accomplished through central-planning and autocratic leadership?  Would I be rude to wonder if Herbold is a student of economics or history? Could he be unaware of what centralized “winning plans” have wrought in North Korea?

If Herbold is as deluded as he appears, many Chinese are not. Just a few days before Herbold’s essay appeared, Liu Junning wrote in the Wall Street Journal, “Westerners who think that authoritarian rule is China’s natural state misunderstand its culture.” Junning adds that China’s prosperity is not due to a mixture of central planning and markets.  Instead, “the most significant transformations from the perspective of boosting prosperity,” according to Junning, “have involved loosening of control over the people, not some alchemy of power and Marxism.”

Why is the Wall Street Journal allocating space for Herbold to share his delusions? Presumably because, as Junning points out, many others share the belief that Chinese success is due to central planning. Further, Herbold has credibility because presumably he had a successful tenure at Microsoft. But did he really?

In his 2002 Harvard Business Review article “Inside Microsoft: Balancing Creativity and Discipline,” Herbold describes the cultural differences between Microsoft and his former employer Proctor and Gamble:

It was exhilarating to experience this degree of informality and delegation of responsibility to individuals throughout the organization, which clearly fostered both creativity and speedy decision making. But the experience was also disorienting. At Procter & Gamble, where there was a procedure for almost everything, board meetings were tightly scripted affairs.

Herbold then explains his job which he held from 1994-2001:

My job was to bring some discipline to Microsoft without undermining the very characteristics that had made it successful. I hoped to do this by creating central systems that would standardize certain business practices and give managers instant access to standardized data on each business and geographical unit.

Herbold goes on to claim that his central-planning reforms were responsible for rising profit margins at Microsoft during his tenure. Then he “charitably” adds, “I don’t take sole credit for this.”  Nowhere in the essay is there any hint that Microsoft’s success had anything to do with an unprecedented mania for technology stocks, strongly rising demand for personal computers, and most importantly, Microsoft’s game-changing smash hit, Windows 95, which Herbold had absolutely nothing to do with.

Yes, like most of us, Herbold has legendary status in his own mind. But Herbold has not matured to the point that he can recognize that his legendary status is delusional. In other words, Herbold is as deluded about Microsoft as he is about China and, importantly, he is deluded about the way to cure the American malaise.

No doubt in the coming years the snake oil that Herbold peddles will be increasingly welcomed by a segment of the American population—those who almost every day ask, “Why don’t they do something?”

Every day, many entrepreneurs are doing more than “something;” they are inventing the future Microsofts of the world. They don’t need Herbold to tell them the “winning plan.” They need those who are ignorant and delusional to stay out of their way. As Herbold’s delusions are increasingly shared by others in the United States, future Microsofts will find their homes in other parts of the world.


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