Business Report

Help, We're Being Disrupted!

The fast pace of technological change has inspired a new literary form: the memo that warns an entire company it must alter its course.

You can’t shake the feeling that your company is headed for a cliff. But most of your colleagues don’t quite realize it. After all, on the surface business is good. But you see how technology is going to shake the ground your company is standing on, perhaps even toppling the business itself.

So what can you do?

For some discontented technologists, the answer is to let fly with a “disruption memo”—a lengthy (and ultimately public) declaration that dissects the threats to a company’s competitive position.

Top Tech Disruption Memos

Stevey’s Google Platforms Rant
by Steve Yegge (Google, 2011)

The Burning Platform Memo
by Stephen Elop (Nokia, 2011)

Dawn of a New Day
by Ray Ozzie (Microsoft, 2010)

The Peanut Butter Manifesto
by Brad Garlinghouse (Yahoo, 2006)

The Internet Services Disruption
by Ray Ozzie (Microsoft, 2005)

The Internet Tidal Wave
by Bill Gates (Microsoft, 1995)

The genre includes such memorable documents as Yahoo’s Peanut Butter Manifesto of 2006 and Nokia CEO Stephen Elop’s “burning platform” memo of 2011. Born from frustration, and an insider’s knowledge, such texts can be gripping. This year, an Internet post in which a Google engineer described problems at that company was judged “the best article [ever] about architecture and the management of IT” by one person who commented on it online.

The ability to issue an outcry to the whole company, no matter whether you are the CEO or someone lower in the chain, is something that didn’t exist before blogs and e-mail. But before you seize the opportunity to dash off your own screed and send it to “All Staff,” consider some advice. Two authors of famous leaked memos, Ray Ozzie and Brad Garlinghouse, spoke with Technology Review and led us through the dos and don’ts of crying disruption.

1. Be detailed in your analysis.

A good disruption memo proves that you know what you’re talking about.

When Ozzie replaced Bill Gates as Microsoft’s chief software architect in 2005, he was worried about the company’s direction. Although Microsoft still reaped huge profits, other companies were increasingly setting the agenda online. So Ozzie spent weeks writing a 5,000-word memo titled “The Internet Services Disruption“—a highly detailed warning to his new colleagues that Microsoft had to develop a coherent strategy for navigating “a time of great turbulence and potential change in the industry.”

After years at Lotus Development and Groove Networks, a startup he founded, Ozzie had a sterling reputation in computing. Even so, he says, he felt the need to ingratiate himself with Microsoft’s roughly 90,000 employees. So with the help of a technical assistant, he was careful to ground his memo with discussions of programming technologies. That was especially important because 10 years earlier Gates had written the 1990s version of essentially the same call to arms (“The Internet is a tidal wave. It changes the rules”), and Ozzie’s document was bound to attract comparisons.

“What I was trying to do was, in essence, establish credibility. Some people knew me, some didn’t,” says Ozzie, who left Microsoft a year ago and is now planning his next career step. “I was trying to make sure we all got on the same page.”

2. Stay positive. And bring a scoop.

To be effective, be sure you describe problems and solutions.

Garlinghouse was a senior vice president at Yahoo when he wrote the so-called Peanut Butter Manifesto. In 1,900 words segmented by bullet points and boldface text, he argued that Yahoo had spread itself too thin (like peanut butter on bread) and left opportunities open for rival Internet companies. But then he suggested ways to fix the problems, including closing divisions and restructuring the company. “Keep it constructive. If it’s just a bitch session, we can all do that,” says Garlinghouse, who today is the president of applications and commerce at AOL (a job he’s leaving at the end of this month). “You can bring the poop, but you’ve got to bring the scoop. If you’re going to crap on something, you should suggest a way to clean it up.”

3. Don’t let them call you crazy.

Dark though your company’s future may be, you don’t want to be written off as a doomsayer.

That may mean watering things down, just a little. For his cri de coeur at Yahoo, Garlinghouse revised his projection of how many jobs he thought Yahoo needed to cut. He suspected that the company would have to lay off as much as 40 percent of its staff, but he thought saying that would be too provocative. “We must reduce our headcount by 15-20 percent,” Garlinghouse wrote instead. “You want to make sure people hear the signal and don’t get distracted by the red herring,” he says now. “I was worried if I said 40 percent headcount reduction, people would fixate on that.”

If you’re actually CEO, starker language could be in order. Last winter, facing brutal competition in the smart-phone market, Nokia’s Stephen Elop wrote to tens of thousands of employees saying that the company was like a man about to burn to death on an oil platform. Ozzie says Elop’s dramatic approach was appropriate to the situation, given that Elop was about to carry out layoffs and other overhauls. By comparison, Ozzie used much more measured language in his message to Microsoft in 2005: “For all our great progress, our efforts have not always led to the degree that perhaps they could have.” Ozzie feared that if he was too bombastic, it might get some people’s attention but prompt other people to “write this clown off.” He saved the heavy rhetoric for follow-up meetings. “My style is to be a little bit more measured in tone and then, face to face, quite dramatic,” he says. 

4. Let your boss see it first.

Don’t let your employer be the last to know your big memo is about to pop.

Garlinghouse recalls how he wrote the Peanut Butter Manifesto over a few days with help from two junior colleagues. But then he took a step back and forwarded it to Yahoo’s founders, Jerry Yang and David Filo. Filo suggested sending it to Yahoo’s chief operating officer, and “within three weeks 30, 40 people had it,” Garlinghouse says. Ozzie says that before sending his 2005 memo to top staff he had gotten input from Gates, Microsoft CEO Steve Ballmer, and the presidents of Microsoft’s product divisions. The lesson: don’t blindside or alienate people you’ll need to work with if you want your advice carried out.

5. Even your mother will read it.

As you sit down to explain all that is wrong with your company, keep in mind that it’s likely to become public.

That’s what happened this fall to Google engineer Steve Yegge. He posted to his Google+ account a 4,500-word description of how Amazon, where he once worked, was doing a much better job than Google at developing a broad computing platform. “Stevey’s Google Platforms Rant” was meant only for colleagues, but when Yegge accidentally posted it to a public page, technology news sites soon swarmed to dissect his detailed insider’s analysis of Google’s competitive weaknesses.

Ozzie and Garlinghouse say their memos leaked to the press after circulating among top management (both deny being the leakers). Ozzie says he was prepared. “It was written in a way that in case it escaped, it wasn’t disclosing anything that was damaging or proprietary information,” he says. And he sees an upside to having memos get reported in the press: “In most organizations that size, in many cases employees listen more to things coming in from the outside.”

6. The memo is just the beginning.

If your memo works as intended, you probably will have to work very hard to follow up on it. After his 2005 memo, Ozzie spent the next two years meeting with product managers and other front-line staff who had to carry out his strategy. “A memo like this is stirring the pot—it’s initiating a process of really hard work,” he says. “It’s beginning a campaign.”

7. Accept that it’s probably hopeless.

By the time a technological disruption is visible, it is often too late or too difficult for a company to change course.

Today, Garlinghouse says, Yahoo is still wrestling with many of the problems he identified in 2006. “These large companies are so hard to really change their perspective,” he says. Similarly, before leaving Microsoft in 2010, Ozzie wrote a second sweeping memo titled “Dawn of a New Day,” in which he regretted that “for all our great progress, some of the opportunities I laid out in my memo five years ago remain elusive and are yet to be realized.”

No matter what happens to the company next, Ozzie believes Microsoft should be due for another big memo around 2015. “About every five years, like clockwork, the nature of technology and the nature of the market accumulate enough change that it feels like a disruption,” he says.

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