Global Corporation - Global Citizen Microsoft: At The Forefront Of Corporate Responsibility

Thursday, January 1, 2004 - 01:00

The Editor interviews Brad Smith, Senior Vice President, General Counsel and Corporate Secretary, Microsoft Corporation.

Editor: How does Microsoft think about corporate responsibility?

Smith:
We think about corporate responsibility in two ways. The first has to do with our responsibilities as part of the information technology (IT) industry. We operate, together with other companies, at the forefront of an industry that is changing the way people work and interact. The rapid change of information technology is one of the driving forces of our economy and defining features for our generation. This clearly creates important responsibilities for us as a company and, more broadly, for us as an industry.
That responsibility has grown substantially over the last five years, as the Internet has made computers more ubiquitous and connected them into a single, global network. The Internet today is creating many new benefits for people. Yet, it is also creating new challenges for society. As a result, part of our corporate responsibility needs to focus on responsible innovation. For example, through an initiative we call trustworthy computing, we're working to ensure that people's personal information - their privacy - is protected when they're online, that we're creating a safe online environment for children, and that the security of people's computers is protected, whether from hackers, viruses, or even from the intrusiveness of something like spam. A key component of corporate responsibility for us focuses squarely on ensuring that technology moves forward in a way that ensures both that its benefits are disseminated broadly and that there are strong technology and societal solutions to the technology problems that emerge.
The second way we think about corporate responsibility has to do with our commitment to being a responsible global citizen. Any global company needs to consider its impact at the local level in the communities in which it operates. That means considering how our business activities can improve local economies, how we're working constructively with local governments, and how we're adhering to local laws and ethical obligations. It also means that we need to focus on adapting to local cultures, including through strong training and resources for our local employees.

Editor: How does Microsoft engage with government and policy makers around the world?

Smith:
As information technology has become increasingly important to the world's economic infrastructure and social fabric, it has become much more important to people who make laws and interpret them. In some ways, the entire IT industry is working its way through a major transition that necessitates a stronger focus on forging partnerships between the public and private sectors. There are many technology challenges that the industry cannot solve by itself and that government cannot solve by itself. As one of the technology leaders, we have a responsibility to work in partnership with governments and others in our industry in areas where public policy or legal changes are needed to address IT issues.

Computer security is a good example. When the recent Blaster computer virus was released, it created substantial productivity issues for businesses and homes alike. As a company and an industry, we need to respond: first by continuing to focus on product quality and making software more resilient to attack, and second by providing services and education to our customers to help them better protect their PCs. But we also recognize that, given the criminal nature of launching a virus, we need to work closely with governments as well. We invited investigators from the FBI and Secret Service to work in our technical facilities to help track down the individuals who launched the Blaster virus. And, we have just established an anti-virus reward program to help the FBI, Secret Service, and Interpol to identify, arrest and convict those who release malicious viruses and worms on the Internet.

Part of our work is focused on discrete policy issues as they arise, but another important part is aimed at providing information more generally to people in government about where technology is heading and how it will impact society in the future.

Editor: What is Microsoft's commitment to business integrity?

Smith:
Business integrity starts with a commitment to meet our obligations under the law, but it goes well beyond that, as well. When we think about business integrity, we also think about how we're shaping our corporate culture and how we're enabling all employees to make informed and ethical choices in their work and interactions with others.

We have a number of very important legal obligations that come out of the challenging antitrust litigation experience that we went through as a company. At the end of that experience, we emerged with a broad consent decree to which we need to adhere. The case also resulted in a finding that the company has a monopoly position in the market for desktop computer operating systems. On the one hand, there were aspects of the outcome that were a disappointment for us as a company, but on the other hand, it created a starting point for the adoption of a wide range of new responsibilities, both under the law and more broadly.

We've undertaken a number of practical steps to adhere to our legal duties. We put in place rigorous training for our employees to ensure that they understand and comply with the obligations of our consent decree. We adopted a new set of standards of business conduct and ensured that our employees understood what these meant. We created a new Office of Legal Compliance to assess and ensure that we live up to our legal duties. These are all things that have been very important to the life of the company, but we look at these as just the starting point. Our goal is not just to meet our obligations under the law, but to exceed them.

Editor: How does this impact the company's culture?

Smith:
Steve Ballmer, as our CEO, has given us a clear mission as a company that really looks forward over the next two decades to the kind of positive role that we need to play in the world. This has had a number of implications.

In the early years of the PC, I think engineers throughout the industry sometimes made technology decisions in a way that was more product-centric than customer-centric. We looked at new features from the standpoint of the exciting new things that they enabled computers to do. That still remains very important to us, but as our company has grown, so has our influence in society. We recognize the need to make technology and business model decisions with a clearer focus on our customers and partners and the communities and economies in which we operate. This has started to transform our culture to be more customer-centered and values-based. We spend more time focusing on the impact of our products and business practices on our customers. We spend more time talking with our employees about values like honesty and integrity, openness and respect, passion for customers and technology, and commitment to personal excellence and accountability. We also spend more time talking with others in our industry, so that we can better appreciate the impact of our decisions on their business plans.

Editor: You mentioned that Microsoft considers how its business impacts economies. In what ways does it do that?

Smith:
As a company we're not vertically integrated or broadly diversified beyond the creation of software. We focus on doing some key things well and working with a broad array of industry partners. For example, we partner with roughly 750,000 firms around the globe. Microsoft's flagship partner initiative is its Certified Partner Program - more than 30,000 companies around the world have elected to become Microsoft Certified Partners. These firms have been generating almost a third of their revenue growth from their affiliation with Microsoft, and we estimate that every dollar in Microsoft revenue generates eight dollars in downstream revenue for our partners. This in turn enables them to expand their own businesses and create additional jobs. That's the business side of the equation.

We believe our philanthropic efforts also play an important role in creating economic opportunity around the world. Microsoft has deep philanthropic roots. From the company's earliest days, Bill Gates was very focused on the United Way and ensuring that, even as a young start-up, Microsoft and its employees were giving back to the community. This year alone, employees contributed $31 million through our annual giving campaign - and Microsoft matches these contributions dollar-for-dollar.

Additionally, we've recently launched two programs to help improve economic opportunity worldwide. "Partners in Learning" addresses technology needs in schools. Its goal is to empower teachers in more than 70 countries, helping those in the neediest schools integrate technology into their curriculum and improve the educational experience. It makes the latest computer technologies available at the lowest possible cost and it will provide more than $250 million in teacher training over the next five years.
The second initiative is called "Unlimited Potential" (UP) and is focused on digital literacy training in the broader community. We're making a $1 billion commitment over the next five years to provide IT skills training to disadvantaged individuals through community-based learning centers worldwide. UP offers curriculum development, operations support, and funding for training personnel to help transform even the poorest rural technology centers into hubs for lifelong learning.

Editor: Does Microsoft help the foreign countries in which it operates to become more attractive to foreign investors by supporting infrastructure improvements?

Smith:
Indirectly, yes. We have located offices in cyber parks which were heavily supported by governments and designed to create an IT infrastructure and commerce base. When leading IT companies like Microsoft commit to offices and other facilities in these cyber parks, it helps attract the capital necessary for infrastructure (roads, utilities, telecom and network connectivity). We have done this, for example, in Hong Kong, Dubai, Malaysia, and Egypt.

In Hyderabad, India, we are building a new campus on land assembled by the government for attracting foreign multinationals. With Microsoft's commitment for the property, the government invested in water, utilities and roads to service the commercial center.After we located in Hyderabad, we were approached by the real estate developer and the State of Andhra Pradesh to provide design review on the next phase of buildings. The same is true for the Dubai Internet City project where we are currently located. We worked with government officials there in more of a partnership than a typical tenant/landlord relationship and were able to facilitate meaningful changes that were mutually beneficial.

Editor: What is Microsoft's commitment to its employees?

Smith:
Software is a product that is entirely the creation of people's minds. Given this, our employees are clearly our most important and valuable asset. Microsoft maintains an incredibly diverse workforce of more than 54,000 people in over 80 countries. Our success depends on the decisions and actions they make every day - so we're committed to providing equal opportunity for all employees and to fostering an environment where our people can develop their potential. Professional development is an important and ongoing part of every employee's experience at Microsoft. It includes training, mentoring, online tools and resources, and special programs to develop managers and our next generation of leaders.

As we've matured as a company and more of our employees have had families of their own, we've come to appreciate ever more keenly the importance of personal and family support in our employees' lives. We pride ourselves on having a market-leading benefits plan, as one of the ways to keep our employees healthy, happy and moving ahead in their careers.