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Bob Herbold: Microsoft and the art of selling software

By Richard Morochove

First published July 23, 1998

After 26 years, he thought he'd never leave The Procter & Gamble Company. Yet six weeks after the phone call from a friend, he was in Redmond, Washington, working for Microsoft.

A move in mid-career from selling soap to software doesn't sound like the path to success. Yet it's worked out well for Bob Herbold, executive vice president and chief operating officer of Microsoft Corp, arguably the number three man in the company after Bill Gates and Steve Ballmer.

"Microsoft is a company which, believe it or not, is very similar to Procter & Gamble," says Herbold. "They both hire really good people, they're fun to work with. Secondly, they both focus on product and run their companies in a simple, simple way. You get the product right.

"Always look at your product versus the competition and ask the question: What do we have to do to eventually be viewed as the best product in this particular category?

"People want to know what are the new things you're providing me that are exciting. Getting a Merlot wine stain out at long last, can be exciting at times, depending on your role in life."

Yet there are also differences in the ways you market Tide and Windows.

Herbold explains, "The detergent industry is a very low interest industry. The things you have to talk about aren't nearly as exciting. You go for the emotionality and the imagery."

On the other hand, Herbold places the computer business in a very high interest category. He takes advantage of that interest by showing product features that excite people. Yet even in the computer industry there are different degrees of excitement, as shown by the recent launch of Windows 98, low-key in comparison to Windows 95.

"Windows 95, was a major celebration about starting a new way to think about a PC," says Herbold. "Windows 98 is a completely different proposition. It's a major set of new capabilities and refinements. That doesn't deserve the same kind of incredible euphoric celebration. Let's hit the nuts and bolts of what I can tell somebody about the specific features that would excite them."

Herbold joined Microsoft in November 1994 and is responsible for worldwide operations including finance, manufacturing, distribution, logistics, information systems, human resources, corporate services, and real estate. He also oversees all corporate marketing activities such as corporate advertising, market research, creative services, and event marketing.

The former senior vice president, advertising and information services, at Procter & Gamble, sees himself as a change agent who wants to leave his mark on the company.

"I sold off all the manufacturing assets. We shouldn't be in the manufacturing business given that the world is moving from floppies to CDs which are lot less expensive to produce.

"More importantly, they're moving to more licensing and they're moving eventually to electronic distribution. So we shouldn't be hanging around with fixed assets like bricks, mortar and 700 people."

Software retailers may not like getting cut out of the profitable sales loop, but Herbold says Microsoft will eventually distribute all its software electronically, starting first with sales to large businesses. If high-speed Internet connections become widely available soon, Windows 98 could be the last version of the operating system to be sold in retailers.

When Herbold joined Microsoft, he found there wasn't much attention given to the overall image of Microsoft, its trademark and its branding. He introduced opinion surveys.

"We began to measure on a regular basis, every four to six months, Microsoft's image on a series of attributes among several audiences: general public, PC users, IT professionals, business decision makers and, more recently, Washington, D.C. influentials, Silicon Valley developers, Silicon Valley in general," says Herbold.

All get asked a series of identical questions, for example: Please rate Microsoft on a scale of 1 to 9 in terms of being a software leader. Other questions rank Microsoft's image in innovation, helping businesses, and Microsoft's sometimes controversial business practices.

According to Herbold, Microsoft's image is very positive among all groups surveyed, except for a recent decline among IT professionals. This he attributes to legal tussles with the U.S. Justice Department.

"Does it worry us? You bet," he exclaims!

Microsoft recently initiated an advertising campaign specifically to influence these attitudes. However, he says these concerns aren't mirrored in attitudes of the general public or PC users Microsoft surveys.

"They couldn't care less," says Herbold. "They like the products."

Dealing with the bureaucrats inside the beltway has only recently become important for Microsoft.

"For the first 21 years of Microsoft's existence as a company the role of Washington D.C., not only for Microsoft, but for the industry, was relatively minor," says Herbold.

"The last thing this industry should want is a lot of bureaucracy, ground rules, commissions, committees, guidelines that slow down that innovative process and add cost. We're doing just fine." CW

Richard Morochove, FCA, is a Toronto-based computer consultant.

Copyright ©1998 by Morochove & Associates Inc. All rights reserved. This work may not be copied or distributed by any means without our prior written permission.

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