Burning the Ships ─ Transforming Your Company's Culture Through Intellectual Property Strategy

At the start of this decade, Microsoft was on the defensive—beset on all sides by anti-trust suits and costly litigation, and viewed by many in the technology industry as a monopolist and market bully. How was it going to survive and succeed in the emerging new era of "open innovation," where collaboration and cooperation between firms, rather than market conquest, would be the keystones of success?

This was the challenge facing Microsoft founder and Chairman Bill Gates. But "like Cortez burning his ships at the shores of the New World," Gates decided to embrace the change that was needed. He recruited Marshall Phelps—the legendary "godfather" of intellectual property who had turned IBM’s IP portfolio into a $2 billion-a-year gold mine—out of retirement and into the cauldron of controversy that was Microsoft. Only this time Phelps’ mission was infinitely more challenging than simply making money from IP. It was to help reform Microsoft’s "man the barricades" culture, encourage the company to abandon its fortress mentality around its technology and share it with others for mutual benefit, and use intellectual property not as a weapon of competitive warfare but as a bridge to collaboration with other firms instead.

Here, for the first time (and 500 collaboration deals later), is the inside story of what one analyst has called "the biggest change Microsoft has undergone since it became a multinational company."

In this book, authors Marshall Phelps and David Kline take the reader inside the dramatic struggle within Microsoft to find a new direction. They offer an extraordinary behind-the-scenes view of the high-level deliberations of the company’s senior-most executives, the internal debates and conflicts among executives and rank-and-file employees alike over the company’s new collaborative direction, and the company’s controversial top-secret partnership building efforts with major open source companies and others around the world. Nothing was held back from this book save for information specifically prohibited from disclosure by confidentiality agreements that Microsoft signed with other companies. Indeed, the degree of access to Microsoft’s inner workings granted to the authors—and the honest self-criticism offered by Microsoft leaders and employees alike—was unprecedented in the company’s 34-year history.

There are lessons in this book for executives in every industry—most especially on the role that intellectual property can play in liberating previously untapped value in a company and opening up powerful new business opportunities in today’s era of "open innovation." Here is a powerful inside account of the dawn of a new era at what is arguably the most powerful technology company on earth.

Marshall Phelps is Microsoft's corporate Vice President for Intellectual Property Policy and Strategy and is responsible for setting the global intellectual property strategies and policies for the company. He also works with governments, other companies in the technology industry, and outside institutions to broaden awareness of intellectual property issues. Phelps joined Microsoft in June 2003 after a twenty-eight-year career at IBM Corp., where he served as vice president for intellectual property and licensing and built its world-leading $2-billion-a-year licensing program. Phelps is an executive in residence at Duke University's Fuqua School of Business and was elected to the initial class of the Intellectual Property Hall of Fame in 2006. He may be reached at mphelps@microsoft.com.

David Kline is a journalist, author, and intellectual property consultant who has earned acclaim for his unique ability to demystify complex IP issues and explain them in a clear and relevant manner to a broad business audience. His bestselling 2000 book, Rembrandts in the Attic from Harvard Business School Press, is considered a seminal work in the field of intellectual property strategy within corporate America. As a journalist, Kline has covered some of the world's most critical wars, famines, and other crises for the New York Times, Christian Science Monitor, NBC and CBS News, the Atlantic, Rolling Stone, Wired, and other major media. He may be reached at dkline@well.com.