Leadership Lessons from Microsoft and Xbox Live

Imagine you are an executive of a large corporation that competes in a number of verticals and enjoys a monopoly or near monopoly in many of these. Your company generally produces great products that meet the needs of many consumers. In some verticals your products are even considered best in class. While some people may fear your monopoly power, others are grateful for the fine products you provide.

If this were the case, you would likely be on top of the world. In fact, your company would probably be in such great shape financially that your great products would beget great customer service that would beget huge barriers to entry (even if someone built a better or comparable mousetrap).

Now, imagine that even though you produce some great products, your company is generally hated and mistrusted by consumers; and that most consumers feel like your company is just a necessary evil, and that they would gladly drop you as soon as they are provided with a suitable alternative. How would you feel coming to work every day? Would you be okay earning a living in this environment? Would you even care what your customers thought so long as they remained customers? Would you do anything to change customer perceptions?

True leaders – those who come to work with a sense of humility, a desire to serve and an abundance mentality – would work diligently to change not only customer perceptions, but also the corporate realities that created those perceptions. It appears that there are no true leaders at Microsoft. (Or, at the very least, none that have had a positive impact on Microsoft’s reputation among the consuming public.)

Pigs Get Fed, but Hogs Get Slaughtered

There is a saying in business that pigs get fed, but hogs get slaughtered. The idea is that it’s okay to step up to the trough and eat – it’s even okay to get fat doing so – but when you take far more than your share – when you are perceived as someone who constantly takes and never gives – you become a hog and you will be slaughtered. Microsoft is a hog.

Microsoft operates an online gaming platform known as Xbox Live. Two of my sons subscribe to this platform as Gold Members, and one of them is set to renew his annual Gold Membership next month. This annual renewal generally runs just over $50 and is a relatively good value if use the service as much as he uses it. In fact, he uses the service so much that he sometimes receives Xbox gift cards for his birthday or at Christmas. These gift cards might be for points to use in Xbox Live or even an actual subscription for an Xbox Live Gold Membership.

We recently received a notice from Microsoft that his Xbox Live membership was set to expire next month and that his account (which I created and maintain for him because of his age) was set to auto renew the Live membership for $59. Let’s be perfectly clear here: I never authorized Microsoft to auto renew anything. I make it a habit to never set anything to automatically renew because of the hassle getting my money back when some subscription inadvertently renews automatically.

Time to “Uncheck” the Auto Renew Box

I assumed Microsoft was up to some shenanigans here, so I decided to log into my son’s account and deselect the auto renew setting on his Live membership. (In this instance, my son has a couple of 12-month Gold Membership cards that he can apply to his account, so there is no need for an auto renewal. However, I would have deselected this anyway to avoid hassles when those expired.)

To make a very long story somewhat short, it seems Microsoft (in all their technical expertise) cannot create a button on their website that allows someone to cancel the auto renew feature online. You must call Xbox Support (yes, physical make a telephone call) in order to do so.

I want to let that sink in.

In 2011, one of the most technologically advanced companies in the world cannot program their website to allow someone to deselect an auto-renewal setting for an online service.

Before you decide that I am an idiot for believing that this is a technology issue, let me say that the first of two Microsoft reps who had to help me turn off the automatic renewal told me that Microsoft “… used to allow people to cancel the auto renew online, but that it created issues and that it was easier for most people to just call in …”

I want to let that sink in.

Microsoft requires that you log into your Xbox account to get the link that leads you to the page that tells you to call their support team to cancel this feature, but they say it is easier for me to cancel this feature via phone. Stop peeing on me and telling me it’s raining.

The phone call to cancel this service took more than sixteen minutes and required that I provide the same secret account information twice (I was told this was for my own security “… to ensure your account is not being accessed fraudulently …”).

I want to let that sink in.

I can order anything I want from Xbox online in less than 30 seconds, but in order to cancel something, I need to jump through hoops on the phone with two representatives and provide answers to secret questions twice. I feel very protected. God forbid some hacker cancel a service and save me money.

How do Others Feel about this?

Not surprisingly, people absolutely hate Microsoft over this very issue. In reactions ranging from expletive-laden tirades on Xbox message boards to thoughtful videos intended to warn the public or alert the executives at Microsoft that something is amiss, there are literally thousands upon thousands of frustrated customers (like me) who understand when a company is stepping up to the trough way too many times.

Microsoft is not the first or the last company that will make it hard for their customers to cancel a service, but there is a particular “fuck you Mr. Customer” feeling about this move that leaves a very, very bad taste in a consumer’s mouth.

I cannot understand how this is a good move for Microsoft. Does this required phone call discourage enough people from removing the auto renewal feature that it is a net win for Microsoft? If that is the case, then Microsoft is taking advantage of consumers, in my opinion. What goes through the mind of someone who sets up or supports a policy like this? There is an inherent evil in this thinking that reminds me in a very small way of the Enron traders who made money by screwing the State of California.

It’s in the Math, Microsoft

I know the folks at Microsoft are smart, but I cannot believe the math even works in their favor on this one. Given the anger so many consumers show over this ill-conceived policy, I cannot imagine that Microsoft makes up for the potential lost revenue with incremental renewals. Additionally, in my case they had to pay two people (both I assumed were Americans by their accents and clear grasp of the English language) to assist me in cancelling the default auto renewal for this service.

Of course, even if the math works out in Microsoft’s favor in the short run, over the long run (where most leaders should have their greatest focus) there is no way the sheer hatred generated by this policy is a long-term win for the company.

(A small personal example of this: I am a fairly heavy user of search engine services and generally split my searches between Google and Microsoft’s Bing; with Google getting about 75% of my searches and Bing getting the rest. Because of the business I am in, I also happen to be someone who tends to click more on sponsored search results than most. In fact, I estimate that I view sponsored results an average of 50+ times per week. Just moving to Google for all of my searches will cost Microsoft over $300 per year in lost revenue from my clicks. Of course, this is too small to even be chump change to Microsoft, but this is just one Microsoft service I will eliminate. For all future home computer purchases, I will forego buying the latest version of Microsoft Office and opt for the comparable free alternatives available at OpenOffice.org. And so on, and so on…)

True Leaders Would Care

Microsoft’s executives – the guys and gals needing the leadership lessons – will never miss my revenue, of course. They will also likely never feel any sting from the lost revenue of the thousands or millions who will do as I do. They could, however, feel a slight pinch from any attorneys general who choose to sue them over this practice. (You see Microsoft: States take it very seriously when big companies try to scam their citizens. Just ask the 24 states who sued Time Magazine in 2006 for their auto-renewal policy; something the states considered a deceptive business practice.)

As I wrote earlier, true leaders – those who come to work with a sense of humility, a desire to serve and an abundance mentality – would work diligently to change not only customer perceptions, but also the corporate realities that created those perceptions. And true leaders would not need government action to do so… true leaders care enough to do what is right.

Besides the pigs and hogs saying, there is another saying I think is appropriate for Microsoft: The worst time to take advantage of someone is when you can. Microsoft should plaster their offices with signs reading exactly that; it just might make a few people hate them a little less.