Global Citizen

An interview with Pamela Passman, Vice President, Global Corporate Affairs, Microsoft.

Pamela Passman recalls her conversation with Microsoft CEO Steve Ballmer at corporate headquarters in Redmond, Washington in the spring of 2002. Passman was new in her position as the software giant’s Vice President for Global Corporate Affairs. The discussion turned to Microsoft’s corporate citizenship initiatives around the world, with the theme being, “We’re doing an awful lot of different stuff.”

Ballmer wasn’t happy. “Steve said to me, ‘I feel like everything we do is pop guns!’” she recounts. “He was very dramatic. ‘Pop! Pop! Pop! It’s all nice, but... If we really focused our resources, we could do something very significant. Go figure it out, Pamela.’”

That was quite a challenge. With approximately 71,000 employees in more than 100 countries around the globe, Microsoft generates annual revenue of $44 billion. Its products—including the Windows operating system, Microsoft Office, the Xbox and the MSN internet service—are nearly ubiquitous, used by hundreds of millions of people. The launch of the new Windows Vista operating system in January is already a major event on technology and financial calendars around the world. Microsoft has fought fierce anti-trust battles in the United States and Europe. Its size and dominance have made it a company that many people love to hate.

Passman’s job function resides within Microsoft’s Department of Law and Corporate Affairs. She works worldwide, providing “regulatory counsel” to Microsoft business units and developing corporate positions on a wide range of public policy issues—including intellectual property rights, privacy, internet security and safety, international trade, accessibility and telecommunications. Passman plays a key role in Microsoft’s relations with government, industry and non-governmental organizations. She also oversees the company’s community investments and outreach. She supervises the work of approximately 150 people in the United States and 50 internationally.

Passman, a native of the Washington, DC area, is a graduate of Lafayette College and the University of Virginia Law School. She joined Microsoft in 1996 from the law firm of Covington & Burling. Prior to her current position, she served for six years in Tokyo as Microsoft’s Associate Counsel responsible for Japan, South Korea, Taiwan and China.

Passman spoke recently with CRO Editor Michael Connor.

Michael Connor: Microsoft operates in more than 100 countries. How does that affect the way you structure the corporate responsibility function around the globe?

Pamela Passman: We identified a couple of years ago that we wanted to change the role of our country leaders, that we didn’t just want them to be sales persons, that we really wanted them to be our representatives and our leaders “in country” in a broader sense. And we came up with new criteria for what it meant to be the leader for Microsoft in a country. That entailed bringing new people in, and taking people out.

What were some of the criteria?

An ability to engage in a broader set of issues, working with various stakeholder groups—that’s not something everybody has a sensitivity towards—as well as building competencies across their local teams on broader stakeholder engagement. And we now have our country managers engaged in this, we now have people working directly for them that are focused on this broader stakeholder engagement. And now we have global programs to support their programs as well as their ability to develop local programs that meet local needs.

How do you interact with country managers?

I do that in a variety of ways. They come to Redmond, or the U.S., at least twice a year as a group, and I meet with them and I get a good chunk of their time, in exchanging ideas, getting feedback, as well as training them, sharing information. And then I travel around the world. They have regional meetings that I try to hook into, or I go through their country. They have a portal, they have monthly calls, they have newsletters—all of which my team and I contribute to. The idea is that they’ll spend 25 percent to 30 percent of their time and energy broadly with their community, which is significant. One of the ways we integrate it into the business—one of the reasons why I travel a lot—is that we do a review of our business, and our stakeholder engagement is part of that. We’re going through all the profit and loss statements for the business, and we’re also assessing how we’re doing in terms of stakeholder engagement.

How does that happen? Who sits in the room? How do you go through that?

Kevin Turner, who is our COO, and Jean-Philippe Courtois, who is the head of Microsoft International, review about 30 countries during January, and there’s a whole presentation deck that each country has to fill out about how their business is doing in a variety of different ways, and we are part of that. There’s an opportunity to meet with the core people who work in that part of the business separately, and then you have what’s called the “Big Tent” meeting with the senior leadership of that country, with the country manager presenting. Then senior representatives of headquarters, and our regional teams, spend several hours reviewing that country’s business.

So it’s part of the annual financial review?

We call it the rhythm of the business—ROB—and there are quarterly check-ins with that. We’re part of that as well. There’s reporting, there’s metrics. There’s a scorecard every country manager is measured against. We have metrics on that scorecard.

Who do you report to?

I report to our Senior Vice President and General Counsel, Brad Smith, who reports to [CEO] Steve Ballmer.

So you’re lateral with the people being reviewed—the country managers?

Yeah, I’m lateral or more senior than the people who are running our country businesses.

What are some of the key issues?

Every government around the world, whether it’s developed or developing, large or small, has a vision for their country around a knowledge economy, or an innovation economy, and they view us as an important partner in that. We have a very substantial investment in our partner eco-system. We’re a software developer, or a platform company, we’re reliant on a lot of other IT players, being successful… hardware companies, resellers, value-added systems integrators, independent software vendors. We do a lot to support them, train, promote, market, exchange information, license technology to and from them, to be sure that that local eco-system is healthy and vibrant. We’re not going to have a business in places where that doesn’t exist. It’s in our interest, but it’s also a very significant economic impact. We’ve done economic studies and they show that for every dollar Microsoft makes in a country, local players make 7 to 18 dollars, so it’s quite significant.

Our work in education, life-long learning, is another example where we have a training opportunity for every person on the learning spectrum with respect to IT skills. We spent a lot of time talking to a lot of people across the company and around the world outside the company and [we have developed] two programs, Partners in Learning [focused on primary and secondary education] and Unlimited Potential [a global workforce initiative that provides technology skills through community technology centers]. We’ve spent the last three years building, scaling, replicating these programs. Both of them are very grassroots-oriented, because that’s where we felt we could really make the biggest contribution. Our technology is used by hundreds of millions of people. Our engagement should be that significant as well.

The Unlimited Potential Program, which is focused on community centers, is engaging with non-profits/NGOs—really reaching people that are not served by formal education, people who don’t know how to use a computer, know that they want to enter the workforce, or reenter the workforce, or skill up. They need some basic training, but they don’t have the ability to go to a commercial place to get that. In Japan, it’s very focused on the disabled and elderly. In Norway, the blind. In Latin America, we have groups disenfranchised economically or socially, and indigenous people. In the U.S. and Europe, we’re finding that these training programs are very effective at getting people their first job, giving them a credential. You know, when you look at the classified ads, the ads are very clear. They’re looking for people with Microsoft Word, Microsoft Excel or Access.

You hosted a small dinner a few months ago for a number of people connected with the United Nations, where a lot of the discussion focused on developing countries and poverty. Why is poverty in developing countries an issue for Microsoft?

I think any multinational corporation understands that it has interests in expanding its business, reaching new markets. But we also appreciate that our technology is not necessarily accessible or affordable to all different types of people. We’ve come to appreciate that our technology is a very important tool, a very important economic tool and we can go on insuring that it’s available to people at the top of the pyramid, or the top of the middle of the pyramid, but we also feel that we do have a responsibility, and an interest, in insuring that broader segments of society have those basic tools.

We’re engaged with a number of different parts of the UN, partly because they have know-how in parts of the world where we don’t. They have a better sense of priorities and needs in certain parts of the world than we do. They also have existing programs that we can contribute to. We’re not out there starting, necessarily, our own program, solving Africa’s poverty. UNESCO has turned out to be a very significant partner for us in countries throughout the world.

One could get the impression, looking at Microsoft literature, that a lot of your time is spent in what might be called philanthropy.

I would say probably less than one third of my time is spent on work with non-profit organizations. I spend more of my speaking time on that, but I have a much broader set of issues that I work on as well.

Let’s talk about China. Microsoft has gotten a lot of criticism for cooperating with the Chinese government on issues of censorship. How are you involved in that?

I spend a very significant amount of my time in China, and I have for the last 10 years. And I continue to do it on a policy basis, on intellectual property rights. I was very involved in the past couple of years working with the U.S. government and the Chinese government on those issues. I was very involved in [Chinese] President Hu’s visit to Microsoft in April.

The issue of internet services in China—and more broadly, because it’s not just a China issue—is a great example of how as a company we’re approaching our stakeholder engagement. As we saw the issue unfolding, my team quickly looked across the company, and the different parts of the business that might have an impact on how we run our business practices in this area. We wanted to be sure that those people who are involved in making decisions—whether in China, in the U.S., or an operations center in Singapore—are aware of these issues and how they impact the company. Before you can say you’re going to do something or not do something, you need to understand your business practices. And so my team worked across the company to both educate people about the issues and create a decision-making process.

We also undertook—and I was directly involved in this—a variety of stakeholder engagement. We met with a lot of human rights organizations, started a dialogue with them, also started a dialogue with a number of others in our industry, supported by a number of academics and others—BSR [Business for Social Responsibility] is very involved in this—so that the industry was having a broader discussion. We testified before Congress, we spent a lot of time talking with the U.S. government, the Executive Branch and Congress, to set out these issues.

And we also changed some of our policies. Last January, we announced a policy related to blogging and how we would approach requests by government to take down content. We’re really trying to approach this in a way that focuses on our customers. It’s important that our customers understand why we manage our business the way we do and why we do certain things.

So part of the blogging policy is that we’re going to respond to a written government request that is backed by legal authority. It’s not easy in every country, especially where they come to your office and they say, “Do this”. When we’re required to take down content by a government, we’re only taking down that content with respect to access in that country. We had to create the technology to do that. Eighteen months ago, we didn’t have the technology to do that. It enables us to remove it, but just in China. It would be available anywhere else in the world. And third, a kind of labeling, a notice, so that our customers know that if we’re requested by a government authority, under certain laws and regulations, to take down certain content, we’re going to have to take it down, but we’re only going to take it down in that country.

There’s been some talk of an industry-led standard being developed in this regard. What are the chances of that?

I don’t know that I would call it a standard. I would call it a set of principles. I’m very hopeful. It’s going to take some time. There’s ongoing dialogue. We’ve brought in some very helpful third parties to help in those discussions and I think we have some milestones in the next six months to help move the process along. We’re trying to broaden the number of companies involved as well.

From China to Europe: You’ve had a number of confrontations with the European Union and EU Competition Commissioner Neelie Kroes. She’s said Microsoft is waging a “coordinated campaign” to discredit the commission’s efforts. How do you react to that?

I think we have a concerted effort to explain to our partners and customers what’s happening with the release of Windows Vista, and also for people to understand why we do things the way we do. We thought it was very important to explain the issues around security. We heard from the commission that they don’t want us to include security enhancements to Windows Vista. The single greatest feedback we’ve gotten is that our customers want us to enhance the security of our product, and we have designed the security enhancements in a way that we think is pro-competitive. We’ve been through this with the U.S. government, we’ve followed the U.S. consent decree which provides a structure for us to continue to integrate and add functionality to our operating system but to do it in a pro-competitive way. The European Commission has a different approach to that. There’s competitive technology out there, and they’re essentially saying, “No, you can’t enhance your product.” And this is pretty fundamental to our business, so we do think it’s important.

You’ve mentioned in the past that, in your view, security and privacy are important issues...

The security work is very interesting and continues to evolve. We—and when I say we, I mean many people across the company—have had the ability to influence the development of the technology. And so, starting with Bill [Gates], there’s been a development process surrounding security, privacy and safety type issues, continuing to understand the functionality we can add to the platform.

How is that a corporate citizenship issue, versus a product quality issue?

I don’t think we can be credible talking about the importance of child safety, educating law enforcement, educating consumers about it, unless our technology is responding to the latest issues. So is it a quality issue? Yes. Is it a competitive differentiator? Yes. Do we have a responsibility to build the safest technology we can possibly build in light of the information we know about how bad people do bad things on the internet? Absolutely.

Is there a tension between being a good corporate citizen and being competitive?

I don’t think there has to be a tension. I think you need to understand who you are, and you need to understand your business. But you also have to be open to doing new and different things and engaging with groups that you wouldn’t normally engage with. I spend a lot of time with my counterparts at our competitors. There are many issues that we can work on together, and we try to do that. There are organizations that we participate in together, it’s really important for the industry. But there are issues that we’re going to disagree on.

Note: This transcript was edited for style and clarity.