For the first time in five years, Robbie Bach is walking the aisles of a big game convention. He's smiling. This E3, dressed in a fuchsia shirt and no tie, the former head of all things Xbox is enjoying the novelty of being an outsider.
As he cruises the carpeted spaces between the blaring booths of Nintendo, Sony, Activision and Ubisoft, he enjoys the garish din as a matter of nostalgia.
He wanders around the Microsoft booth and luxuriates in the notion that he doesn't need to fret and worry about staging a press conference. He doesn't have to sit in a stuffy room and pitch analysts and retailers. There are no nightmarish parties to attend.
In 2010, Bach quit his position as president of Microsoft's Entertainment & Devices Division. He'd spent 22 years at Microsoft, first helping to make its Office products a success, and then steering Xbox through the hazards and crises (some of them self-inflicted) of launching a video game console.
After leaving the world of Microsoft, he spent some time doing absolutely nothing. Then he joined a few boards, including the U.S. Olympic Committee. He did some charity work and he played some tennis.
He also began thinking about his time at Microsoft and the lessons he'd learned during the turbulent years of launching the Xbox and the Xbox 360. He merged these thoughts with his political outlook and ambitions. Bach is keen to use his experiences to aid American civic life. He worked through his own past, his personal struggles to overcome a physical disability.
He sat down and wrote a book that tells the story of his time running Xbox, of the errors he made and the lessons he learned.
Xbox Revisited is an odd concoction. Subtitled "A Game Plan for Corporate and Civic Renewal," it is part game industry memoir, part political manifesto and part marketing manual.
There are personally revealing stories, such as Bach's fight to overcome scoliosis of the spine while a promising young tennis player. And another about being in New York on business the morning of the World Trade Center attacks. There's one about sending a resignation letter to his bosses at the point when it looked like Xbox was going to be a catastrophe.
Occasionally the book turns to dismal management-speak and mixed metaphor-cliches like, "I stepped up my game in order to get my team to the finish line and establish a beach-head." There are whole sections that address the deathly minutiae of business-plan writing.
Bach's political leanings, explored late in the book, can best be understood through his call for small government. He views the national debt as a matter of primary concern and calls for "common sense" solutions. America, he says, is a land of opportunity. Social safety nets are necessary but must be carefully administered.
Somewhat discomfortingly, he compares management solutions used to resolve Xbox-related issues to the problems facing Presidents Lincoln and Truman, when they respectively considered the future of American slavery and the pros and cons of detonating nuclear weapons over Japanese cities.
Still, the book is a worthwhile read for two reasons. The first is that Bach offers a store of anecdotes about the Xbox years from a unique perspective. The triumphs and the terrors of launching a console from within a highly complex organization like Microsoft, as told by a Microsoft loyalist and insider, are interesting.
Second is that the organizational lessons he's learned, once distilled and packaged, are useful for individuals and for large organizations. His claim that these lessons ought to be used to "renew America" may seem grandiose. But he means them with absolute sincerity.
He offers a clarity of purpose that comes from spending a large portion of his life surviving the maelstrom of Microsoft's innovations, aggression, successes and failures.
We meet in the lobby of an upscale hotel in downtown Los Angeles. Bach sits in a large, leather sofa and lounges like a man who has been enjoying retirement.
He is good looking in the way of the health conscious middle-aged American businessman. I imagine him, at some point in his youth, wearing a yellow argyle sweater over his shoulders. His haircut is mid-West preppy.
He is here to promote his book, due to be published in September by Brown. As well as the book, he also hires himself out as a public speaker and as a consultant for large private and public organizations. He points out (pretty late in the the interview, and only when prompted on the issue) that the profits he makes from public speaking and from the book go to charities like the Boys & Girls Clubs.(Shutterstock.com)
Just to get it out of the way, I ask Bach the obvious question: Is this book a prelude to running for office?
He replies that he has "no plans" for a career in politics and that he prefers to influence events at a broader level, by bringing his skills in management to public life so that they might be more useful.
Bach describes his life now as his "second act," which he wants to use "to change the direction of our country." He talks about how he recently advised a major city on how to streamline and re-organize its fragmented Information Technology departments.
So we get down to the nitty gritty, which is to talk about those Xbox memories and what he learned while tilting against formidable opposition like Sony and Nintendo, as well as trying to please demanding partners ranging from mega retail chains to big game publishers and, of course, console game consumers.
Before the launch of Xbox, Bach came over from the business software end of Microsoft and he admits that, when he first heard about a plan to enter the console business, he thought it was "one of the craziest ideas I'd heard." There would be more occasions when he would doubt the sanity of this enterprise.
Microsoft HQ - Peteri / Shutterstock.com
Bach begins his book with a story about the Xbox presentation at E3 in 2001, when the machine was just a few months from launch. The presentation was a disaster. The machine didn't work. The script was dreary. The whole shebang was amateurishly conducted.
"Sony was really smart," he recalls. "We were new to E3 as a console manufacturer. [E3] had to squeeze us into the schedule. Sony took the slot the night before and then had a massive party afterward. They kept all the journalists out to like two in the morning. We got stuck with the 8 a.m. slot the next morning. Most of the audience was hung over when they got there. We didn’t put on a good show as it was. But with a hung over audience it was worse."
(Fairfax Media / Getty Images)
The original Xbox was not a great success. It cost the company billions of dollars and was outsold by the PlayStation 2 by a factor of six-to-one.
Between 2001 and 2005, Bach's team were punished, not merely for putting on a bad E3 presentation, but for their collective inexperience in the games market and in consumer electronics.
Despite the team's foresight and technical savvy in launching Xbox Live, Sony outsmarted them by betting on the success of DVD, which was a big part of Sony's PS2 pitch to consumers. This was a problem for Bach's managers. One of Microsoft's main motivations for getting into the console business was to stop Sony from dominating the living room, which they viewed as a sneaky assault on their own territory of "computing."
Still, the company gave the go-ahead for a new console, codenamed Xenon, and released in 2005 as the Xbox 360. This machine launched a year before the PlayStation 3, a useful advantage for sure, but not enough to beat a company like Sony.
But there came a moment, at E3 in 2006, when Bach and his team believed they had finally turned the corner, when the entire Xbox project seemed to make sense. That moment was when Sony announced PlayStation 3 with an eye-popping $499 price tag: $100 higher than Xbox 360.
Bill Gates (Jeff Christensen / Getty Images)
"That was the most amazing experience ever," says Bach, chortling at the memory. "'They’re gonna do what? What price? Really? Did he just say that?' It was a high-five moment.
"There were about 20 people in the room watching it," he recalls. "I literally had to text somebody at the conference to get confirmation. The streaming was bad. We thought it must have skipped, something must have happened to the stream. 'Did they really just say that? Yeah, that’s what they said.'"
At the time, Sony's Kaz Hirai claimed that "the next generation doesn't start until we say it does." Microsoft didn't see things that way. Bach had learned how to play against Sony. He believed he'd learned all the right lessons.
"They had the Blu-ray player in it, which made the console more expensive. We made a conscious decision to not put a player in [Xbox 360] because it was too expensive. We said, 'We’ll let Xbox Live stream high definition and not worry about it.'"
Bach draws a comparison with Microsoft's own, more recent errors. "The Xbox guys managed to repeat the [high price] experiment, this time with Xbox One," he says. "There’s a fundamental rule in the video game business: If you’re at a $100 price disadvantage on your base console price, you’re going to lose. It’s just economics. It’s not that hard to understand."
By 2008, Bach was winding down as head of Xbox. This was around the time plans were starting to be drawn up for Xbox One. It was also the era of Kinect, which was launched in 2010.
I ask Bach if he would have kiboshed the premium Kinect-enabled Xbox One. He dodges the question, offering a different anecdote about failure in the great game of console launches.
"I was at Tokyo Game Show when [Nintendo boss] Satoru Iwata publicly showed the Wiimote for the first time. I’m sitting in the second row. I’m literally 10 feet from him. I said to myself, 'Oh shit, somebody better tell me why this isn’t a huge problem.' It turned out it was a huge problem."
Although Wii did cause Microsoft problems, the Xbox 360 was a great success, selling on a par with PS3 over its long lifetime. Xbox Live helped to secure the profits that justified the company's decision to enter the console business and to bet on broadband gaming.
Despite this happy ending, Bach's stories about the Xbox years aren't so much about self-aggrandizement as an attempt to frame a certain way of thinking and acting in order to get things done.
He calls it "the 3P approach," which he and the Xbox team adopted at around the time they were licking their wounds between the launch of the original Xbox and the launch of the 360.
Bach recalls that first, grim Xbox conference when he sat in his hotel room, the night before his presentation, writing and rewriting his awful script.
He remembers being at home and personally testing Xbox disks on the new console to see if they worked, wondering to himself if this was really a good use of a Chief Xbox Officer's time.
He admits that, during those early years, Xbox was "in deep, deep trouble" and that "I was doing a poor job of providing leadership and direction for the team."
There were also personality clashes. His relationship with live-wire subordinate J Allard was, by his own admission, challenging. Allard brought a lot of the fantastic ideas that made Xbox unique, while Bach's contribution was big-picture and bottom-line. They are different kinds of people. In the book, Bach pays tribute to Allard's contribution, but says their relationship was "rarely easy" and that he "wanted to fire J" on several occasions.
In May, 2001, beset by doubts and disappointments, aware that he was not a game person, Bach tried to quit the project. His bosses persuaded him to remain in charge. He says he "took a step back," and formulated the 3P plan.(charnsitr / Shutterstock.com)
This managerial totem is at the core of his book and is the notion that he now pitches during his speaking sessions and civic consultancies.
It stands for Purpose, Principles and Priorities. Ultimately, it's a way of approaching the humble to-do list for really big projects. Bach says the danger in approaching major schemes is always over-complication and distraction.
Essentially, for all endeavors, we should begin with a short, distilled statement of Purpose that is nigh-on immutable. For Xbox 360/Xenon, that statement was: "Xenon brings innovative forms of gaming and interactive entertainment to more living rooms than ever before."
At E3 in 2005, this was the core of Microsoft's message, when the company trumpeted its new console as a catalyst in broadening the appeal of gaming. (It didn't quite work out that way, but it was a much stronger message than that four years before.)
Principles follow: a list of five ways in which the purpose can be realized. These must be a guiding moral imperative during the project's lifetime. For Xbox 360, they boiled down to:
Finally, Priorities are a set of action-points that are designed to get the team to where they want to go. Bach, again, says they should number no more than five. He adds that while there will always be other ideas, they should not get in the way of the listed Priorities, unless circumstances dictate a rethink.
For Xbox 360, the team decided to focus on the following:
So, how does a managerial structure born of making electronic boxes that play video games help improve life for Americans?
"Part of the reason why the 3P framework worked so well for Xbox, and part of the reason why I’m confident it will work in most other places, is because it was born in a very complex ecosystem," says Bach. The framework includes other additions, such as how to construct planning documentation and how to communicate ideas through the hierarchy.
"I’m not a gamer. I’m an ecosystem guy. I figured out, 'Gosh, this is way more complicated than just producing good games.' The business model’s quite complicated and consumers are involved. The 3P framework was able to sort that ecosystem in a way that gave us clarity about what we had to do. Civic organizations are by and large dealing with consumer issues. They are complex."
Bach says that when he takes this message out to large organizations operating in the public sector, it is received well. He says he found clarity during the "darkest days" of the Xbox project, and he wants to make it his life's business to push that forward.
"Xbox was such a hard thing," he says. "Having lived it internally, it was far and away, factor of five, the hardest thing I’ve done in my life."
Bach's stories of his time at Xbox include long sessions with Bill Gates, in which plans were formulated to stem Sony PlayStation's successes, with Gates banging his hand on the table and yelling at him.
They include Bach visiting New York to meet with game journalists on the morning of September 11, 2001. After the attacks, he managed to rent a car and, along with some fellow Microsoft colleagues also stranded in the city, drove across a stricken country.
"We had teams doing exploratory work. Occasionally one of those things would leak and people would think it was real."
Another story, briefly touched on in the book, is about a product codenamed the Xboy, a handheld Xbox. Such a notion has long been known about, but only rarely discussed in public.
It offers a glimpse into how Microsoft's Xbox division sought to remain focused, but perhaps struggled to comprehend the bigger picture. The idea came up again and again. Each time, Bach shot it down.
"We had teams doing exploratory work," he says. "Occasionally one of those things would leak and people would think it was real." Xboy, as well as a dual-screen Xbox-branded tablet, were such ideas.
"Xboy was indefinite. People came and said, 'This is what it would take. This is what we think. This is the strategy. Here’s the business model. What do you think?' The management team would say, 'You know, it’s just not worth it.' Unfortunately it had such an appeal emotionally that the idea kept coming back.
"There was this theory that [a handheld] was all leveraged resources because the games would be the same," he says. "You and I both know that’s a lie. The games are not the same. 'Well, the hardware would be the same,' they said. That’s also a lie. The hardware’s not the same. 'Well, the channel’s the same.' That’s almost true. But now it’s another SKU you've got to get placed. You have to fight for shelf space. The retailers are going to say, 'We’ll give you shelf space, but that’ll take away from Xbox shelf space.'
"We just looked at this as a management team and said, 'If we try to do this we’ll hurt Xbox a lot. Xbox is the strategic thing that must get done. It must get done right.' It was my first really hardcore lesson in saying less is more. Forcing the team to focus and say, 'We've got to get this right first.'
"It’s hard for people at Microsoft to get their heads around the idea that the company couldn’t do everything," he says.
The idea came back, more urgently, when Sony launched the PSP, in 2004. "People said, 'Look, Sony’s doing it. We should do it too,'" he recalls. "That product was quite interesting. It just turned out not to be a good business."
Did Microsoft's failure to really investigate an advanced, digital handheld device ultimately cede ground to its greatest rival, Apple?
"The irony is, the thing we missed about that was it should have been a phone. What we should have done was the Xphone, not the Xboy. I don’t think it would have been an obvious thought at the time. This was still pretty early. This is three years before iPhone. But if we’d been prescient enough to start looking at phone technology, looking at touch screens — if we managed to think that all through, we might have said, 'Oh gosh, we should do an Xphone.' That could have been ... who knows? Hindsight is 20/20."
Xbox 360 was not, by any means, an untarnished triumph. Engineering problems led to the infamous Red Ring of Death, which caused a high percentage of units to malfunction, as a result of inadequate hardware testing in the rush to market.
Microsoft's response was to extend its warranty to three years, and finally to fix the problem with a new hardware build. But it was an ugly episode, in which the Xbox brand was damaged.
Bach says the problem was "complicated" and that Microsoft did its best to deal with it at a customer response and engineering level. It left many consumers extremely frustrated, but somehow Xbox 360 survived.
The console went on to sell more than 80 million units around the world. Bach can look back on it both as a successful project, and as a model for his own ambitions for the future.
"There are so many stories from that time," he says. "What’s fun about the book for me is that I can take those stories and learn a lesson from them. I can take that lesson and apply it in a different context.
"It’s a little weird to think, 'Hey, how can video games help us have better communities?' That's what I’m trying to do. I can say, 'this works, this matters.' Just because you’re in a civic organization, in a government, the same concepts can apply."