It’s not often that I see software that really changes my world. It’s even rarer that I see software that I know will change the world my sons live in. I can count those times pretty easily. The first time I saw an Apple II in 1977. When Richard Cameron showed me Apple’s Hypercard. Microsoft’s Excel. Aldus’ Pagemaker. And something called Photoshop, all in his West Valley Community College classroom. Later when I saw Marc Andreessen’s Netscape running the WWW. ICQ and Netmeeting which laid the ground for Skype.

Like I said, these things don’t happen often.

Yesterday was one of those days. Curtis Wong and Jonathan Fay, researchers at Microsoft, fired up their machines and showed me something that I can’t tell you about until February 27th. I’m sure you’ll read about his work in the New York Times or TechCrunch, among other places. It’s too inspiring to stay a secret for long.

While watching the demo I realized the way I look at the world was about to change. While listening to Wong I noticed a tear running down my face. It’s been a long while since Microsoft did something that had an emotional impact on me like that.

Why torment you with a post like this? Because it’s my way of making sure that stuff that really is extraordinary gets paid attention to. And because I wanted to get down the emotional impact of what I saw before that feeling totally wears off. I also wanted to get down some lessons that others at Microsoft might learn from so that they can have this kind of impact in their own work. Imagine if Microsoft did 10 things a year like what Curtis and Jonathan showed me yesterday? If the innovation engine at Microsoft were working that well there wouldn’t be any pressure to buy Yahoo. Heck, and if there were a constant stream of stuff like what I saw yesterday Yahoo wouldn’t be resisting going to Microsoft. They’d +want+ to go to Microsoft. Yesterday is the first time since leaving that I wish I were back working at Microsoft.

Now, I can hear Christopher Coulter in my head. The thing these two guys did won’t have a business impact the way, say, Microsoft Office did. There isn’t a business model here. But does every damn thing need a business model? Does a scientific paper that changes the world need a business model? Does it need more audience than just the other 50 scientists in the world who care about that topic? No.

But back to that tear.

Note that it wasn’t a team of 100 people who did it. Two guys with a supporting cast of maybe a dozen. I’ve noticed a trend at Microsoft: that the coolest stuff is done by small teams without a ton of resources. Down the hall from Wong and Fay was researcher Andy Wilson. When I walked into his lab he was working on another cool surface computing technology for Microsoft’s upcoming Tech Fest (which happens March 4). He, and another researcher, were playing with a cool round screen. You might know of Andy’s work: it was his research and demos that convinced Microsoft to build the Surface device which you touch with your hands.

No need for big teams. I never sense a lot of bureaucracy or politics in either of these two guys’ offices.

Back to Wong and Fay’s work.

Could they have done this at a Silicon Valley startup? I doubt it. Venture Capitalists won’t see enough business value in what they are doing. Plus they would need to build a team around them, work out a business plan. Invest their own capital and time building a prototype so that people “get it.” If I told you today what they were doing, without showing you the video we’ll have up on March 3, you’d tell me “that’s lame Scoble.” But when you see it face-to-face everyone I know who’s seen it say they’ve had an emotional reaction to it. Buzz Bruggeman, CEO of ActiveWords, was the first to tell me about it and said it was the best thing he’s seen in years from Microsoft.

Maybe it could be done, but they’ve been traveling all over the world working with researchers from other institutions and getting data for their new thing. It’s a lot easier to get access when you say “I’m a researcher at Microsoft” than when you say “I’m building a startup.”

Other lessons? Keep up to date on the latest things happening in your industry. In Wong and Fey’s work you’ll see techniques that lots of startups are using and, even, that the Google Map team is using. This isn’t stuff that was possible in 1995 so it requires 2008-style Web services and data centers.

Anyway, I’m getting all geeky on you (today Rocky and I are heading to Amazon to talk with Jeff Barr of the team that built its S3 and EC2 services, among others, so that’s probably why I’m ramping up my geek level) but that shouldn’t take away that these two guys got me to cry yesterday.

And that was a good thing. Two guys working inside a big company still can change the world. Can’t wait to talk more about what they’ve done. They’ll have a bunch of press on February 27 and our video will be up on FastCompany.tv on March 3.

UPDATE: I’ve updated this post with a few additions here.