Can strategic lessons from Microsoft’s Xbox business provide a framework for the revival of the country?

Our guest on the GeekWire radio show this week is Robbie Bach, the former Microsoft President and Chief Xbox Officer and the author of the new book, “Xbox Revisited: A Game Plan for Corporate and Civic Renewal.” We discuss the core principles outlined in the book, revisit some of the tough lessons learned during the development of the Xbox and Xbox 360, and talk about the current state of Microsoft and the console industry, among many other topics.

That conversation begins in the second segment below, at 9:30 in the audio player below, and it continues with a special bonus segment in this podcast version of the show. Continue reading for a full transcript of the discussion with Bach below.

In our opening news segment, we recap a big week for tech mergers and acquisitions in the Pacific Northwest, involving Amazon, Microsoft and Zillow. And our App of the Week puts a new twist on one of the most beloved video-game franchises of all time. (Pac-Man fans, this one’s for you.)

Here’s an edited transcript of our conversation with Robbie Bach:

Q: The foundation of the book is an approach that you and the rest of the Xbox team came up with. It is an acronym, or at least an abbreviation, in true Microsoft style. It is called the 3P’s, and it stands for Purpose, Principles, and Priorities. What is this approach, in a nutshell?

Robbie Bach: The basic idea is that when you face a really complex problem, whether that’s a business problem, a personal problem, or, in the case of this book, a civics problem … those complex problems require incredible simplicity to attack. The 3P’s really are something that’s very obvious. When you look at a problem, what is your purpose in trying to solve it? What are the principles you’re going to use to pursue that problem? What are the priorities, the things that are most important, to achieving success? The amazing thing is, in so many circumstances, people see a complex problem and immediately dive in deep rather than stepping back and saying, “Hey, let’s define what we’re trying to accomplish,” and that’s all the 3P Framework is.

Q: You go through it in the book, and you explain exactly how it applied to Xbox. Then the leap, which I think a lot of people would not expect, is the entire second half of the book is, “OK, how can our country, our leaders, our community leaders, use these principles to actually guide us as a country?” What made you take that leap?

Robbie Bach: When I left Microsoft, I left with a real reason, a real purpose if you will, which is I wanted to have social impact. While I was able to do some of that at Microsoft, Microsoft was a full-time job and then some. When I left, I stepped back and said, “How can I really have impact?” I looked around at what was going on in our communities and I said, “Wow, I can take some of the things I learned during my 22 plus years at Microsoft, customize them, and apply them to a whole new area where I can have social impact. Non-profits, government, whatever it may be to help make the community a better place.

Q: To that point, since leaving Microsoft you’ve been involved in a wide range of things. You’re a board member on the U.S. Olympic Committee, Sonos. You’re a board member National Boys and Girls Club of America. A lot of different groups and organizations. Catch us up on what you’ve been doing for the past 5 years.

Robbie Bach: I really have three areas of activity, two of which are very closely related. The first is, I’m on a number of boards, a little over half of which are non-profits: Boys and Girls Club, U.S. Olympic Committee, an organization called Year Up, which is a vocational training organization. That’s really part of my social impact agenda. I’m on a couple of for-profit boards, which is sort of my way of keeping my hands in business and applying my skills in a business context. That’s one part of my time.

The second part of my time is writing and speaking. That’s the book, Xbox Revisited. It’s my blog on robbiebach.com. It’s the public speaking that I do. That, again, is a way to scale social impact. I think of my job there as helping other people be what I call “civic engineers,” and giving them tools to use to address civic issues.

The final thing is just a small fun thing. A friend of mine, Pete Higgins, and I bought a little gluten-free pasta company down in the Kent Valley called Maninis. We make gluten-free pasta, rolls, and flour. It’s a great little company and we’re pretty excited about that.

Pete is the guy who first interviewed me at Microsoft. My first interview was with Pete and then he ran Office. He really started Office.

Q: He’s now with Second Avenue Partners, right?

Robbie Bach: He’s now at Second Avenue Partners, and Pete and I have been good friends, really since the very beginning and now we’re business partners.

Q: As you’re talking about friends and former Microsoft colleagues, one of the people that you write fondly about in the book is J Allard, who was in many ways your counterpart on the product design side. He was the Chief Experience Officer at Xbox, but you write that you don’t stay in touch with him much. Why not?

Robbie Bach: It’s not because we don’t want to. J and I are just really different people. The fact that we worked so productively for 10 years is in some ways kind of amazing, but we both sort of fed off each others’ energy, and we had different approaches to things. It really was a great partnership and when we left, we left to go do really different things. We’ve had a couple of meetings since we left, but probably not as much as either one of us would like.

Q: You were very complimentary in some ways, with contrasting styles. J is very creative and you come out of business school.

Robbie Bach: I was a little buttoned up. I was the buttoned-down, business school guy. That’s for sure.

Q: In fact, I don’t think you played games in a hard-core way before you became the leader of the Xbox crew.

Robbie Bach: It’s not clear I’ve played games in a hard-core way even when I led Xbox. That was never my core contribution the team.

Q: You were obviously able to figure out the business. Actually, in the book it’s great because you tell the story in a very raw way. I think the temptation of a lot of people in your shoes would be to sugarcoat it. You talk about the successes and how you got there, but along the way things got really rough. There was a disastrous E3 debut for the original Xbox and, of course, many people know there was a billion dollar write-down for the Xbox 360. I imagine the acronym RROD, red ring of death, probably keeps you awake at night still.

Robbie Bach: It does.

Q: What did you learn from those difficult experiences about being a leader?

Robbie Bach: I think the biggest thing I learned is the value of perseverance. I learned that both personally and from a team perspective. I think we all have to recognize that in our personal lives and in our professional lives, bad things are going to happen. Things aren’t going to go smoothly. Anybody who looks back and says, “Hey, I’ve had a bed of roses the whole way.” I think think they probably aren’t looking at it in an objective way.

Q: Either that or they sat on the couch their whole lives.

Robbie Bach: Exactly, so I look at it and say, “Hey, those things taught me that when the rubber meets the road, you got to get going.” You really have to overcome difficulties and you have to fight through it. On the other side of all those things on Xbox and all the things that have happened to me have been really wonderful successes.

Q: In the book, you cite examples of governments and civic leaders not following the 3P’s. One of them will hit close to home for people in the Seattle area. That is the planning for the 520 bridge replacement. How is that not an example of what people should be doing?

Robbie Bach: I think basically people try to postpone the problem. We should have been planning for the bridge in the late 1980’s, then they really dove all the way to a solution. Pretty soon, you have 6 ideas for how we’re going to build the new bridge. You needed to step back and decide, what was the goal in building the bridge? Are we trying to enable more car traffic? Are we trying to enable more commuting? Are we trying to enable a mass transit system? Are we trying to enable people to ride their bikes and walk across the bridge? None of that got discussed, and pretty soon you have people debating specific solutions without any context. When you do that, it’s really hard to get consensus and you end up with a project that’s 10 years late and a billion dollars over plan.

Q: One of the examples that you cite is, there was no real plan for connecting the bridge to I-5, and that’s still somewhat muddy.

Robbie Bach: There’s still not really a plan. Today, they’ve got you all the way to Montlake, so we’re getting closer. They have funding to get to I-5, but no approved plan.

Q: I know that’s a small example, but it is a very visceral example for people here and for other people who deal with transportation problems. In a broad sense, not just transportation, considering all of the issues that we as a country face, what would the world look like, what would the country look like, if we started to follow these kinds of principles that you’re talking about?

It’s my belief that if people saw us starting to work on those issues with a real plan, with a purpose identified, and with real priorities established, you’d get a lot of momentum. Things would happen way faster than you’d think. Robbie Bach: I think the most important thing that would happen is that the biggest, most challenging, and most important issues would get tackled. The truth is, none of these issues are going to go away overnight. Doing tax reform is not easy. Fixing energy and the environment in our country is not an easy thing. Rebuilding America’s infrastructure, those are not easy problems. They’re not going to disappear overnight, but you’ve got to start. It’s my belief that if people saw us starting to work on those issues with a real plan, with a purpose identified, and with real priorities established, you’d get a lot of momentum. Things would happen way faster than you’d think.

Q: I am sure people ask you this all the time, but have you ever though about running for elected office?

Robbie Bach: I do get asked that. Some people think the book was sort of the preemptive thing for running for office. That’s not my goal, and it’s certainly not something I want to do. I think of my job as providing tools for others to be civic engineers. You can be a civic engineer in what you do in your current job, you can be in your private life, you can run for office if you want, but my job hopefully and how I want to have impact is to give people tools to work with.

Q: Where is this all headed for you? What’s down the road? You’ve obviously been involved in a lot of these organizations. Boys and Girls Club, Sonos. What’s next for you?

Robbie Bach: I think the big thing for me is really trying to get the scale. I have a professional background at Microsoft. I worked from a big platform with lots of scale and lots of support from the company. Now I literally am one person. I don’t have an assistant, I do all my own travel planning. I’m really trying to build to the point where I can have an impact on a broader level. The book is a start to that. I’m now a regular on the speaking circuit, trying to build that business. I blog about once a week, once every other week. I’m really trying to build the impact so that people can hear me.

Q: We should point out, this is not a money making venture for you, the book. This is going to go to charity.

Robbie Bach: Yeah, in fact any profits I make from the book or from my speaking, that all goes to charity. Boys & Girls Clubs of America, U.S. Olympic Committee, Year Up. Those organizations will all benefit from anything that comes from this.

Q: Many people in the investment community, Microsoft shareholders in particular, would hear the name Robbie Bach and associate you with billions of dollars lost, either through the Xbox itself, through losing money on the product or through the billion-dollar write-down. How do you address that impression?

Robbie Bach: Mathematically, certainly, if you look at the original Xbox, it’s just true. The original Xbox lost, depending on who is doing the accounting, somewhere between $5 billion and $7 billion. I think of that as an investment, and everybody ultimately can think of that as an investment, because we know the end of this story. The end of this story is that the successor product made billions of dollars, even with the write-off, and has built an asset for Microsoft that’s worth billions of dollars by itself. In the end, it’s a success story, but I’m freely and openly admitting, and I talk about this a lot in the book, it’s very easy to look at it and say, “Wow, what was Microsoft thinking and what was Robbie doing as the leader?” It’s a totally fair question.

Q: Early on, you were asking yourself that question, and you went through your own evolution and maturation as a leader and really figured things out, from a very deep and dark place, how to get back into the light.

Robbie Bach: I cover this in the book, but in the middle of 2001, probably 4 or 5 months before Xbox shipped, I wrote a letter of resignation and sent it to my boss. I’m a very confident person and I had real doubts about my ability to finish the project as the leader. Rick Belluzzo, God bless him, helped me through that process, and I learned a lot after that and came back. Frankly, Xbox was the best 10 years of my professional career. Sometimes it works out that way and I feel very fortunate to have been given the chance to get there.

Q: Rick Belluzzo, the very short-lived Microsoft president, was the hero of Xbox, if you’re an Xbox fan. He saved the product when it was about to be killed when it was launched, and then he convinced you to stick around through the original Xbox, and then launch the Xbox 360.

Robbie Bach: Part of the reason to write the book certainly was about civics, but there’s also an opportunity for people to realize that what you see on the surface of a business isn’t always what’s going on. Rick, on the surface, he was only at Microsoft for a short period of time. People might not have thought of him as a successful Microsoft person. He certainly was an atypical Microsoft person, for sure. He played a huge role in my personal success and a huge role in Xbox’s success.

Q: He actually set you up with some life counselors, I guess is the best way to put it. You and your wife actually got a lot out of it. It was one of the more interesting and inspiring parts of the book for me. You learned, and were able to instill in your team, work-life balance at a time when things were just crazy. How did you do that? You explained it in the book, but I think people need to hear.

Robbie Bach: Rick sent us to a couple in Kansas, who are literally on a farm in Topeka, Kan., Jack Fitzpatrick and Anne Francis. They really helped us think, and helped me think, “What do you want your career to become? What do you want to accomplish? What kind of personal fortitude do you have?” As part of that, one of the things I wanted was a great family and a great marriage. We had to sit down and draw boundaries. We did crazy things like, I went to my team and said, “I’m going to plan my travel 9 months in advance, and by the way, I will leave at 5:30. In the afternoon. Doesn’t mean I won’t work afterwards, I’ll take calls, I’ll do email, all those kinds of things, but at 5:30 I have to be home. I’m coaching my kid’s team, or I’m having dinner with the family, and then I’ll come back and I’ll get the work done.”

Q: How did that work? I think a lot of people would hear that and think,”Obviously the product sunk because the guy who was leading it wasn’t around at 9 at night in the office.”

Robbie Bach: The fact of the matter is, at 9 at night in the office, I’m not helping the product be successful. In fact, I was doing the product a disservice. If the leader tries to carry all of the load, everything comes to the leader, and I was certainly not the person who was going to make every decision. Everybody on the Xbox team worked incredibly hard. They’re the ones who deserve the credit. My job was the provide leadership and direction, and whether I’m on email at home or sitting on email in my office, frankly didn’t matter that much. You have to learn to put boundaries up and work hard, and I did both.

Q: You write about the fact that it was a forcing function on the team, it caused people to say, “Wait, Robbie doesn’t actually have to be involved in this, we don’t have to get him into this meeting.”

Robbie Bach: It also gave other people an opportunity to step up. The fact that I wasn’t going to do every trip meant that other people did those trips, and they met with partners, and they met with retailers, and they led other parts of the team. Pretty soon, those partners and retailers realized, “Robbie’s a good guy, I’m happy to meet with him anytime he wants to come by, but I don’t actually need to meet with him to get something done.” It helped drive the culture of the team to a way that empowered other people.

Q: You left Microsoft in 2010 after the Xbox 360 launch.

Robbie Bach: Correct.

Q: Obviously, long before Xbox One was launched.

Robbie Bach: They were just starting planning for Xbox One when I left.

Q: Xbox One, originally led by Don Mattrick, went through some struggles in the beginning, particularly from a PR standpoint. There were things like the always-on requirement and all the stuff that was a big debacle over there. What were you thinking as you were watching that from afar?

Robbie Bach: I think I have two thoughts. The first is, gosh, I think some of that was predictable and preventable. If I’m just honest I would say that. These console competitions last 5, 6, 7, 8 years. I think it shows in the marketplace today. I think Xbox One has put almost all of that behind itself. They’ve got a great holiday lineup. They’re gaining share and volume. … The amazing thing is the console market is bigger now than it’s ever been before. Both companies are selling more units.

Q: Which you wouldn’t have predicted, because you would expect something else to come along in much the same way that smartphones have supplanted dedicated handheld gaming devices.

Robbie Bach: In fact, the year before PlayStation 4 and Xbox One launched, everybody said the console market was dead, and they wondered why Sony and Microsoft was doing it.

Q: Do you think there will be more consoles, another console generation beyond the PS4 and the Xbox One?

Robbie Bach: I think there will be another generation. What the console looks like is a very interesting question.

Q: What do you think?

Robbie Bach: Does it have a physical media?

Q: Probably not.

Robbie Bach: Probably not, so how does that look? Is it just a game box or is it more? What’s the balance between what an Apple TV is and what an Xbox or a PlayStation 4 is? These are really interesting questions, and the teams going to have to wrestle with those. That next generation will be a whole new game.

Q: Obviously, they have recovered somewhat from the initial stumbles, but the PS4 is still far-and-away the market leader in terms of units sold, if you use that measure. Do you feel like they kind of fumbled the momentum you guys had with the Xbox 360?

Robbie Bach: You would have liked to have seen them done more with the momentum we had. On the other hand, look at what’s going on on Xbox Live. Incredible momentum on Xbox Live. I think it’s a balance thing. I’m realistic enough. I’ve been gone long enough that I no longer say “we”. I say “they,” which is a good transition to actually make. I can be a little critical. I could also say that the team did what they needed to do. They persevered through a rocky patch, and they’re now on the path to making this a very competitive market.

Q: You worked at Microsoft for many years, you were there with some of its iconic leaders. Who was the tougher boss: Bill Gates or Steve Ballmer?

Robbie Bach: That’s a great question. In a way, it’s a bit unfair because they were both tough in their own way, but they’d be tough on different issues. Bill was incredibly demanding about product concepts and directions and visions and “Are you watching what your competitors are doing? Do you really have your handle around what you’re creating?” Steve cared about that a lot, but he was also the person who was asking you about how you were managing your people, how you were managing your P&L, how you were thinking about sales and marketing, what your customers are saying. Together, when you have both of them in the room, that was like watching a tennis match. Your head would go back and forth trying to figure out which one you had to answer next. That was challenging, but frankly, it made the job really interesting.

Q: I could see where it would be interesting. In some ways, there’s an analogy to you and J Allard running the Xbox business. You were a little bit more of the business guy, like Steve, and J was more the product guy.

Robbie Bach: I think the analogy is actually quite good. Having somebody who is your counterpoint … I always tell people I think of things like The Avengers, and every Avenger has a superpower. Truthfully, every Avenger has their kryptonite, too. The question, not to mix comic book metaphors, becomes how do you deal with your kryptonite? Jay was this incredible balancing factor for places where I had blind spots and I was a balancing factor for Jay in places where he had blind spots. Cohesively together, not always smoothly, we managed to get Xbox to where it ended up.

Q: When you say not always smoothly, were there times when you guys had to go and hash it out privately?

Robbie Bach: Come on, there were times Jay wanted to quit and yell at me and just jump off a cliff, and there were times I wanted to fire him. That was just sort of the nature, but, of course, those pass quickly, and then you come back and say, “Hey, we got to figure this out.”

Q: You actually both left at the same time. Was that a coincidence?

Robbie Bach: Completely coincidence. I know the conspiracy theorists in the world don’t think so, but Jay and I … it was a very funny story. We went on a walk at Tully’s in Clyde Hill, and we were both sort of telling each other that we were leaving. We realized it was going to happen at the same time, which was kind of one of these funny things that we chuckle about today.

Q: Satya Nadella is now the CEO at Microsoft. Did you work at all with Satya?

Robbie Bach: I did.

Q: In what capacity?

Robbie Bach: We were counterparts. He was in a different part of the business, but our businesses overlapped. He was doing a lot of work for MSN, and there were things between MSN, and Xbox Live, and identity, and customer. Technology issues that ran across all the businesses.

Q: Did it surprise you when he was named CEO?

Robbie Bach: Yes, in a way. Although, there had obviously been a lot of rumors for the 6 months coming up to that. What I really discovered, and this is something everybody forgets, (was that) people change and grow really fast in our industry. I was envisioning the Satya I knew from 3 plus years ago, and 3 plus years doesn’t sound like a long time. It’s an eternity in our business. If you’d looked at the Robbie Bach who was in 2001, and then gone 3 years forward to the Robbie Bach in 2004, I was a completely different person. In 2001, I was barely capable of managing myself. In 2004, I was actually capable of managing the Xbox business. I think for Satya, his skills are escalating very quickly, and I’m pretty excited about what he’s done with the company so far.

Q: What do you think about how he’s doing?

Robbie Bach: Certainly from a cultural perspective and getting the company on the right foot and sort of changing things around. I don’t think anyone will ever know on the product side until we get another 12 to 18 months down the road because a lot of the product stuff that’s come out was all stuff that was in the works or at least started when he took over, but you’re going to start to see now things that are Satya’s. That are his initiative and under his leadership, and that’s really where you’ll tell. I will say for a first 12 months or however long it’s been, I think he’s done a great job.

Q: I think one of the most interesting things he’s done is that Windows is still important, but it’s not up on the altar anymore. It’s not the be-all-end-all for Microsoft. He’s really opened things up. For me, the watershed moment was when they announced that Office would be free for editing and everything, basically the core functionality, on Android and iPad. It seems like those are the kind of moves, it seems symbolic at the time, but it’s actually fundamentally different for the company.

In the mobile space, trying to figure out how to do Windows on a phone actually wasn’t that helpful. In the Xbox space, we managed to avoid it pretty much completely. We started really from scratch, and I think that helped us.

Robbie Bach: Yeah. Windows was, and is, this amazing thing. It’s what made Microsoft — in many ways DOS, then Windows. It’s an incredible corporate asset. The company, for a long time, built things around that. At times, that was super powerful and super helpful. The way Office and Windows, sort of ham-and-egg was not always smooth, people thought that those two would work well together, they didn’t. In the market, the ham-and-egg worked very, very well. There were also times when having Windows be Windows actually hurt the company. In the mobile space, trying to figure out how to do Windows on a phone actually wasn’t that helpful. In the Xbox space, we managed to avoid it pretty much completely. We started really from scratch, and I think that helped us.

Q: All right, forgive this question. What did you learn from the Kin?

Robbie Bach: The Kin was just an abject failure in many respects. If you want to forget, Kin was a social phone that we developed in-house. J actually was very involved in that project, as were several other people. It may have been the best business plan I saw in my 22 years at Microsoft.

Q: You’re kidding me. What made it so great?

Robbie Bach: It had end-to-end, from a business and an experience perspective, real cohesion. To our question about purpose, principles, and priorities earlier on, this project had that. Now, what happened, unfortunately, and this is the learning, is that about a third of the way through the development process, we realized that a bunch of the assumptions about what we were going to get from the Windows mobile team and a bunch of technology assumptions were just not going to be true.

Q: Not to mention what you were going to get from the wireless carriers, which is where you got really screwed; didn’t you?

Robbie Bach: Verizon, to be fair, really tried to be a good partner. Neither one of us was as honest with each other as we should have been, so there was a little bit of a wall between us. We’re developing something; they’re saying they like it. Both of us had issues and concerns. About a year out, we should have known that the product was going to be great, and a year late. Unfortunately, in the mobile space, a year at that time, a year was an eternity. The idea that you needed a social phone became, “That’s yesterdays news. Every phone is a social phone.” …

Facebook was just starting the inch towards mobile phones. People forget that in the early years of iPhone there weren’t apps for everything. If we had shipped it in 2000 when we were supposed to, I think the phone would have done reasonably well.

Q: Virtual reality is key right now. It feels like it’s going to be the next battleground. You’ve got Sony, Microsoft with Hololens, of course Oculus Rift, HTC and Vive. How much do you pay attention to the virtual reality space?

Robbie Bach: I’m not following the technology super closely, I do follow the trend. My observation is that the key question is commercialization. I think that the technology and the concept is wicked. I mean really powerful, and not just in gaming. This could be for business, commercial use, retail use. There’s a lot of applications for it. The problem is, right now, you’ve got to walk around looking like a complete goofball wearing this crazy thing on your head. You look like you should be in a Star Wars movie. By the way, they have problems with people getting sick using it. There’s certain conditions where it’s really tough. They have to figure out how to commercialize it.

My favorite comparison is touch technology on-screen. There was touch technology on the screen 5 or 6, maybe 7 years before the iPhone, but the commercialization required an expensive screen device and a stylus. That commercialization never worked. Apple came out with a much less expensive, less precise, but less expensive, commercialization with a finger and it went like that. To me, commercialization is a key element in what’s happening in virtual reality.

Q: What does Apple do right that Microsoft hasn’t traditionally gotten right?

We were a little too technology focused, and not enough quite enough experience focused. Occasionally, Apple has been too experience focused and not enough technology focused.

Robbie Bach: I think there’s things both companies do really, really well. They’re just different. I think the thing that Apple got right certainly for a period of about 4 or 5 years, way better than anybody else was thinking about experience, and what the customer’s experience would be with a product. Sometimes Microsoft got that right, I would say the Xbox team got that right, I would say the Xbox team did a really good job of that. Not even so much with the original Xbox, but with Xbox Live. That experience was a great experience. There’s places where Apple got it right on the iPhone and on iPod, I mean really incredible. We were a little too technology focused, and not enough quite enough experience focused. Occasionally, Apple has been too experience focused and not enough technology focused.

Q: You mentioned Xbox Live. People point to Halo: Combat Evolved, the first one, as the thing that vaulted the Xbox into business. Obviously it was the killer game. That said, if you look at the core technology, the decision to put an Ethernet port into the original Xbox has to be one of the smartest business moves Microsoft has ever made, in my opinion. That was your team.

Robbie Bach: It’s interesting. I can’t say it was one of the smartest decisions Microsoft has ever made because there’s a lot of smart decisions that got made in Microsoft. … I go back a long way, I was there 22 years.

Your point, in the original plan we had a 56K modem in the box. We literally went in a big group meeting and told Bill we were taking the modem out and just including the Ethernet port. Frankly, in the first meeting, he told us we were crazy.

Q: He said, “That’s the stupidest f-in idea I’ve ever heard.”

Robbie Bach: That was just the standard line. That didn’t distinguish that idea from many others I’d had from many others I’d had over my 22 years there. We went and had a private meeting with him, and we showed him the data. We showed him what you could do with a 56K modem. It didn’t take him long. He looked and said, “Yeah, this is a big bet but you guys are making the right bet. What we have to do is, we’ve got to go double-down with the guys who are doing broadband, and make sure the right thing happens with broadband.” Of course, that happened. We caught the broadband wave almost perfectly. Better lucky than good, but caught the wave at the right time with the right concept.

Q: I don’t think the Xbox 360 especially would have been what it became without Xbox Live, and I don’t think Xbox Live would have existed without that Ethernet port, at least not in the form that it did.

Robbie Bach: No, it’s funny. People ask me, “Why was Xbox successful?” And I tell them three things. One, Microsoft was persistent, and willing to fund us, which in some ways not mathematically logical, but a good thing. Second was Halo. People forget, though, that that first version of Halo didn’t support Xbox Live because Xbox Live didn’t exist when it shipped. The third thing was Xbox Live. Without Halo and Xbox Live, Xbox doesn’t make it.

Q: These rumors tend to pop-up every year or so: Microsoft should spin-off Xbox into it’s own group. Do you think there’s a case to be made for that?

Robbie Bach: I don’t think it really matters because I think Microsoft has been pretty definitive about the direction they want to go. They spent a lot of money on Minecraft. They’ve been very definitive about restructuring the group to put Phil Spencer in charge and he really is running the business now. I think they’re investing in the games. I think it’s somewhat of a moot point.

I also point out, people don’t realize how intertwined the Xbox business is with Microsoft technology. It’s not a simple thing. I think Xbox as a standalone business would have its own set of challenges.

Q: What about “Xboy,” the idea that Microsoft should have built a handheld gaming device. In hindsight, should Microsoft have built its own dedicated handheld gaming device?

Robbie Bach: I think in hindsight, we made a really great decision. We didn’t make it because we were smarter than the other guy. We just made it because we had big problems to deal with on Xbox itself. In my 3P framework in the book, I talk about purpose, principles, and most importantly, priorities. Priorities requires focus. We had 5 things we had to do to make Xbox successful. If you add Xboy to that, that’s another 5 or 10 things that have to get done. The team just could not possibly have done that. We literally said no, for the most part, just out of focus. As it turned out, it was brilliant because that market went away.

Smartphones took that market away, so we focused on the thing that survived and did well, and continued to grow. Some skill in navigating strategy, and making priority choices, and some luck in how the market went.

Q: In the book, you write about sitting in the front row at E3 when Satoru Iwata, the Nintendo President, introduced the Wii-mote and the Wii. You’re line was, “Somebody better tell me why this doesn’t matter” or, “Somebody better tell me why this isn’t a competitive threat.”

Robbie Bach: There were a few other words included in that line, too.

Q: Yes. Who was the tougher competitor, Sony or Nintendo, during your tenure?

Robbie Bach: They were so different. First of all, you bring up Iwata-san and I should say, in memory of him, he passed away this year. I met him several times, we competed hard, but I thought he was always a very respectful, open person and a participant in the industry and that should go noted. It’s not always that you go against guys that you respect, and I have a lot of respect for him.

As I do for Kaz Hirai, who I also competed with, at Sony. We didn’t always love each other, but it was a good, healthy competition. Nintendo and Sony are very hard to compare. If you think, night and day, Nintendo and Sony are kind of night and day. Nintendo is a game company first, almost a toy company first, and I mean that with respect. They start with the game and build the hardware around it. Sony starts almost exactly the opposite. They are an engineering company. They start with the hardware, and try to make it as cool as they possibly can, and then engineer the games around it.

The only thing they have in common is they’re both based in Japan. If you actually talk to somebody from Japan, being a Kyoto based company and being a Tokyo based company, mean completely different. I know that sounds crazy, but I’ve had a number of people tell me that. They’re just really, really different. Nintendo was always working from the young age group up. Sony was always trying to come from the hardcore gamer down. Just different.

In Xbox 360, I talk about this in the book, we chose to focus very much on Sony, which worked out okay for us in the end, but did leave us exposed to what Nintendo was doing. For the first year or so, maybe 18 months, that was a real challenge.

Q: Final question here. What do you hope your legacy will be as people look back on your Microsoft career, and then your post-Microsoft career? How do you hope people would sum up your impact on the world?

Robbie Bach: I don’t even think about that in terms of Microsoft versus post-Microsoft, I just think of that in terms of impact. I hope people walk away saying something was better. Somebody’s career was better because I helped them along, somebody’s business was better because I gave them advice, some civic issue got better because I focused on it or helped other people think about it. You want to leave where people think there’s been impact.

I always claim that when the story is all written, and when the Microsoft story is written, and the Bill Gates story is written, people are going to remember what Bill and Melinda Gates are doing through the foundation more than Microsoft. People are going to remember what Jeff Raikes and Tricia Raikes are doing through the Raikes Foundation, and what Scott Oki and his wife have done through all of his charitable work. Hopefully, I’m some small participant to that group, to have contributed in the broader social context. I know that sounds kind of goofy, but you reach a point in your career where you want people to not think, “Oh, he helped find Halo and start the Xbox business” and think, “Oh, he helped make our communities better.” That’s really where I am.