(May 16, 2005) - Microsoft is an amazing company. They operate at the very edges of our understanding of organizational theory. Their market position, growth rate, changing fortunes and extreme capitalization make them an ideal place for experiments in organizational design and execution. Admirably, the company learns from its mistakes, models desired behavior and sets new standards.

Recently, the various blogs at Microsoft have been receiving lots of attention. From Scoble's offering (which turns many ideas of corporate governance on its head), to blogs from individual contributors to the well known recruiting blogs (Heather, Tech Careers, Australia) , the firm sets new standards, left and right. It has to.

The blogs, and a broad range of other Microsoft policies, are necessary adaptations for a large enterprise aggressively entering the flat era. For Microsoft to continue to grow, it will have to act smaller and smaller, leveraging its heft while maintaining customer/employee intimacy. It's no small challenge and there are few good guides.

Microsoft has the blessing/curse of having to fail in public. And, they have converted it into a core strength. Here's a recent example:

Take a look at this week's BusinessWeek. There's a short piece called How Microsoft Changed Its Mind, a series of four verbatim emails on the subject of a piece of diversity legislation in the Washington State Government. The first, from Steve Ballmer, is a thorough heartfelt explanation of company policy, personal feeling and the difference between the two. The second is from the internal Gay rights group; the third is from a group of Christian employees. The fourth is Ballmer's change of position two weeks later.

The series is well worth reading and passing around. A public commitment to diversity, generated in this very grass roots way, is a powerful market discriminator. It's a profoundly useful way to strengthen internal identity while improving the employment brand.

It's an example worth following.