Google (GOOG) is barging into the business of computer operating systems—via Chrome, due next year. Microsoft (MSFT) is vigorously defending its turf–via Windows 7, its new operating system due in October. Simultaneously, Microsoft is striking at the heart of Google, via Bing. “We should have been earlier in search,” said CEO Steve Ballmer two weeks ago in France when asked to name his greatest regrets over the years.

We may be at a tipping point in tech. The spending will rise. So will the sparring. And as the sparks fly, have you noticed? Google and Microsoft both seem to be doing their own searching…to answer that most basic business question: Who am I?

Ballmer riffed on this question, actually, at the Cannes Lions International Advertising Festival. I did an  on-stage Q&A with him there (you can find details and video clips by searching “Ballmer” on Postcards‘ homepage), and afterwards, I followed him to a meeting with the Cannes “Young Lions.” These are rising-star marketers and creative execs age 3o and under. One of them asked: “What does Microsoft stand for?”

Ballmer seemed to love the question. “This is a real debate inside Microsoft,” he replied. “It’s rumored that we’re going to open retail stores,” he added, and then he surveyed the Young Lions about whether it would be wiser to call the stores “Microsoft” or “Windows.” Ballmer suggested that “Microsoft” means “software company” and “well-run business.” What does “Windows” mean? “Access” and “guide to technology,” he said.

Ballmer didn’t get what he hoped for in this mini-focus group. The young stars of the ad universe appeared evenly divided on the ideal name for the prospective retail outlets. Microsoft’s chief ended the discussion by asking: “How many people here use Macs?” Most in the room raised their hands. “Biased!” Ballmer bellowed.

For what it’s worth, we’ll likely see in October what Microsoft can do retail-wise. The company is mum on its plans, but it’s a pretty safe bet that stores will open this fall, accompanying the Windows 7 marketing onslaught. Retail is a gamble; except for Apple (AAPL), consumer tech giants have stumbled. Managing conflicts with existing retailers, like Best Buy (BBY), is tricky too. Moreover, who would bet that Microsoft, which has never oozed sex appeal or product-intro pizazz, would be good at this game?

Then again, Microsoft is redefining itself–or trying to, at least. To command its retail drive, the company recently recruited a heavy-hitter: David Porter, previously head of worldwide product distribution at DreamWorks Animation SKG (DWA). Before the movie gig, Porter spent 25 years at Wal-Mart (WMT).

One of the smartest takes on consumer tech retailing is a story that Fortune ran in 2007: “Why Apple is the best retailer in America.” It’s worth reading again.

The ideal career path may be: reaching the top of the corporate world, then taking time off for family when your kids need you most, and then jumping back into a primo job at a top-tier global company.

Impossible in this dreadful economy? Here’s someone who’s done it. Remember Jeanne Jackson? At Gap (GPS) in the 90s, she built Banana Republic and then went to help Wal-Mart (WMT) take Walmart.com from start-up stage. But after leaving Wal-Mart seven years ago, Jackson was out of the big game, except for board gigs at McDonald’s (MCD), Nordstrom (JWN), and Nike (NKE).

She’s back. Actually, I follow these Most Powerful Women (and Jackson was one, on our annual list a decade ago), but the announcement four months ago that she landed at Nike–as President, Direct to Consumer, reporting to the CEO–was so low-key that I’d missed it. A few days ago, I spotted Jackson’s name and Nike title on the participant list for our upcoming Fortune Most Powerful Women Summit. I popped her an email. We talked yesterday.

“I made a commitment to my family,” Jackson, 57, told me, explaining why she had dropped out for so long. Since 2001, when she joined the Nike board, Jackson actually had talked on and off with chairman Phil Knight and CEO Mark Parker about joining the company. But not until this year, when her son graduated from high school and her daughter accepted an internship in London, at Burberry, did she decide to jump.

She didn’t think the jump would be to Nike first thing. “I thought I’d do something related to private equity,” says Jackson, who has been quietly running her own private equity/consulting business, MSP Capital, out of Newport Beach, California for the past several years. She expected one of the companies she backed “would speak to me.” But nothing did. (Along with “some spectacular failures,” she says, she scored a couple of hits, including Pure Digital, which sells the Flip camera and recently was acquired by Cisco.)

As the global economy tanked, she felt ever more drawn to the thing that she has focused on throughout her career: strong brands. Says Jackson, who was at Disney (DIS) and Victoria’s Secret early on: “In this economy, consumers default to strong brands.” Now, in this new role that Nike CEO Parker created for her, she oversees the company’s global retail holdings. That includes some 3,500 franchised Nike stores, more than 600 wholly-owned Nike and Cole Haan stores, and five e-commerce sites. Some $3 billion in revenues annually travels through these “direct to consumer” channels.

And despite the global meltdown, Nike is performing well. Revenues reached $19.2 billion in the year ended May 31. Profits fell 21% after five years of 20%+ annual growth, but investors have stayed with the stock: It’s up nearly 40% in five years, while the S&P has dropped 20%. The world’s largest athletic shoe and apparel marketer, Nike has smartly reduced spending and layers of management, while selectively adding key talent like Jackson.

Of course, she’s contending with the retail slowdown–Nike too has cut new-store expansion. But in some ways, Jackson is returning to the sort of thing she did inside Gap and Wal-Mart: playing entrepreneur inside a corporation. Last week, she opened the first Hurley/Converse/Nike store, in Orange County, California. The Hurley brand is for surfers and skateboarders and other cool kids. Converse, she says, has particularly broad appeal–from high school kids to musicians to “my mother-in-law, who is 87 years old and wears Converse.”

The family dynamic–usually a complication when executives, especially women, return to big jobs–is alright for Jackson. At least until her son heads off to SMU this fall, she’s commuting from California to Oregon, where Nike is based. Husband Doug, a retired airline pilot, is flexible and always has been. “I could take any job and he would just relocate,” Jackson says. (He has his own passion: cars. He owns the Batmobile–one of four built in 1966 for Batman on TV.)

Jackson, meanwhile, has simplified her business extracurriculars. She quit the boards of Nordstrom and Harrah’s Entertainment, as well as Nike. The one board she’s staying on: McDonald’s. After all, you can never get enough lessons in smart retailing.

Lloyd Blankfein, the CEO of Goldman Sachs (GS), phoned from Madrid a few weeks ago to share “The Best Advice I Ever Got.” This is the cover package in the current issue of Fortune. And you can read wisdom from Blankfein and lots of other power players –Bill Gates, Tiger Woods, Google (GOOG) CEO Eric Schmidt–in the issue and online.

Beyond Blankfein’s “Best Advice” that appears in the issue, he told me some best advice that he likes to pass on at Goldman Sachs–and I’ll share it with you here. Blankfein said that executives, on their way up, tend to forget that they become role models. “People’s sense of  themselves is a lagging indicator,” he told me. He went on to say that he talks with folks at Goldman to make sure that they recognize the impressions they leave:

I ask our people, “When you were on the way up, who had the job that you have now and how did they respond to you? It’s shocking to think that people respond to me like I responded to  [former Goldman Sachs CEO] John Weinberg. I don’t feel that way about myself.

I also say to people here, ‘Okay, take that person who was in your current position when you were growing up in the company. How often did you talk about that person to your spouse or your boyfriend or your girlfriend? A lot. Well, guess what. Those people who are subordinate to you—they’re talkin’ about you now. So whatever you did, however you behave—it may be over in your mind. But it’s not  over in theirs. They’re still talking about you, saying, ‘He or she is unpleasant or thoughtless.’

Blankfein went on to say that this sort of self-awareness has been particularly important amidst the global economic crisis and backlash against Wall Street.

I tell people here, ‘We’re going to get through this crisis. However you perform  now–well or badly–we’re going to get through it. But how you behave will affect your reputation for the rest of your career. Do you show courage or not? Do you act big or small? Are you a statesperson or are you selfish?  Everybody’s going to notice and remember.“

Think about it: Who was in your job back when you were starting out? What did you think of that person? And what impression will you leave today?

“You won’t become a general unless you become a good first lieutenant.”

– Colin Powell, former U.S. Secretary of State and retired four-star general, in the Best Advice issue of Fortune, now on newsstands. This “barracks wisdom,” Powell says, was passed down from the old reserve captains to the young infantry officers at Fort Benning in the form of a fable: A young officer asked a general what it took to earn that rank. The general told him he’d have to have moral and physical courage, never show fatigue or fear, and always be the leader. The young officer thanked him and said, “So, is this how I become a general?” The captain answered, “No, that’s how you become a first lieutenant, and then you keep doing it over and over and over.”

Powell’s interpretation: “I’ve always tried to do my best today, think about tomorrow, and maybe dream a bit about the future. But doing your best in the present has to be the rule.”

Pattie shared Powell’s story with the students at an ExxonMobil (XOM) breakfast yesterday. And it fits with her favorite career advice, which came up in a Time Inc. University class that I helped Pattie teach today: Don’t plan your career. I subscribe to that advice too. –Jessica Shambora

“Right now, nothing is more important than a nimble, agile leader, who is comfortable with ambiguity and figuring it out as they go along.”

–Avon (AVP) President Liz Smith, in a discussion led by Pattie Sellers at NYU today. The panel, which also included Cece Sutton, Morgan Stanley’s (MS) new retail banking president, was hosted by Forte Foundation.

Smith and Sutton, both on Fortune’s Most Powerful Women list, talked about how the global recession has altered what they seek in the talent they recruit. Smith values flexibility and a certain comfort with not knowing what tomorrow will bring–because more than ever, who can predict? Management, she said, has become “less strategic planning than scenario planning: ‘If this, then what?’”

It’s also more important than ever to be “completely transparent in order to take your people along on the journey,” Smith said. Sutton agreed, adding: “People who are successful now are great operators: Know the business and be in the weeds.” –Jessica Shambora

Gerri Elliott, one of Microsoft’s (MSFT) star execs, left the company early this year to spend more time with her family. Yes, seriously to spend time with her family. As I wrote in January, her departure was a major loss for Microsoft, according to senior executives there, and it was also a case of a powerful woman asking, “Why kill myself and miss my kids growing up?”

Now Elliott, who spent 22 years at IBM (IBM) before moving to Microsoft and heading the $8 billion Worldwide Public Sector unit there, has finished her hands-on familial gig and hasn’t taken long to find a new one back in the business world. Today, Juniper Networks (JNPR) announced that Elliott is coming on board in a new position crafted for her: EVP of Strategic Alliances.

Elliotts’s friends and former colleagues aren’t surprised. She and Juniper’s CEO, Kevin Johnson, have known each other for two decades, going back to their stints together at IBM and Microsoft. In fact, Elliott says she remembers the day 17 years ago when Johnson walked into her IBM office and told her he was leaving to go to upstart Microsoft. He asked her if she would take him back if he screwed up. Little did Johnson know — or Elliott either — that he would rise to head Microsoft’s biggest business, Windows, and one of its toughest, search.

For a decade, Johnson tried to hire Elliott at Microsoft. But she was a bleed-Blue loyalist. Caving in 2001, she flew from Connecticut to Seattle on September 10. Her first day at Microsoft was 9/11. Between running the company’s enterprise business in the Americas, co-heading the Americas organization, and leading the global Public Sector, Elliott handled some of Microsoft’s largest customers–which include countries and government agencies.

After she left in January, she followed the advice of a good friend: She didn’t take headhunter calls for two months. “I wanted and needed this break with my daughter,” Elliott, 53, told me in an email today. But the phone didn’t stop ringing, and eventually she considered CEO positions at start-ups, a president post at a Fortune 500 company,and COO and EVP jobs at several tech companies.

The only thing that really excited her was working with Johnson again. “He’s an exec who cares about the whole person,” she says — and he proved his worth by agreeing to put in Elliott’s Juniper employment contract that she’ll be able to go to the Fortune Most Powerful Women Summit. That’s the annual confab that I chair, and yes, I was shocked when Elliott told me that this event is so important to miss.)

Also in Elliott’s new contract: permission to participate in the annual Fortune – U.S. State Department Global Women Leaders Mentoring Partnership. This is a program that brings rising-star women from developing countries to shadow American women who participate in the MPWomen Summit. Since we launched the program in 2006, Elliott has been one of the program’s most supportive mentors.

So Johnson has lured Elliott to Silicon Valley by tailoring the job to her. The other clincher, she says: Juniper values partnerships. “I mean really values them, like it’s in their DNA,” she says. Elliott will hit the ground running and work to fortify the networking giant’s existing partnership with Nokia (NOK), Siemens (SI) and IBM.  Actually, she’s hard at work already. When I checked in with her earlier today, she was on the road with Johnson, visiting a Fortune 500 giant and trying to strike another major alliance. — Pattie Sellers

If you can’t pay your people enough (a problem for a lot of bosses these days), how do you get the best talent to come and work at your company? I posed the question to Citigroup (C) chairman Dick Parsons last week. He had a fascinating answer: Appeal to “patriotic duty,” he suggested.

Of course, only a few basketcase “too big to fail” corporations — Citi, General Motors (GM), AIG (AIG) — can dream of employing the patriotic proposition. The rest of the penny-pinching corporate world must use other bait. And for anyone hunting talent globally, it helps to know that even in a flattening world, geographical and cultural differences abound.

This is what Egon Zehnder International, the search firm, found recently when it conducted an online questionnaire of 1,003 executives around the world. I had  lunch with CEO Damien O’Brien, and as he says, the findings suggest that companies that tailor their appeals will get a leg up in the war for talent.

In lieu of high pay, what do you offer? Decision-making latitude. Status. Opportunity for personal development. All those things matter to managers everywhere. But one other thing matters most of all, even more than pay, to execs pretty much across the world: “content of the work,” according to the survey.

Geographic differences kicked in particularly strongly when Egon Zehnder asked: Would you take a drop in salary for a more interesting job? Executives in Europe (where I am right now, penning this Postcard) expressed much more willingness to switch than Americans did. (Quality of life, including life at work, matters a lot here.) No execs were more willing to sacrifice pay than the Swiss: 84% said they’d switch. Sixty percent of surveyed U.S. executives  said they would trade a better-paying job for a more exciting one.

And who, according to Egon Zehnder’s research, seems to be the most stuck on pay? Japanese executives. Only 40% of the Japanese who took part in the survey said they’d give up money for more interesting work. Hmm, an even higher percentage responded “I don’t know” — suggesting that execs in Japan are puzzled by the very question. — Pattie Sellers

by Patricia Sellers

There aren’t many hero CEOs anymore. So it’s remarkable that two of the most admired chiefs have announced their retirement within the past three weeks.

First came Anne Mulcahy, who saved Xerox (XRX) from near-bankruptcy.

Now comes the news that Procter & Gamble (PG) CEO A. G. Lafley is stepping down after reviving that consumer giant and doubling its size to $83.5 billion in less than a decade. Like Mulcahy, Lafley earned his leadership chops out of crisis, led with a quiet charisma, had a clear focus, and constantly communicated.

Not a coincidence that they both succeeded. Those are the things you need to do to be a great leader.

Even people who have followed Lafley’s career hardly remember how terrible things were in June 2000, when Lafley was plucked out of the beauty business to lead a company in crisis. He detailed the mess well in a Harvard Business Review piece this past May: “The company had announced that it would not meet its projected third-quarter earnings, and the stock price plummeted from $86 to $60 in one day…The price dropped another 11% during the week my appointment was announced. A number of factors had contributed to the mess we were in, chief among them an overly ambitious organizational transformation in which we tried to change too much too fast…But our biggest problem in the summer of 2000 was not the loss of $85 billion in market capitalization. It was a crisis of confidence.”

Lafley is too diplomatic to name his problematic predecessors, but I’ll tell you who they were because I knew them all: CEOs Ed Artzt and Durk Jager were as hard-driving as leaders come — and intimidating too. They knew how to line up followers. But inspire the troops to become leaders? They struggled to do that. And another CEO in between the Artzt and Jager regimes, John Pepper, was well-liked but not tough enough.

So P&G had lurched through leaders who just weren’t right—until Lafley surprised everyone. He understood the power of a consistent message. His mantra for nine years: “The consumer is boss.”

Diligently and methodically, he spread the word that P&G had to focus on big brands, big markets, and big customers. He said that P&G, to win with powerful discounters, must slash costs and reinvest savings in marketing and product design.

Focusing on those things, Lafley became the best organic-growth guy in the consumer-products industry. In a 2004 Fortune story about P&G’s innovation drive, I quoted him: “Organic growth is more valuable because it comes from your core competencies. Organic growth exercises your innovation muscle. It is a muscle. If you use it, it gets stronger.”

He drove innovation by reaching outside for ideas — an alien concept for promote-from-within P&G. Shamelessly, he used hokey terms to communicate: “Connect and develop” was his term for partnerships with outsiders who might  be more creative than the folks at P&G.

Here’s the key: P&G employees understood Lafley’s mission. The company’s results proved that. By driving innovation in age-old brands like Tide and Crest and Olay, P&G outperforming rivals like Unilever (UL) and Colgate-Palmolive (CL).

But even as Lafley declared that acquisitions are risky, he didn’t shy away from them completely. “When we acquire, we acquire to build the core,” he told me in 2005. He bought Wella and Clairol to expand P&G’s beauty business. And as P&G grew to be a top player in personal care, he bought Gillette for $57 billion in 2005. That acquisition added five billion-dollar brands — Gillette, Oral-B, Braun, Duracell, and Mach3 — to P&G’s stable of 16. Last year, annual sales of Gillette Fusion topped $1 billion, and today P&G claims 23 billion-dollar brands.

Lafley has been contemplating retirement for a while. As the global crisis hit and P&G’s growth around the world slowed, the board urged him to stay on. Fortune has been saying for a long while that COO Bob McDonald, a 29-year P&G veteran who is a West Point grad and U.S. Army captain, had the edge. Insiders says he played a key role in the Gillette acquisition. The other contender was Susan Arnold, a 29-year veteran who drove P&G’s high-margin beauty business to $20 billion in sales and went on to oversee all of P&G’s brands; she quit in March one day after her 55th birthday, clearing the way. (Speaking of birthdays, McDonald turns 56 on June 20, one week after Lafley celebrates turning 62.)

Now with P&G’s stock trading at $52.63, down from its high of $74.67 at the end of 2007, McDonald has his own recovery to pull off. But in terms of confidence in leadership, the new boss has nowhere near the turnaround challenge that Lafley did.

by Patricia Sellers

The news that another Fortune Most Powerful Woman — Bank of America (BAC) chief risk officer Amy Brinkley — has fallen was inevitable.

The surprise is that she lasted as long as she did.

The pressure is that intense inside CEO Ken Lewis’ financial-services empire — now the largest U.S. bank by revenues and No. 11 on the Fortune 500, thanks to a run of aggressive acquisitions. The topper, Merrill Lynch, was a rescue that Lewis agreed to during that fateful September 2008 weekend when Lehman Brothers collapsed and the global financial crisis spun out of control. This marked the beginning of the end of Brinkley’s career as BofA’s savvy risk manager and close CEO adviser.

Brinkley, 53, seemed ever-adaptable for three decades. She started at BofA in 1978 as a management trainee in the Commercial Credit department and rose through a variety of jobs, including marketing and consumer products, before taking the top risk post in 2002. As BofA profits compounded and its stock rose as high as $55, Brinkley’s star rose too. She was No. 22 on last year’s Fortune Most Powerful Women list. In the 2007 Most Powerful Women issue, we included her in a feature called “One Step Away,” about six women who could be Fortune 500 CEOs someday.

“Always be open to a broad range of possibilities” when creating a career, she told me.

But as BofA’s troubles grew and the Merrill acquisition came to be viewed as insanely high-priced (even at $29 billion, the ultimate price in the all-stock transaction), somebody had to pay. The official word from BofA is that Brinkley is retiring by mutual agreement. But clearly, she had no choice but to step down. (She declined to comment for this story.) To replace her, Ken Lewis has installed Greg Curl, 60, a 31-year BofA veteran whose most recent job was Global Corporate Strategic Development and Planning executive.

More heads will likely roll. BofA’s stock is now trading around $12. And regulators, who recently required the bank to raise $33.9 billion in new equity, are continuing to pressure Lewis to strengthen the company’s management and board. Directors have been resigning. The latest: former Lowe’s (LOW) CEO Bob Tillman.

Meanwhile, Lewis, 62, has been called to testify before the House Committee on Oversight and Government Reform next Thursday. He’ll be grilled about his knowledge of Merrill’s deteriorating condition at the time he agreed to the buyout.

Amidst all this drama, one other Fortune Most Powerful Woman stands firmly at BofA: Barbara Desoer, president of Bank of America Home Loans & Insurance. She’s been in charge of integrating another buzzed-about acquisition: Countrywide Financial. Certainly, Countrywide has left another black mark on the bank: The SEC yesterday announced that it has filed civil fraud charges against former Countrywide CEO Angelo Mozilo. Even so, this deal looks like a good one: It’s given BofA ownership of 20% of the U.S. mortgage market, at a reasonable acquisition price of $2.5 billion.

Desoer, who started at BofA in 1977 and has headed technology and operations as well as marketing, is nose-to-the-grindstone and low-profile except for an on-stage Q&A last fall with my colleague Geoff Colvin. Ranked No. 27 on the Most Powerful Women list, she’s earned high marks inside the bank and from analysts for integrating Countrywide smoothly, amidst so many distractions.

Maybe it helps that Dosoer is located a world away, in a Los Angeles suburb. Usually it hurts to be far from the center and the CEO. This time, distance might well be an advantage.

New York City is second fiddle to Silicon Valley when it comes to tech start-ups. But one intriguing new Internet company is about to launch here in Manhattan in two weeks.

Have you heard about Hunch? This morning at a Women in Media breakfast, I ran into Caterina Fake, the  entrepreneur best known for co-founding Flickr and selling it to Yahoo (YHOO). Last time I saw her was at the home of Sheryl Sandberg, Facebook’s COO, in Silicon Valley. As I’ve written, Sandberg frequently hosts tech’s rising-star women for soirees with guest speakers.

Hunch was just a glimmer of an idea back then. It was going to be site for consumers to use to help them make decisions. But, Fake (left) told me today, she hadn’t a clue about what it would look like or how it would be used.

Now she knows. She describes Hunch as a mix of a “decision tree” and a “Magic 8 Ball.” (Remember the toy black ball that told you your fate and fortune when you were a kid?) On Hunch, you type in a question like…

What car should I buy?…

What’s wrong with my pet?…

Should I write a novel?

And Hunch responds by asking you questions. You click Yes or No in response to each one, and eventually you arrive at an answer. Fake says that she and her colleagues worked to make Hunch fun, like a game, so people stay on the site for a while.

What will visitors use Hunch for most often — career advice? Food tips? Shopping savvy? Fake doesn’t know. That’s part of the excitement of launching a new venture, she says.

This breakfast, part of Internet Week in New York, included lots of high achievers, who have jumped from traditional companies to the digital space. There was Betsy Morgan, who left CBS (CBS) to be CEO of the Huffington Post. And Susan Lyne, ex-Disney (DIS) and Martha Stewart Living Omnimedia (MSO), who is now CEO of Gilt Groupe. You wouldn’t think that this online fashion-brand merchant would have a Gooogle-like growth trajectory, but it does in its first two years. Watch for Lyne to broaden the platform  beyond high-end clothes and accessories.

It was a kick to see Eileen Naughton, who was, in the mid-’90s, general manager of Fortune and later president of Time magazine. She spent 16 years at Time Inc. (TWX), got squeezed out in 2005, and landed on her feet. Actually, she landed at Google (GOOG), where she’s now director of digital platforms. Her purview includes YouTube and DoubleClick.

Naughton echoed the other women at the breakfast, who said that New York City needs more engineering and tech talent to compete with Silicon Valley. “The best place to get engineering talent right now is investment banking,” Naughton said.

That’s a silver lining of the recession: tremendous talent, looking for new employment. Another silver lining is attractive real estate prices. Another tech entrepreneur, SheFinds Media CEO Michelle Madhok, told the group that she just rented 1,000 square feet for new offices and scored a deal: $22 per square foot. That’s about 40% lower than a year ago.