I guess there was no way I could not comment on the latest announcement. It was a big one that surprised and gratified a great many people. Wall Street certainly liked it and to be frank, I think a great many Microsoft employees welcomed it.  On August 22nd Microsoft CEO Steve Ballmer announced he would be retiring within 12 months or once a successor had been chosen.  It is a big day at Microsoft after many years of floundering, the guy who has been at the top since 2000 is stepping aside.  I have waited a week or so to get my thoughts around this change, as well as read as many articles as I can on what the post Ballmer Microsoft might look like. But as we look back and look forward it may be a case of be careful what you ask for as whoever takes the reigns will have a daunting task before them.

I was once told back in the day that Microsoft had a problem called “a cult of personality” .  The cult being Ballmer and Gates.  Not long after Bill announced that he was stepping down as CEO.  Bill envisioned the future and the role Microsoft would play and seemed to succeed at everything until he stepped down..  The company led by Steve would go through its first big transformation.  Moving from the mindset of a small entrepreneurial company to the mindset of a big American corporation.  It was new territory, a small tech company just 5 years before, now a Fortune 500 company.  Ballmer chose to follow then american business idol, Jack Welch to build the corporate Microsoft.   But everyone had faith in Steve, so it was not questioned. Throughout this process, even though Bill had removed himself from day-to-day operations, the company was still being led by those two friends from Harvard.   If you think about up until the day Ballmer departs the doors of Microsoft, the company has known no other leaders than Gates and Ballmer.  It has been and still is ingrained into the DNA of the culture of Microsoft.  Until the past five or six years it was not questioned.  Every shift, every great memo, every huge press release contained either Steve or Bill or both.

If you look at the numbers, it would be hard to call Ballmer’s reign anything but a success.  The company now generates over $70 billion in revenues.  It has nearly 100,000 employees and 66,000 contractors.  It has succeeded in the enterprise with the Windows Server line(Active Directory technology), SQL Server, Sharepoint Server, etc…  Windows and Office continue to reign supreme over the desktop world. Xbox has risen to be one  of the leading game consoles. The one big exception in the numbers would be the flat performance of Microsoft stock.  Where he gets criticized is the big misses, missing the mobile phone market and blundering on the tablet, which has led to the ultimate crime losing the developer.  As much as they embraced the internet, even when I was there, I don’t think that Microsoft under Ballmer, fully understood the internet, thus their tardiness in moving to the cloud.  Rather than move forward they looked backward and tried to protect their existing market share.

Since announcing his resignation Ballmer has been very critical of himself over the launch of Windows Vista.  Calling the release his biggest mistake.  I guess in saying that it validates one of my biggest disagreements with  Steve.  Was Vista a bad release of Windows? Yes.  Was it one of the most anticipated and delayed products ever? Yes.  Did we have to go through multiple execs to ship it?  Yes.  But I guess in calling out a product as his greatest failing, that to me, is the issue.  It is a mindset of the legacy of Microsoft.  Shipping product.  In my opinion the biggest mistake was not seeing the shift to a mobile world and realizing both the products and experiences that would be needed for Microsoft to fully participate in “the mobile future”.    With the announcement of the acquisition of Nokia’s Devices and Services division it shows Microsoft dramatically trying to transform itself to meet the challenges of this new age.  That will be the subject of another post.

There are certainly questions with the timing of the departure.  Microsoft has just announced the largest re-org in its history  A change that whatever the outcome will redefine the company, for better or for worse.  Followed by Steve’s announcement and then the acquisition of Nokia.  But if you start to think about it, all these changes coming at once does not happen randomly.  Microsoft is on the process of making big bets.  Companies in tech can rise very quickly, but what is less documented but equally true is they can fall.  For every Google there is a Yahoo, for a Facebook a MySpace, for a Microsoft a WordPerfect, Lotus 123, Novell etc..But it is curious that Ballmer would announce the largest re-org in history and  then step down so suddenly. Whomever succeeds him will need to be bought in on the re-org, but then it seems all these recent big announcements are connected.

When he steps down who will lead?  Given the acquisition of Nokia and the return of Stephen Elop, the early odds makers have Elop being the next CEO of Microsoft.  On the surface it makes sense.  If as I stated above, we believe all these events are connected, than Elop would likely have discussed these changes well in advance of the re-org announcement and the purchase of Nokia, plus he is ex-Microsoft.  At a time where the company craves a dynamic leader, if Elop is chosen it would be like Pope Benedict XVI succeeding Pope John Paul II.  A conservative, but safe choice.  Microsoft employees will await there Pope Francis.  I hope Elop does not do another “burning platform” memo, that would be a bad sign for the company.  The good news is Stephen is a confident and eloquest speaker, He led the Microsft Office division, which is no small task and wil give him some credibility to start. That should get him through the first six months should he assume the role, but after that hunting season will be open.

Some of the other bets and names that have been thrown about seem a bit far-fetched.  One was Kevin Turner, current COO. I dismiss this one simply because this would need Bill Gates blessing.  I cannot imagine a scenario where Bill Gates says, “Let the Wal-Mart guy have a shot”. J Allard, though a popular guy never ran an org close to the size of Microsoft, he was not even the number one guy in XBox.  Steve Sinofsky is interesting, but he was a somewhat polarizing figure while at MS so I don’t see those one happening.  A lot of names come from the outside but usually with Microsoft ties: Kevin Johnson, Bob Muglia, Vic Gudotra and Paul Maritz.  Of the four Paul Maritz is the most visionary and has a track record of success at VMware.  I think Bill likes him as well but he would need convincing to take on such a daunting task.  His downside would be he is not a consumer guy as he has always focused on big enterprise challenge.  Vic, now at Google and doing very well, would have the same challenge as J Allard.  Kevin and Bob I just don’t see, though I respected them both when they were at Microsoft, it would seem late in their careers to take over this role.  I am a bit surprised tha no one was groomed for this role, it seems a rather sudden departure.

Of all the aforementioned candidates in my mind the only one worth considering, would be Paul Maritz.   Maybe more importantly Is the fact that there is no leader I have heard of that inspires in me a dramatic shift at Microsoft.  There in lies the challenge; Whoever takes over will not have the knowledge of how Microsoft works even remotely close to Steve and Bill.  When the change happens it will be seismic as in Microsoft’s entire history has always been about the “Cult” of Bill and Steve, and legacies have a way of enduring beyond their expiration date.  For someone new to come in and say “I lead this company” will not be an easy things. This is however both the exciting and frightening thing about change, you do not know what to expect.  For many at Microsoft it will prove both challenging and frustrating.

Steve, loved the company, as he said many times.  His legacy will be felt for many years to come..  During his tenure there were certainly times where he achieved great highs and seemed to walk on water.  Those were long ago.  More recently he was criticized for lack of vision and relying on Microsoft’s legacy and not its future.  Only time will determine what his legacy will be and how history will judge him.  The future for Microsoft is now uncertain.  For many who wanted to see this happen, the question will remain, “now what?”.    If you polled a hundred people about what Microsoft should now do, I feel confident you would get a hundred different answers.  You got your wish, now be careful of what you wished for.  Uncertainty is a future without confidence.

Good Night and Good Luck

Hans Henrik Hoffmann September 6, 2013