Steve Ballmer: The Final Review

I guess with all the reviews I went through at Microsoft, it is time to give Steve Ballmer his final review.  He was with the company for nearly 34 years and a part of its foundation.  He was a primary reason the company rose to great wealth and fame.  He was a cornerstone of the company’s growth, but as in all things in life, things come to an end.  In Steve’s case he probably did not go out as he would have wished.  To be frank it was rather quiet, which is odd coming from a man who is anything but quiet.  When Steve was in a room everyone knew.  In order to do a proper review we will have to have a system in place.  I shall borrow one from the various Microsoft review systems I was a part of during my 18 years at Microsoft. Now we had the old system of five being the best and one being the worst.  Then we had the last system that inverted the old system. Never quite followed why HR wanted to do this.  In any case I think I am going with the middle systems that was between the 1 to 5 or 5 to 1 system.  This consisted of the following: did not meet expectations, met expectations and exceeded expectations.  We shall also break this out by category.  I have laid out the following categories: 1) Financial Results 2) Vision 3) Talent Acquisition and Loss 4) Company Enthusiasm  5) Leadership.

One thing we have to give Steve credit for is he saw a company that was growing in terms of its financial results and number of employees.  Very early in his tenure he bought into the business models created by than business guru and GE CEO, Jack Welch.  Though I cannot agree to a lot of what Jack was a proponent of, it did enable Steve to create a business machine.  It created structure where there was little.  He took Microsoft’s software licensing machine to new heights. Over the course of his tenure the numbers were always on Steve’s side.  As he looked to make a more efficient company.  During Steve’s tenure revenues increased from $20 billion to over  $70 billion. I once had a sales manager tell me that in sales it is quite simple and brutal, “you are what your numbers say you are”.  For Steve one can only say he was brilliant in this regard.  Review Score: Exceeded Expectations

A key component of any companies survival is vision.  A company must envision where it will be in ten yours and how it will get there.  In technology this is even more important as companies must continually innovate to stay alive.  One minute you’re in, the next your out (kudos to Heidi Klum for this quote) Steve had a vision of where the company would be and how it would get there.  The problem was it was generally the wrong vision.  His vision usually started with and ended with Windows and Office.  Even a month before he stepped down he was saying to Microsoft employees, “this is a Windows company”.  The problem was he was not seeing that it was rapidly becoming a non-Windows world.  He failed to see and understand the consumerization of technology.  When the iPhone launched he did not recognize what had happened.  How the industry floor had shifted from under him,   Steve often said he loved Microsoft.  He bled Microsoft.  He had been with the company for over 33 years.  The problem was that products that created Microsoft’s success, were products he could not see beyond.  The numbers backup up the decision, but at the cost of the future for the present.  Review Score: Did not meet Expectations

In the technology industry your technology giants usually have a lot of rock star talent behind their CEO.  This was certainly true of Microsoft during the Bill Gates era.  There were some great developers and visionaries in the ranks.  At Microsoft you had people like Nathan Myrvold, Ray Ozzie, Paul Maritz, Bob Muglia, Charles Simonyi, J Allard, Brad Silverberg, etc..all the aforementioned are gone.  There have been few if any replacements.  The big reason is Steve wanted immediate action and valued business leaders more than technology leaders.  There was really only one visionary that Steve trusted and tha was Bill Gates.  When Bill left he left a large void that was never filled.  It largely, I believe, came down to an issue of trust.  Even when Bill left, putting Ray Ozzie in charge of driving the technology vision, Steve did not seem to want to listen.  In the end all the talent at the top had pretty much all left, leaving it all to Steve.  In order to steer a ship you need to know where you are going, this was never quite clear with Steve at the helm  Review Score: Did not meet Expectations

There was Steve’s enthusiasm for the company and then the employees enthusiasm for the company.  If it were Steve’s enthusiasm alone that was being reviewed the rating would be off the charts.  When Steve said, “I love this company”, it was with unbridled passion.  He really cared. One of the negative things that happened during hos tenure was the creation of a review system based on the Jack Welch model implemented at GE.  It was designed to foster competition in the employee ranks, but it did so at the cost of innovation.  Without going into details it fostered a system if trying to gain political advantage and in the end soured many employees on the company, which was disheartening.  Steve tried mightily to keep employees in his world of “Microsoft love”, but in the end a key part of the Microsoft culture was lost.  Like on Capitol Hill politics breeds its own kind of poison,  In my first 12 years at Microsoft, everyone loved the company.  As the years moved on and exciting technologies came from outside the company the love of Microsoft seemed to float out with it. Review Score: Did not meet Expectations

Leadership as is often said is not something you  are born into, but the events that surround you create the leader.  When Steve was appointed CEO by Bill it seemed the natural course.  He had been Bill’s number two for a long time.  The fact that he was named CEO to replace Bill was not a big surprise (Bill stepping down, however, was a big surprise).  Early on Steve did some important things.  The DOJ trial was behind Microsoft, but there was housekeeping that needed to be done.  He settled with Sun Microsystems.  He realized the company had grown and was no longer a startup anymore.  It needed to put in place policies and systems befitting a Fortune 500 company.  Where Steve veered and went wrong was forgetting what had made the company great and staying on too long as CEO.  If he had stepped down in 2010 I think he could have had a positive legacy.  Perhaps it was the fact that the country was still recovering from the worst economic crisis on history.  But more likely it was the fact that Steve could not see anyone but him running the company.  Finally the fanatical passion of Microsoft employees seemed to weaken a great deal.  Partly it was just an aging work force, partly because the technical visionaries were gone.Primarily the Microsoft culture had changed.  In the end I thought Steve’s leadership was either half empty or half full, depending on how you look at it.  In my mind it puts him in the middle.  Review: Met Expectations

Microsoft is now forging ahead under the guidance of Satya Nadella and it is still early going.  In truth a large legacy has been left behind and it will take time to sort out what will be kept and what will not.  We have years (I hope) before I write about the legacy of Satya Nadella.  For Steve’s sake I hope that is ten years from now otherwise if Satya were to set with the sun much earlier the blame will likely go to what he inherited not what he created.  For Steve post Microsoft he is already doing some exciting things.  I was happy he resigned from the Microsoft Board of Directors.  I never felt it wise to have your former boss on the Board especially of he started scrutinizing decisions Satya was making. This will give Satya more freedom at a time when he desperately needs that freedom. Finally Steve has thrown himself into professional sports as he went out and paid too much for the LA Clippers.  However in getting rid of Donald Sterling I think we can all agree it was money well spent. Steve was always driven by passion, he is an emotional leader.  I think he will succeed, but as for Microsoft that time has passed for Steve and he left with a lot of battle scars.  I am afraid history will not be kind.  Just like when I started at Microsoft and business schools joked about how IBM did not see the industry direction, time has passed and now Microsoft will be similarly remembered as having its IBM moment, all under Steve’s leadership.

Good Night and Good Luck,

Hans Henrik Hoffmann October 3, 2014

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