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Microsoft must change its corporate culture not just structure

Analysis Deep changes are needed
Fri Jul 12 2013, 17:25

SOFTWARE GIANT Microsoft's reorganisation might have shuffled the deck chairs but it gave little clue as to who is likely to succeed Steve Ballmer as CEO.

Microsoft has over the past decade had a number of labels attached to it, most of which are not positive. Yet the firm under Ballmer's controversial leadership continues to increase revenue and profits and its share price is trading close to a 10-year high.

Given these facts, it would be surprising if Ballmer made sweeping personnel changes. Rather what he did was reorganise how the firm is compartmentalised to seem, at least from the outside, that the company is proactively working to address areas where its competitors are garnering significant positive press.

Ballmer's decision not to give any signals that one or two employees are being groomed to take over his position was perhaps because the firm has suffered departures of high profile employees in recent years, employees that in some cases were widely seen as Ballmer's heir apparent.

Steven Sinofsky, who led the development of Windows 7 and Windows 8, was widely tipped as Ballmer's successor, but he left soon after Microsoft shipped Windows 8. Given Sinofsky's very public role, it wasn't surprising to see that his departure generated some speculation in the press, due to his reputation for being a difficult person to work with and not least because Windows 8 was poorly received.

More recently, Microsoft Xbox chief Don Mattrick left the firm and eventually will become the CEO of game publisher Zynga, but only after he burnt bridges with gamers and potential customers over the Xbox One. Now Julie Larson-Green, who has been leading the firm's user experience initiatives with Windows and Office, is perhaps the only remaining executive who from the outside seems possibly destined to eventually take Ballmer's seat at the boardroom table.

Ballmer said in his public memo that Microsoft will draw from across the firm's engineering departments to create future products. His words, if actually put into practice, could be the best thing that has happened to Microsoft in decades.

Despite Microsoft's image as a company that has missed the boat on just about everything since the world wide web became popular in the mid-1990s, the firm has strong engineering and research talent. Microsoft Research publishes papers in top academic journals and presents at IT industry conferences around the world, but very rarely does any of its research end up in the company's final products.

When Microsoft's researchers do manage to take their ideas past the firm's managers they result in products such as the Kinect and more recently Bing's voice translation. From a technological standpoint these two examples are worlds apart from the regurgitation exercises that the firm engages in with products such as Windows and Office.

So Ballmer's decision to rearrange the company and trot out fine phrases such as meeting the customers' needs, making the company more agile and incorporating its strengths are all good as a means of pleasing shareholders, and indeed Microsoft's share price rose handsomely after the announcement, but what such a corporate reorganisation doesn't necessarily do is change culture.

Ballmer often doesn't get the credit he deserves. He is often cited as an impressive salesman and in that capacity he has been successful. The problem with Ballmer though is that he doesn't come across as a visionary or a leading technological thinker, a view that has been reinforced by failed catch-up products such as the Zune and Kin, the Surface tablets and to a lesser extent Bing and Windows Phone.

The firm needs to give researchers the chance to see more of their ideas end up as products and that doesn't happen simply because there are new signs on the doors. Eric Rudder, who Ballmer said will "drive our cross-company looks at key new technology trends", must be given the freedom and ability to butt heads with some executives in Microsoft's establishment without working in fear of getting sidelined or pigeonholed.

Microsoft's organisational reshuffle does enough to promote the sense of a firm getting down to the hard work it needs to do to catch up with rivals such as Apple, Google and Sony. What it doesn't do is provide any insight into the soft changes in corporate culture that are needed to ensure that this reorganisation becomes something more than just an administrative exercise. µ


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