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Replacing Steve Ballmer won't fix Microsoft

Column Dysfunctional corporate culture needs total overhaul
Fri Aug 30 2013, 15:37

REPLACING STEVE BALLMER won't fix Microsoft, and given the firm's recent history and present situation, it's not inconceivable that the uncertainty and turmoil that result will only further demoralise and disrupt it, thereby hastening its downward trajectory.

Right up until a week ago, Microsoft CEO Steve Ballmer had planned to remain in charge of Bill Gates' software company for five more years until 2018. That changed last Friday when Ballmer suddenly announced that he will retire within a year. Ballmer's announcement of his retirement stunned the IT industry, not least because six weeks earlier the current chief had outlined a sweeping reorganisation of Microsoft that surely will take months to implement and might take years to deliver visible results.

Wall Street apparently viewed that sudden surprise development favorably, however, as Microsoft's share price immediately leapt, and rose more than five percent on the news.

It certainly looks like this surprising sequence of events can't have been planned all along, as most firms don't announce wholesale reorganisations that will necessarily take place while they search for a CEO to envision their new organisational structure and how they will make the transition as quickly as possible while avoiding too much disruption.

Instead, major corporations tend to plan such transitions carefully, step by step, usually choosing a new CEO first and then charging that chief executive with articulating his or her vision for the future and presiding over its rollout throughout the entire corporation, exactly the reverse of the sequence that Microsoft rather incomprehensibly chose - or perhaps more likely stumbled into.

It's possible, therefore, that chairman Bill Gates, the Microsoft board of directors and maybe some major stockholders let Ballmer draw out his master plan for reorganising Microsoft, looked it over and discussed it in detail, then reluctantly concluded that his vision was inadequate, or perhaps just fuzzy and ill formed.

Furthermore, they might have decided that Ballmer is not the charismatic, visionary CEO that the company needs at this point to dream up its next product lines, the new organisational structure that will realise them, and a thorough revolution of the company's corporate culture and internal processes. Maybe Steve Ballmer took his best swing, but missed.

That's the only scenario that I can imagine that makes sense for this recent sequence of events at Microsoft. Either that or the company is further out of control than I ever thought. However, just replacing Steve Ballmer won't fix what's wrong with Microsoft.

In his article for the New Yorker magazine on the back of Ballmer's departure announcement, Nicholas Thompson helpfully linked a brief video reminder that Ballmer has at times lacked the gravitas often possessed by the successful CEOs of major corporations, but he also linked a devastatingly insightful article by Kurt Eichenwald that appeared at Vanity Fair a year ago. There, he laid out the underlying reason for Microsoft's failure to execute successfully throughout the past decade. In short, the company has developed a vicious, dysfunctional corporate culture, based on ranking staff against each other and creating internal competition, rather than competition with other companies.

I don't expect that Microsoft will learn anything from that article. After all, that was published last August, and there's no sign that the company has noticed it. Nor do I anticipate that Microsoft will ever change. But if it doesn't change, it's certainly doomed, whoever succeeds Ballmer. µ


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