Steve Ballmer's eternal quest to rescue Microsoft
19 Jul 2013
The Sydney Morning Herald
By Abz Sharma and David Grant
"Are Steve Ballmer's latest efforts to turn around the fortune of Microsoft too little, too late?" ask Professor David Grant, Co-Dean of the University of Sydney Business School, and Abz Sharma, PhD candidate.
Steve Ballmer's latest reorganisation of Microsoft suggests he is no closer to turning around the company's ailing fortunes than he was 12 months ago. In fact, the "One Microsoft" announcement appears to all but confirm that an ossified and dysfunctional organisational culture has beset the company's recent performances. For many observers, it begs the question: is Steve Ballmer the right person to lead this revival?
After nearly 13 years as CEO, Ballmer seems to have little to show for his tumultuous tenure. Consecrated by Bill Gates as his successor in 2000, Ballmer inherited Microsoft at the peak of its powers. Such was the dominance and success of Windows at the time that it would go on to be accused of antitrust and anti-competitive practices in the US and European Union, respectively.
The delayed launch and commercial failure of Windows Vista in 2007 is arguably the most significant blunder during Ballmer's tenure, but there have been other expensive missteps. There was the $US8.5 billion ($9.25 billion) overpriced acquisition of Skype. Then the troubled $US5 billion ($5.4 billion) alliance with Nokia. Don't forget the $US6.3 billion ($6.8 billion) write-down for online advertising firm aQuantive. And finally, the $US2 billion ($2.1 billion) investment pledge for the now-failed bid to take Dell private.
In 2012, Forbes described Steve Ballmer as "the worst CEO of a large publicly traded American company". Many agree that this ignominious title is well deserved. The negative coverage has taken a toll.
In March, a Glassdoor survey found only 47 per cent of current Microsoft employees approved of Ballmer's performance as CEO (up from 29 per cent in 2011). In the past 12 to 18 months, there has also been growing dismay among industry pundits, analysts and shareholders with Ballmer and his caravanserai of calamity. These critics believe Microsoft has lost its vision under Ballmer because he is not a visionary by temperament.
Yet Ballmer cannot be faulted for lacking effort. His "One Microsoft" shake-up of the company delivers several immediate and long-overdue changes to work patterns at the Redmond headquarters. And it signals further significant measures are on the way.
Headlining the July 11 announcement was the switch from a divisional to a flatter, more functional organisational structure. Put simply, the message was that Microsoft's push to become a "devices and services" company would only succeed if it worked together.
Indeed, in a meandering 2700-word "memo" to employees, Ballmer wrote that Microsoft needed to focus on improving three things: internal communication, teamwork and collaboration, and making high-quality decisions more quickly.
Notwithstanding the contradictions and unanswered questions associated with this latest intervention, Ballmer may yet triumph.
Microsoft's Build developer conference in June gave some cause for optimism. The coming Windows 8.1 release delivers useability improvements, tightly integrating the company's suite of desktop and cloud-based software and services. All told, Microsoft's "devices and services" strategy has seen several new products launched in the past 12 months, including Windows 8, Surface RT and Pro, Office 2013 and 365, and Xbox One.
Despite this progress, Ballmer's strategy includes some curious decisions. For example, why does the Surface tablet operate on two different hardware architectures? Why doesn't Microsoft manufacture its own branded smartphone this year? And why does the Surface tablet operate on two different hardware architectures (baffling both consumers and developers)?
It is then perhaps unsurprising that Microsoft's latest quarterly earnings figures include a $US900 million ($980 million) write-down for unsold Surface inventory. This follows the recent announcement of heavy price cuts on the Surface RT ($180) line. For a company wishing to be in the tablet hardware business, these developments are unlikely to inspire confidence.
Then there is the absence of fully fledged and standalone versions of Microsoft Office for Google Android and Apple's iOS platforms, which analysts say will account for nearly 2 billion mobile devices by year's end.
With traditional PC shipments falling a further 11 per cent last quarter, it is difficult to fathom why Ballmer and Microsoft continue to ignore this major revenue growth opportunity.
With chairman Bill Gates' and the board's endorsement, Ballmer's position appears safe for now.
Moreover, without a presumptive heir, the calculus remains complicated for critics and advocates of leadership change. Were Ballmer to leave, the search for a successor could take several months and leave an incoming CEO with little room to manoeuvre away from Microsoft's present strategy.
If Ballmer's "One Microsoft" reorganisation is to live up to its headline as a truly major and meaningful organisational change program, it will almost certainly require greater patience from the company's stakeholders and well-wishers - including a preparedness, from within and without, that things may well get worse before they get better.
In Greek mythology, Hades punishes the king of Corinth, Sisyphus, by making him have to roll a heavy boulder up a mountain for eternity. Each time Sisyphus approaches the top, the stone escapes his grasp and rolls to the bottom, and he begins his futile labours again.
Steve Ballmer might be regarded as a modern-day Sisyphus. With each dispiriting roll back down to the bottom, he has shown that he is prepared to push the huge Microsoft boulder back up hill.
Commenting on the legend of Sisyphus, the philosopher Albert Camus remarked that an eternity of futile labour is a hideous punishment.
Were Ballmer to be replaced, his successor might well have to accept a similar fate.
Abz Sharma (@AbzSharma) is a PhD candidate at the University of Sydney Business School. His doctoral research focuses on charismatic leadership. David Grant is co-dean and professor of organisational studies at the University of Sydney Business School. He teaches leadership on the University of Sydney Executive MBA.
First published in The Sydney Morning Herald
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