Category: How not to do it

Microsoft announces Steve Ballmer’s retirement

So, Microsoft has announced Steve Ballmer’s retirement as CEO—presumably effective from whenever the company can find someone competent that Ballmer has not driven out.

Here’s the hitch though: Ballmer has chased all potential successors out of the company — Ray Ozzie, Robbie Bach, J Allard, and most recently, Steven Sinofsky.

Just about everyone in the tech scene reckons that Ballmer was, in fact, fired—and not before time.

As someone who has always loathed Windows as a horrible piece of software (or, if you prefer, ‘as a Mac fan-boi’) I am, of course, very sad to see Ballmer go. The man’s inability to understand how to penetrate the important new markets has not only brought the destruction of Microsoft exponentially closer, but his total lack of vision and ridiculous pronouncements have also destroyed the company’s technical credibility.

The wider problem for Microsoft is that Ballmer had just initiated his (extremely risky) One Microsoft re-structuring and the decision to get rid of Monkey Boy now explains why he has remained at the helm for so long and through so many disastrous product launches, e.g. Zune, Vista, Windows 8, the Surface Tablet, Windows Mobile, Windows Phone, etc. And that reason is, quite simply, that Microsoft’s board have no more clue than Ballmer about how to save the company: it has taken them this long to work out that Ballmer was never going to be their saviour.

Indeed, not only does the board seem to be at sea, but—as Guy English points out—they don’t seem to understand that this moment is, in fact, the worst possible point to fire the idiot.

Ballmer writes in his farewell memo:

There is never a perfect time for this type of transition, but now is the right time.

No. It’s not.

They’ve just completely recreated the company in a pattern that’s totally alien to most organizations of their size. Indeed, the current configuration only seems to work for Apple. Which, arguably, grew into it completely organically. The structure of Apple certainly wasn’t created by fiat a month prior to a CEO hitting the bricks.

The only way that today’s news could have been good for Microsoft is to have announced a successor and to have said that the new structure was determined after long discussions with them. The only story that could be positive is that Ballmer and his successor, whoever they are, have worked closely together and now that the structure has changed there’ll be a year of handing over the reigns.

As it stands? Ballmer has completely shaken up the way that Microsoft has always worked. Now they don’t only need to find a new CEO who believes they can lead Microsoft out of the hole they’ve dug themselves but one who believes that the last decision that Steve Ballmer made, a company wide reorganization, is the way they, as the new leadership, want to run the company.

Microsoft is currently searching for a new CEO who’ll fit the straight jacket Steve Ballmer has left behind.

Yes, Microsoft is still making large amounts of money, but it is difficult to escape the fact that Ballmer’s tenure—certainly over the last decade—has been a failure: Marco Arment neatly sums up why.

My favorite part of this news is that this — the massive, probably-terrible internal reorganization — is what seemingly got the board to finally fire Ballmer. It really shows how far Microsoft is up its own ass.

Let the stock stagnate for over a decade? Fine.

Fail to dominate consumer web services, and only get your share by losing billions of dollars for years? That’s OK.

Lose control of online collaboration of Office documents to your biggest rival? Well, maybe the internet will turn out to be a fad.

Miss the entire smartphone revolution, then field what’s still one of the least popular major smartphone platforms? No problem.

Preside over the mass cannibalization of the PC business by tablets, while having effectively zero tablet marketshare? Hey, maybe you can try again next year.

But try to mess around with our divisions? You’re fired.

Anyone who read my last post on Microsoft will realise that the mind-boggling management practices at the company had stifled any chance of innovation long ago—certainly before Ballmer became CEO (although as part of senior management, he bears a heavy burden).

After all of this, however, people will no doubt point out that Ballmer was good at milking the assets that Microsoft already has, and that’s true.

So, perhaps the board should rethink their decision to fire Ballmer and adopt the strategy suggested by Tim Worstall—sweat the remaining assets, return as much money to the shareholders as possible, and then wind up the company.

Microsoft leads the way

On page 4 of this Vanity Fair article (can’t seem to direct link), Kurt Eichenwald outlines how Microsoft leads the way—in this case, the technology giant ably demonstrates how to destroy a culture of innovation within a business in one easy step.

At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor.

“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” said a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”

Supposing Microsoft had managed to hire technology’s top players into a single unit before they made their names elsewhere—Steve Jobs of Apple, Mark Zuckerberg of Facebook, Larry Page of Google, Larry Ellison of Oracle, and Jeff Bezos of Amazon—regardless of performance, under one of the iterations of stack ranking, two of them would have to be rated as below average, with one deemed disastrous.

For that reason, executives said, a lot of Microsoft superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings. And the reviews had real-world consequences: those at the top received bonuses and promotions; those at the bottom usually received no cash or were shown the door.

Wow.

Do go and read the rest: the further revelations about just how utterly insane this idea was—is?—are quite flabbergasting.

In the end, the stack-ranking system crippled the ability to innovate at Microsoft, executives said. “I wanted to build a team of people who would work together and whose only focus would be on making great software,” said Bill Hill, the former manager. “But you can’t do that at Microsoft.”

If you want to know why every “innovation” that has come out of Microsoft in the last decade or so has been an ignominious failure, then you need look no further.