Steve Ballmer and Bill Gates at the 2006 news conference announcing Gates' retirement plans. Robert Sorbo/Microsoft

Commentary: With his booming voice and boundless optimism, Microsoft CEO Steve Ballmer is the technology industry’s version of a head coach. But these days he’s trying to run his team without a star quarterback.

The perennial push to oust Ballmer is back. I understand why shareholders want him gone, and why Ballmer thinks he deserves to stay, as he made clear at a Seattle event yesterday.

But as long as we’re all going down this path again, there’s actually a larger issue to address: Microsoft no longer has an overarching technology leader next to the CEO at the top of the company – someone with a strong engineering background and technical vision, surveying the field and calling the plays.

There will never be another Bill Gates. But there should be someone in his former role as chief software architect, if not in title, then at least in effect.

Ray Ozzie was supposed to be the one. When Gates announced plans to leave the company five years ago, Ozzie stepped in to replace him in that role, with “all technical architecture and product oversight responsibilities.” For whatever reason it never really worked out.

Ozzie left at the end of last year, and rather than replacing him, Ballmer decided to shutter the office of chief software architect, relying instead on a patchwork of technical leaders in the company’s divisions.

It’s an experienced group. Craig Mundie, chief research and strategy officer, oversees the long-term vision (as in years out). There’s Don Mattrick in video games; Steven Sinofsky in Windows; Qi Lu in online services; Kurt DelBene in Microsoft Office; Satya Nadella in servers and cloud computing. Not to mention other technical leaders such as Scott Guthrie in developer tools and Jon DeVaan in Windows engineering. And a large roster of technical fellows.

The list goes on. And that’s part of the problem. The company would be stronger with one technical leader at the top.

Who should fill this role? Admittedly, that’s a tough one. Ozzie seemed to make sense at the time. Consumer technology guru J Allard might have been a logical candidate before his departure. Same with outgoing server chief Bob Muglia. Maybe it should be one of the divisional leaders from the list above, or someone from outside.

Maybe the person doesn’t exist, except for Bill Gates — who remains Microsoft’s chairman but made it clear that he’s not coming back full time. And to be clear, even Gates was far from perfect in the role. Windows Vista happened on his watch, as did the company’s fall from grace in mobile phones, and its initial decision not to directly challenge a little search company called Google.

Ballmer at Microsoft's Worldwide Partner Conference last year. (Microsoft photo)

But if Microsoft can find the right person, he or she would run product review meetings with a critical eye, shape a cohesive technical strategy across the company and make sure Microsoft’s divisions don’t step on each other’s toes or work at cross-purposes. Someone who can not only foresee technology trends but also know when to capitalize on them, and when to wait.

This would also be a person with deep credibility in the tech industry and the broader world. One of the greatest spectacles during the Gates Era at Microsoft was the crowd of Wall Street types who would surround him during the company’s annual meeting with analysts — a circle of people, ten deep or more, leaning in for any scrap of insight they could glean. Some of Microsoft’s divisional leaders can walk around the same meeting without being stopped.

An argument could be made that this new technical leader should actually replace Ballmer as CEO, not stand beside him. That may be the case, and the naming of this person would no doubt play into Microsoft’s CEO succession planning.

But in the short term, a wholesale ouster of Ballmer seems unlikely, barring something dramatic and unexpected inside the Microsoft board. The concept of giving the company a top technical leader might be something more pragmatic for shareholders grab onto and advocate if they’re interested in bringing about meaningful change.

As Microsoft’s CEO, Ballmer is no mere cheerleader. He has years of experience running the business. And despite his public persona, he’s highly analytical. During my first interview with him, in July 2003, I remember being surprised when he took to the white board like a college math professor to explain, with great precision, why he had decided to shift the company away from employee stock options.

This was not the caricature I had been expecting.

Ballmer knows how to sell and market technology. He listens to the company’s customers. And despite Microsoft’s stagnant stock during his tenure, the company has grown a series of new billion-dollar businesses on his watch. And at least as viewed from the outside, Microsoft has gotten better at integrating technologies across product groups, as evidenced by the incorporation of Bing into Windows Phone and the upcoming revamp of the Xbox Live media interface.

But as evidenced by his dismissive comments about the original iPhone and Android launches, Ballmer isn’t someone with an innate sense for where technology is going.

A few years later, the Apple and Google devices have redefined the way we use our phones, and reshaped the mobile market, forcing Microsoft to try to catch up. And now Android and iOS are powering machines that are chipping away at Microsoft’s flagship Windows business.

In the end, this is where those shareholders calling for Ballmer’s head may ultimately win their argument, at least in principle, if not in effect. Ballmer’s shortcoming isn’t as much his day-to-day oversight of the business, as it is the fact that he hasn’t put a technical wizard by his side at the top.

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Comments

  • masimons

    How about using a “correct” title. Gates has been out for years.

    • http://www.facebook.com/profile.php?id=690555753 Anonymous

      It’s still “correct.” Nobody “really” replaced what Bill Gates “did” for MSFT. It’s a “nuance”, but still “accurate”

    • Anonymous

      Thanks for the comment. Hopefully the meaning of the headline will become clear if you give the piece a closer read. Gates retired from day-to-day duties in 2008 and I’m suggesting that Microsoft needs to find someone to at least attempt to fill the role he once did.

      • http://twitter.com/pceasy PC Easy

        It was rather clear within the first paragraph of reading it.

    • Anonymous

      Thanks for the comment. Hopefully the meaning of the headline will become clear if you give the piece a closer read. Gates retired from day-to-day duties in 2008 and I’m suggesting that Microsoft needs to find someone to at least attempt to fill the role he once did.

    • Anonymous

      Thanks for the comment. Hopefully the meaning of the headline will become clear if you give the piece a closer read. Gates retired from day-to-day duties in 2008 and I’m suggesting that Microsoft needs to find someone to at least attempt to fill the role he once did.

  • http://www.LiveSide.net Kip Kniskern – LiveSide.net

    In watching Stephen Elop’s “leaked” presentation on Sea Ray, Nokia’s first Windows Phone to be, I started thinking about the front runner to either take over for Ballmer (or as you suggest, to lead beside him), Steven Sinofsky.  Does MSFT really need a technologist at the top as much as they need a visionary?  

    What Microsoft needs is someone who lives and breathes the consumer market, who grasps where that market is heading, makes bold acquisitions and fits the pieces together, and can draw battle lines in time to make it a fair fight in sectors where the next big thing is just emerging, or has yet to emerge.  These aren’t technology skills, and Sinofsky is an engineer, not a top negotiator or talent evaluator.  I was rooting for Ray Ozzie to be the guy, too, but plain and simple, he wasn’t.  If Stephen Elop pulls off the Nokia miracle with Windows Phone, he could be a very compelling choice.

    • Anonymous

      Good thoughts, Kip. The tough part about this is that there’s no obvious choice. I don’t know if Sinofsky has the desire for an overarching position at the company, just based on some of the signals I’ve picked up … but I could be completely wrong there. I do think Allard could have fit into the role pretty easily.
       

      • Bentsn

        My guess is that Ray Ozzie simply was not able to stand up to Steve Ballmer. This is going to be a problem for anyone taking over for Bill Gates as long as Ballmer is still there.

  • http://twitter.com/SVB_Financial SVB_Financial

    gfgfdgfgfd

  • Camanopenny

    What a service Bill Gates would do for k-12 education if he went back to what he knows best! 

  • GeekWire Fan

    The problem is, you can’t find a new Bill Gates as long as Steve Ballmer is the CEO. Along with names you mentioned, Eric Rudder is a senior VP reporting to Ballmer who was Bill Gates technical assistant for over 4 years ran the server/tools division for several years, and could replace BillG if it wasn’t for Ballmer as CEO. BillG didn’t have the same impact in his final years at Microsoft, he wasn’t the CEO. So while this may be the first time I’ve disagreed with a Todd Bishop post, I have to counter to this one saying that a new post is needed called: Microsoft can’t replace Gates without replacing Ballmer.

    • Anonymous

      Good point, thanks for the comment. But if this is the first time you’ve disagreed with something I’ve written, I have some serious questions about your judgment. ;) 

      • GeekWire Fan

        Great counter point. Now I’m hoping at least a few people read this wonder if it’s actually you replying to your own post anonymously just to make yourself look even more objective than you already are. :)

      • Another GW fan

        I am somewhat with GeekWire Fan. You cannot just replace Gates. The dynamics will be different than it was when Gates was at the top. Also I will add that such a replacement must be willing to be the Alpha dog. Ozzie was smart enough for the role, but he didn’t have the Alpha dog personality, that is willing and able to successfully rip any lesser dog in the pack. I also agree that Gates’ impact in the latter year was not as it was in the earlier years. The company’s business is just too broad to be at the top for everything, even for someone as brilliant as Gates. 

        Ballmer does deserve credit for being a savvy businessman that knows how to optimize, optimize, optimize the organization to squeeze every last bit of fat out of the org. He also still has a talented team there, but he has no skill to arbitrate between the lesser dogs of the pack to A) keep them from fighting with each other, B) discern who to listen to and who to shut up, and C) understand that he MUST invest in some risky, sketchy things because no one, not Ballmer, not Gates, not Jobs, not the Google boys, or anyone gets it right 100% of the time. And since you can’t always be right, you must be agile, a characteristic that Microsoft has lost over the years. 

        People like Allard could have been Ballmer’s Seal team that goes in and makes trouble for Google and Apple. That’s what the company used to do for Lotus and WordPerfect. But these days it is Google that is investing in ways to disrupt Microsoft’s core business. Microsoft has so far been ineffective at the reserve. So Google has everything to gain. And now you can see they are turning from Microsoft to Apple and Facebook as well. 

  • Victor

    I think the problem isn’t so much about finding a replacement for Ballmer. The justice department gave a chance for Microsoft to split itself up a decade ago, and Microsoft management should have taken the cue and done the right thing for shareholder, which is to split the company into several different pieces. If you look around in the tech landscape, companies with a clear mandate and identity are doing well. No one will confuse Apple with an enterprise company, nor will anyone confuse IBM as a consumer play. It is companies like HP and Microsoft that are trying to serve too many masters that are struggling to convey a cohesive message to their customers. If Microsoft can be split into several different businesses, the incentives of the management and employees will be made far more clear, and I suspect shareholders will richly reward them for it. No one questioned whether Ballmer is a good manager, but he clearly has been a dud when it comes to the bigger picture. 

    But I doubt very much the senior management there will have the courage to go as far to split the company up unless institutional shareholders get a lot more vocal. The other scenario could be for the management to simply take the company private and not take on any more abuse from people like me. On paper the stock is about as cheap as it gets.

  • http://blog.findwell.com Kevin Lisota

    Any talk of replacing Ballmer cannot underestimate his “passion
    and enthusiasm.” Anyone who has seen him in action at MGX (the company sales
    meeting) or the annual company meeting knows that there is a crazy energy that
    he brings that would be hard, if not impossible, to replace. Granted enthusiasm
    != performance, but I would contend that replacing him with a boring hired hand
    who has proven results leading a big company could be even more detrimental.
    Any leadership at the company needs to have an extremely forceful personality to
    succeed, and the company has relentlessly chewed through the “nice guy” execs
    brought in from other companies.

    Whether Gates can be replaced is a harder question. His
    product reviews used to be something that was feared. He could force menu and
    UI changes at the minute level, and his technical assistants would ride the
    teams to make sure he was being listened to. That cohesion has obviously
    diminished, partly because he left, but mostly because the product and customer
    diversity is so large and complex that it is difficult to keep everyone moving
    in the same direction. I wonder who, if anyone, is feared and respected in
    product reviews these days, or if the fiefdoms just operate on their own. Apple
    clearly still has this sort of focus with Jobs’ obsessive tendencies, but Apple’s
    business is WAY simpler than MSFT.

    You could actually see it with the Tablet project, where
    even’s Bill’s passion didn’t carry the day. Clearly Bill was right about the
    form factor, and he was probably the only reason that the company pursued it.
    Ultimately it failed because the big bet wasn’t made. Engineering decisions
    favored the technologies that brought billions in the door, and innovations
    with limited market appeal at the time were relegated to “add-on” status. It
    was common to see large groups of employees carrying tablets, yet everyone simply
    used them in laptop mode.

    A single head of technology may be difficult to muster
    with such a complex product mix. Maybe one for consumer and one for enterprise?
    Even that gets into thorny questions for products like Windows that span both
    realms.

  • Guest

    The stock hasn’t been stagant during his tenure. It has declined by 50%.

    • Anonymous

      It was coming down from the IT bubble, like the entire Nasdaq market. Under Ballmer’s tenure as CEO, the Microsoft share price has remained broadly in line with the Nasdaq. This means that, by a measure that can be interpreted in a meaningful way, it’s been stagnant.

      The absolute share price movement (a decline, as you note) can’t really be interpreted in any meaningful way, because there are too many unobserved variables. Many of these variables affect the software industry, the broader IT sector and the overall economy too, so comparing share price developments with developments of these broader measures washes away their effects. This gives simpler measures that can be meaningfully interpreted.

      • Justthefacts

        MS’s share price has trailed the Nasdaq quite badly since Ballmer took over. And that despite MS spending more than $100B on buybacks.

    • Joe the coder

      But it has declined with the rest of the market.  stagnant is a perfect description.  What I don’t understand is why he hasn’t push up the dividend.  The MS machine is still kicking off tons of cash though a lot of it is overseas and subject to huge taxes if repatriated.

      • Guest

        Because he wants to blow that money on various failed pet projects instead.

  • Guest

    “Ballmer’s shortcoming isn’t as much his day-to-day oversight of the business, as it is the fact that he hasn’t put a technical wizard by his side at the top.”

    Part of day to day oversight is correctly anticipating new trends, competitors, and positioning the company to win in the future. As you point out, he absolutely sucks at the second. I’d argue he’s been terrible at the first as well (remember how long he tried to pretend the cloud wasn’t the future?). And as a result of both those, he’s failed at positioning the company well for the future.

  • XslsD

    Both Gates and Ballmer should go. Quick.

    We don’t doubt Ballmer’s day-to-day management. But he’s no visionary. He consistently fails to predict the technology future. Gates is just as bad, and unfortunately, Gates is responsible for keeping Ballmer in the job. So shareholders can’t oust Ballmer while Gates is still there.

    The failure of Windows Mobile should have been more than enough reason for Ballmer to get the heave-ho. But then he developed and axed its replacement, Windows Mobile 7, before it was even released, which itself was replaced with Windows Phone 7 (a different OS), which has now also failed. Don’t even mention Zune, Sidekick and Kin.

    There is no technology company on earth with such a failure list.

  • http://twitter.com/DaQuantumFro DaMarico Fowler

    I think what is needed is both someone like Ballmer who is a good operations officer and a Gates/Allen who can see tech trends and has a vision for the cmpany 

  • Steve Gilbert

    I would be less concerned with finding someone to replace Ballmer or have the capacity to become the alpha dog, rather I would suggest someone who could provide the insight, inspiration, motivation AND be able to package them in a way that Ballmer and the executive leadership team can grasp as the direction to take would be the right fit.  Otherwise, find a way of cloning Steve Jobs and indoctrinate the clone into the MS way to take over both functions.

    • Been there…

      A few things here:
      1. Microsoft greatest success did not come from Ballmer. When Word and Excel triumphed over Lotus and WordPerfect, Steve was managing early Windows and the IBM relationship post DOS (the latter almost destroyed the company because Ballmer “tenaciously” clung to the belief that the company could not succeed without that relationship. Only Gates finally persuaded him to finally give up. Sound familiar?

      2. No one in the industry has gotten things 100% correct, not even Jobs.

      3. Read any bio on Jobs and you will find he did inspire and lead by sheer charisma or leadership. He succeeded in part by being Alpha dog, and being in people’s faces. Gates was the same in the early glory days.

      4. Even if you cloned Jobs hewould be unlikely to succeed at Microsoft. The cultures are too different. Further execs at MS are no longer motivated by having the company succeed…as the stock has been in the toilet so the have learned that the only reward is greater domains of power. So they challenge each other’s manhood. This combined with Ballmer’s shoot from the hip and if you miss just reload and try a different aim leads to frequent re-orgs. How do catch the competition when your manager and strategy change every other month.

      • Guest

        MS has no strategy other than to respond to Apple, or Google, or Salesforce. Strategy is probably Ballmer’s #1 weakness.

  • Anonymous

    I disagree. Microsoft are still good at doing what they were good at doing when Gates was in charge: engineering and selling to business customers. Microsoft have stumbled in the consumer market, but they were never particularly good at it under Gates either (consumer Windows was driven by business adoption of Dos/Windows PCs). Indeed, were there any Microsoft consumer products as successful as Xbox 360 and Kinect on Gates’s watch?

    What Microsoft need is a ‘consumer supremo’ to run all of the consumer businesses, and with real power delegated from Ballmer. Ballmer may not want to give up any power, and understandably so since he’s held accountable for Microsoft’s overall performance, but neither he nor Gates is an expert at selling to consumers in the way that Steve Jobs, for example, is (and neither was Ozzie).

    It takes a mathematical/engineering mind of the sort Gates and Ballmer obviously have to design and sell business products. In contrast to business customers who are motivated by profit maximisation, appealing to consumers is more of an art than a science. What Ballmer needs a good manager with an artistic mind to head all of Microsoft’s consumer efforts. Who could it be?

    • GW Fan

      Losing on the consumer side is starting to affect the enterprise side of the business. If you read in the press you can see that iPads are invading the corporate world while Steve & Co only show demos of what next Windows will look like, and while Google ramps up Android for tablets. Here the company will be late again. And data shows the increasing popularity of iPhones and iPads are having a beneficial affects on Mac sales as well…maybe not stealing any major thunder yet, but eroding things nonetheless. Google’s Chrome initiative also doesn’t rob yet, but is causing enterprises to consider that there may be alternatives. On the small business side, you only have to read about the MS BPOS outages to see that they are losing fans there also. And Office 365 still more expensive than Google Apps? Come on Steve, get aggressive there. Underprice them. You can afford it. Don’t let them steal one customer. 

      I do agree that Ballmer could use a good consumer guy, but don’t expect that to happen. He had a good guy in Allard, but killed the project that most could have put the company in a stronger position than Apple on tablets. Also talk to anyone that worked directly for Ballmer and they will tell you that that guy can’t avoid micro-managing them. He pummels his directs with new ideas daily. To succeed Steve needs to first find that person and then delegate. Both seem unlikely. 

      The bottom line is that Ballmer is a conservative spender. He likes squeezes pennies, not make risky investments. He pretty much reaffirmed that at his recent presentation in Seattle. He only cares to continue to shore up the company’s core businesses. He is less likely to invest in a foray that flanks his competition. But that’s what the competition is doing, striking from the flanks into areas that go beyond their core businesses, meaning that any ground they get is a bonus. 

      Again Steve said it himself. It’s Windows, Windows, Windows. Even Office is only of interest in that it reinforces the position of Windows. Courier had to be killed because it was NOT Windows. Xbox is a miracle. I don’t know how they got that one by him, but good they did. 

      • Guest

        “The bottom line is that Ballmer is a conservative spender. He likes squeezes pennies, not make risky investments.”

        You’re kidding, right? Ballmer has spent and lost tens of billions on everything from Xbox to Search. His problem isn’t a failure to take risks. It’s to have them pay off. Had the mobile or tablet bets succeeded, the flanking of competitors would have been achieved by default.  

  • Anonymous

    There is no real way to replace Gates.   Ballmer and Gates had a unique symbiotic relationship built on differing skills, perspectives and perhaps more importantly years of trust.  Is Ballmer really able to trust anyone in that way?   

  • http://www.windowslivehelpnow.com/ windows live help

    The stock hasn’t been stagant during his tenure. It has declined by 50%.

  • Anonymous

    I disagree with the premise of this article. One architect to “rule them all” can’t work across a company as diverse as Microsoft. You need at least 2 visionaries – one for consumer and the other for business.

  • Alex

    It is not accurate to describe Bill Gates as a technologist. Bill Gates was the brain of Microsoft. Ballmer is a simple middle management cheerleader who can never lead a company of Microsoft complexity. Andreesen Horrowitz has awesome blog post on this topic http://bhorowitz.com/2010/12/16/ones-and-twos/
     

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