Ballmer: The Good, The Indifferent, The Bad and The Analysis

John Kirk / August 29th, 2013

QUESTION: Why is it when birds fly in a “V” shape one side is longer?

The answer will be provided, below.

Part 1 of 2

Microsoft’s Steve Ballmer is going to retire within the next 12 months. There’s a lot of ground to cover, so let’s get to it.

One of the most striking differences between a cat and Steve Ballmer is that a cat has only nine lives.1

1. The Good

1.1 CRAZY, ZANY, BALLMER

The surest way to make a monkey of a man is to quote him. ~ Robert Benchley

images-72Ballmer gets a lot of grief for what he says, what he says it about, what he does and how he looks. He does, admittedly, have an eerie resemblance to Uncle Fester from the Adams Family.

But let’s set all that aside. You’ve got to get off the guy’s back and cut him some slack. The man is high energy and fun. The world would be a lot better place if more people put as much of themselves into their work as he does.

1.2 THE SALES GUY

Besides, Ballmer is the sales guy. Firing up the troops is part of his job. And he does that job exceptionally well.

The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made. ~ Groucho Marx

chartAnd speaking of doing one’s job, the job of the sales guy is to bring in the money. And NOBODY did a better job of bringing in the money than did Steve Ballmer.

Microsoft more than tripled its annual revenue from $22 billion annually when Ballmer took over to $78 billion when he announced his departure. To put that in perspective, while Ballmer was CEO, Microsoft grew revenue by $55B. Dell grew by $31B, Oracle by $27B, Intel by $19B, IBM by $16B. [Source: Aaron Levie (@levie)]

1.3 DOES STEVE BALLMER LOVE MICROSOFT?

Oh yes. With all his heart and all his soul. And I honor him for it.

Steve Ballmer loved Microsoft…just not enough to leave it

“This is an emotional and difficult thing for me to do. I take this step in the best interests of the company I love…” ~ Steve Ballmer

Steve Ballmer loved Microsoft…just not enough to leave it as soon as he should have. And for that, his legacy, and Microsoft, will have to pay a price.

2. The Indifferent

There were things about Steve Ballmer that I didn’t much care for, but they weren’t relevant to his demise. They were merely annoying. In terms of analyzing his tenure at Microsoft, I’m indifferent to them.

2.1 STOCK MARKET REACTION TO RETIREMENT ANNOUNCEMENT

I don’t put all that much stock in the stock market’s knee jerk reactions to events, but I will admit that it’s kind of discouraging that the announcement of Ballmer’s resignation made shares jump as much as 9.4%. That’s good for a cool $28 billion in extra market cap value overnight. Not exactly a ringing endorsement.

Being a CEO is a poor way to make a rich living.

2.2 BUREAUCRACY AND INFIGHTING

So much of what we call management consists in making it difficult for people to work. ~ Peter Drucker

Politicking is endemic in any big company, but Microsoft does seem to epitomize the very worst of this kind of behavior. And Ballmer apparently raised politicking to an art form.

2.3 ORWELLIAN COMMUNICATION STYLE

If I seem unduly clear to you, you must have misunderstood what I said. ~ Alan Greenspan, Federal Reserve chairman

Microsoft has always had a bizarre communication style. To be truthful, it sometimes hurts my head.

Perhaps Bill Gates and Steve Ballmer had the same, inscrutable, English teacher when they attended Harvard together. Perhaps not. In any case, Ballmer has the gentle touch of a blacksmith when it comes to word craft. For example, did you fully understand his recent reorganization tome memo? No?

Neither did anyone else.

Here’s a couple of snippets:

“The evangelism and business development team will drive partners across our integrated strategy and its execution.”

Say whaaaaaa…?

“Our focus on high-value activities—serious fun, meetings, tasks, research, information assurance and IT/Dev workloads—also will get top-level championship.”

Meetings…serious fun…top-level championship…Come again?

“In the new, rapid-turn world, we need to communicate in ways that don’t just exchange information but drive agility, action, ownership and accountability.”

As Curt Woodward so charmingly puts it: “You’ve got to love a passage about communication that makes almost no sense….”

If you’re a glutton for punishment, there’s way more where that came from. Knock yourself out.

There are worse things in life than death. Have you ever spent an evening reading a Steve Ballmer Memo?

Poor communication is not really a fatal flaw, but still, Ballmer’s inability – or unwillingness – to communicate clearly didn’t help him any.

2.4 BOMBAST

Steve Ballmer:

— “Linux is a cancer that attaches itself in an intellectual property sense to everything it touches.”

— “Google’s not a real company. It’s a house of cards.”

“Zeal without knowledge is fire without light.” ~ Thomas Fuller

— “(T)here will be 30 million Windows Phone 7 smartphones sold in 2011.”2

“500 million people will be using Windows 8 (in 2013).”

Underpromise and overdeliver. ~ Thomas Peters

— “There’s no chance that the iPhone is going to get any significant market share. No chance.”

— “(W)e are not going to let any piece of this [go uncontested to Apple].” … We are not leaving any of that to Apple by itself. Not going to happen. Not on our watch.”

The words you speak today should be soft and tender … for tomorrow you may have to eat them.

I think that part of Ballmer’s bombast comes from his sales background. But personally, I could have done with less of it.

Boasting is not courage. – African proverb

2.5 NEVER ACCEPT RESPONSIBILITY

I make mistakes; I’ll be the second to admit it. ~ Jean Kerr

Excerpt from: Ballmer just opened the second envelope:

“Ballmer’s view of executive leadership doesn’t admit standing up and taking responsibility. He can’t say ‘I screwed up’ and then explain what he’ll do to rectify the situation. No. Instead, (Lieutenants) are fingered while they pretend they aren’t being blamed.

When questioned about Apple overtaking Microsoft, Ballmer had this to say: ‘It is a long game. We have good competitors but we too are very good competitors,’ he said. ‘I will make more profit and certainly there is no technology company on the planet that is as profitable as we are.’

When it comes to profits, Ballmer is willing to take credit.”

“A man can fail many times, but he isn’t a failure until he begins to blame somebody else.” ~ John Burroughs

2.6 BALLMER WAS NO VISIONARY BUT THEN, HE WASN’T HIRED TO BE A VISIONARY

People complain that Ballmer wasn’t a software guy, wasn’t a product guy, wasn’t a visionary. But Ballmer wasn’t hired to be a visionary.

You may as well expect pears from an elm. ~ Miguel de Cervantes

Bill Gates had set the course. What the board wanted from Ballmer was a steady hand at the tiller that would follow the course that had been laid in for him and to follow that course with all due speed. And that’s exactly what Ballmer did — in spades.

“If you see Ballmer’s job as being the preservation of MS’s position on the desktop, he’s certainly been a success. Microsoft’s real customers, IT departments, still trust Microsoft and still buy from them, mainly because Microsoft treats them very well. You say Ballmer’s a failure because he hasn’t been “disruptive”? His customers don’t want disruption…. ~ In defense of Ballmer

Ballmer thought he was both the skipper and the pilot

There’s nothing wrong with having a non-visionary at the helm. There are lots of non-visionaries at the helms of large corporations. The trick is to know that you’re not the pilot and to find a pilot (visionary), that you trust, to advise you.

If Ballmer had a failing as a captain, it might have been that he thought he was both the skipper and the pilot.

3. The Bad

3.1 DID BALLMER RESIGN OR WAS HE FIRED?

Two campers named Ballmer and Gates are walking through the woods when a huge bear appears in the clearing about fifty feet away. The bear (which owns a huge block of Microsoft stock) sees the campers and begins heading toward them.

Gates drops his backpack, digs out a pair of sneakers, and frantically begins to put them on. Ballmer says, “What are you doing? Sneakers won’t help you outrun that bear.”

“I don’t need to outrun the bear,” Gates says. “I just need to outrun you.”

Technically, Ballmer may have fallen on his metaphorical sword – but only because the Microsoft board was already ushering him before their metaphorical firing squad.

“I think it’s very likely that Ballmer’s decision [to retire] is part of a broader strategy within Microsoft as expressed by the reorganisation in July that is geared toward shifting the corporate culture.” ~ David Cearley of Gartner

Poppycock.3

The evidence that it was a recent and sudden decision to abandon Ballmer to the bears is overwhelming:

  • Interviews with dozens of people indicate that Ballmer had not aimed to leave this soon.
  • One former senior executive said: “It’s a total shocker.”
  • He was definitely not leaving and then he suddenly was,” said one source.
  • He was at the very beginning of a major corporate restructuring that consolidated power to himself.
  • Ballmer’s July restructuring announcement made it crystal clear that he was there to stay.4 (“It’s why I come to work inspired every day … Because we’re not done. Let’s go.”)
  • He clearly lost the backing of Bill Gates — notice how his farewell letter didn’t thank or even reference Gates?
  • The board gave themselves 12 months – TWELVE MONTHS – to find a successor. They were clearly unprepared.
  • Finally, I find the implied logic contained in the following tweet to be totally persuasive:

Not to be cynical but who decides to retire without “spending a lot of time thinking about what comes next?” Just saying… ~ Lessien (@Lessien)

Diplomacy is the art of saying ‘Nice doggie’ until you can find a rock.5 The Microsoft Board just found themselves a big ol’ rock.

3.2 THE TIMING OF BALLMER’S DEPARTURE IS JUST AWFUL

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. ~ Guy English

The just announced reorganization consolidated power with the CEO. Announcing one’s retirement right after an audacious power grab doesn’t make any sense for either Ballmer or Microsoft.

The timing is painfully awkward. I think that Guy English is spot on when he says:

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

Just a disaster in the making.

3.3 LOST STOCK VALUE

Microsoft PriceDo you really want to know why Ballmer is being left to the bears? Feast on this chart.

On the last day of 1999, the day before he took over as CEO, Microsoft’s market capitalization was $600 billion. On the day before he announced his intention to retire, it was less than $270 billion. ~ John Paczkowski

When Ballmer became CEO, Microsoft had a market value of $604 billion … Now, Microsoft’s market value is $269 billion, less than half of its value when Ballmer came to power. ~ Excite News

For a guy who said that helping Microsoft’s stockholders was a big part of his job, he did one lousy job.

3.4 LOST MONOPOLY

Don’t judge each day by the harvest you reap, but by the seeds you plant. ~ Robert Louis Stevenson

Flat stock market not enough justification to fire Ballmer? How about the loss of Microsoft’s all important computer operating system monopoly?

Screen Shot 2013-07-20 at 9.32.23 pm

Microsoft’s share of connected devices sales (in effect, PCs plus iOS and Android) collapsed from over 90% in 2009 to under a quarter today.

Screen Shot 2013-07-20 at 9.23.57 pm

And Microsoft is nowhere in mobile. And mobile is where all the growth is occurring.

Should we be shocked that Ballmer lasted as long as he did?

Looking at the above two charts, should we be shocked that Ballmer is being pushed out the door or should we be shocked that he lasted as long as he did?

I’m not going to write a long Ballmer blog post. He did some great work, but Microsoft is absent from mobile and mobile is all that matters. ~ Benedict Evans (@BenedictEvans)

Wow. That about says it all. Mobile is everything and (for analysts more discerning than I) dissecting Ballmer’s demise isn’t even worth the effort. It’s the ultimate dis.

3.5 LOST ENTERPRISE

In the first quarter of calendar 2013, iOS accounted for 75 percent of total device activations among enterprise users, Good Technology’s latest Mobility Index Report revealed on Wednesday. The remaining 25 percent were Android devices, while other platforms took less than 1 percent.

Tablets are now so popular among business users that they accounted for 27 percent of total device activations in the workplace in the first quarter. ~ Good Technology

Were you wondering if the Enterprise was going to bail Microsoft out? Stop wondering.

3.6 LOST REVENUE AND PROFIT LEADERSHIP

“There’s no chance that the iPhone is going to get any significant market share. No chance.” ~ Steve Ballmer

Remember how I was saying earlier that no one made money the way Steve Ballmer did? Well, that wasn’t quite accurate. Actually, a single Apple product—the iPhone—now generates more revenue than all of Microsoft put together.6

Yeah.

Give that some time to sink in.

3.7 LOST OPPORTUNITIES

A Windows Mobile Phone, a Zune, a Kin, and a Windows RT Tablet, WALK INTO A BAR and the bartender says, ‘What is this? Some kind of joke?’7

Steve Ballmer missed on search, tablets, phones, MP3 players, the consumerization of IT…the list goes on and on. As Nicholas Thompson of The New Yorker wrote: “Ballmer proved to be the anti-Steve Jobs” in his tenure. “He missed every major trend in technology. His innovations alienated people.”

Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road. ~ Stewart Brand

Next

There’s more birds on that side

QUESTION REDUX: Why is it when birds fly in a “V” shape one side is longer?

ANSWER: There’s more birds on that side.

* * * * *

Sometimes answers are complex. Sometimes they’re dumbfoundingly simple.

Sometimes the questions are complicated and the answers are simple.” ~ Dr Seuss

In Part 2, I’ll explore WHY Steve Ballmer and Microsoft failed. Is it as simple as saying that Steve Ballmer was a bad CEO? Or was his end inevitable and preordained by the Innovator’s Dilemma? Or was it something else entirely?

Discovery consists of seeing what everybody has seen and thinking what nobody has thought. ~ Albert Szent-Györgyi von Nagyrapolt

Join me next time and we’ll thrash it out together.

  1. With my apologies to Mark Twain for stealing and re-purposing his prose. []
  2. Say, what ever happened to Windows Phone 7, anyway? []
  3. Look that word up. I think you’ll be surprised by its origin. []
  4. “Lots of change. But in all of this, many key things remains the same. Our incredible people, our spirit, our commitment, our belief in the transformative power of technology — our Microsoft technology — to make the world a better place for billions of people and millions of businesses around the world. It’s why I come to work inspired every day. It’s why we’ve evolved before, and why we’re evolving now. Because we’re not done. Let’s go.” []
  5. Will Rogers []
  6. Apparently, if you’re a Nobel prize winning economist, the only possible conclusion you can draw from this information is that Apple is in much worse shape than Microsoft. Go figure. []
  7. AN ENGLISHMAN, AN IRISHMAN, A SCOTSMAN, A RABBI, A MINISTER AND A PRIEST WALK INTO A BAR and the bartender says, ‘What is this? Some kind of joke?’ []

John Kirk

John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?
  • Nangka

    “Steve Ballmer loved Microsoft…just not enough to leave it.”

    Great article John, as usual. Thx!

  • jfutral

    2.3.1
    The single biggest problem in communication is the illusion that it has taken place. – George Bernard Shaw

    Joe

  • Defendor

    I cut Ballmer a lot of slack right up until Windows 8/RT. He gets a lot of grief for missing the boat on iPhone, but really most competitors were at a loss against iPhone. That is how disruptions work. Competitors laugh them off at first because they don’t get it. Then they stop laughing and start privately weeping.

    Windows though is Microsoft bread and butter. They pre-announced nearly everything they were doing up to a year in advance. They had strong negative feedback for nearly that whole year, ample opportunity to fix problems that ultimately torpedoed a Billion dollar advertising campaign to launch it. I remember them specifically saying they would have clear marketing message around the confused Windows 8/RT divide to explain it. That never materialized.

    The spent over a Billion dollars on marketing and achieved negative results for their main cash cow.

    Part of it was industry direction change, but significant factor was completely self inflicted, and completely warned in feedback for a year in advance.

    For that he deserves to be shown the door.

    • peter

      I lost faith a bit earlier. The failure of the aQuantive acquisition ($6B write-off), the attempt to buy Yahoo ($44B, where fortunately for Microsoft, Yahoo got greedy) and the acquisition of Skype ($8.5B, why-o-why) were all pretty bad.

      Although I agree that Microsoft seriously fumbled the whole Surface episode; there is less shame in not being able to keep up with the best (Google, Apple and Samsung) in the search and mobile races. However, the $9-10B/year R&D budget seems to be rather excessive compared to the others and unproductive to boot.

    • Lerxst99

      Their problem with W8 and WP8 is that they still think they are (as John Kirk puts it) the steamroller, and that the consumers and developers will adjust and adapt and thus buy and create millions of applications and buy their products in doing so.

      I’m not sure they even today after Ballmer has been shown the door, realise that those days are gone.

  • Peter Buckton

    Very enjoyable read, thanks. 🙂
    Looking forward to part 2.

  • “There’s more birds on that side.”
    Back to grade school, John.
    There ARE more

    There’s more birds on that side.
    There’s more birds on that side.

  • Lerxst99

    I started my career in the IT industry in 1995, just around the time Microsoft became, or would become the 800 pound gorilla.
    Supporting and working with a little OS Steve Ballmer has called a ‘cancer’ on numerous occasions. I witnessed how MS singlehandedly destroyed competing companies and technologies, how they stifled innovation and competition. Their downright amoral business practices; this little example should leave a bad taste in the mouth of even the most die-hard fan today: http://slashdot.org/story/01/08/23/127250/microsoft-fakes-citizen-letters-of-support

    All the time when my colleagues were OKAY with this, because they supported their OS and knew nothing else.

    I notice by the way that the next generation in IT thinks of MS as a underdog and even have sympathies for them today, because they do not know their dark past. They are too young to have experienced it.

    So I have to admit that it is with a certain degree of satisfaction I see how Microsoft struggles today.

    If anything I would hope Ballmer would stay at the helm a few years more, he wasn’t done with damaging Microsoft more.

  • aardman

    The only thing I disagree with in the current orgy to skewer a downed Ballmer, not that the criticism is undeserved or invalid, is that some voices look back at the Gates era as if that was Camelot, and if only Gates decides to ride back on a white horse he could easily fix Microsoft, just like that. No. Microsoft’s missteps originates from Bill Gates’ ‘Windows and Office above all else’ mindset. Ballmer’s downfall really was his failure to get away from that mindset when it was time to do so.

    • Lerxst99

      I agree. Nor Ballmer or Gates have been visionaries of any sort.
      A funny Slashdot comment (I don’t know if it’s true or not) said he saw Gates’ book «The Road Ahead» on sale, with a sticker on the cover that said “Now revised to include wi-fi”.

      • steve_wildstrom

        Since the first known use of Wi-Fi was in 2000 and The Road Ahead was published in 1995, it’s no surprise that he missed it. The big error in the original version of the book is that it almost entirely ignored the internet, something Gates admitted was a serious mistake and which was largely corrected in a 1996 revision.

        The bigger point is that being a complete non-visionary about one thing–the internet–doesn’t mean you weren’t a visionary about something else. Gates’s vision, 35 years ago, was a computer on every desktop and Microsoft contributed mightily to realizing it. One visionary breakthrough, realized, is one more than most of us can claim. Gates is as much a visionary as Jobs, or Robert Noyce and Gordon Moore, or Thomas Watson Jr.

        • Lerxst99

          I disagree.

          I believe the definition of a visionary is (among other things) unusual foresight.

          Jobs had foresight, there’s no doubt about that. Gates doesn’t. Although not a visionary idea, anyone remember his famous prediction in 2004 that spam emails would be killed within two years?

          A Windows computer on every desktop is a strategic and economical long-term goal, not “unusual foresight”.

          • Anders CT

            Jobs certainly was a visionary and a single-minded innovator. But he also had his blind spots. If Jobs had had his way, iOS would not have had an app-store, and would be limited to pre-installed apps.

            I really think that the more succesfull you are, the more vulnerable you also are to disruption. Google or Apple may be nest.

          • steve_wildstrom

            Jobs thought browser apps would do the job and that native apps weren’t needed. When he was quickly proven wrong, he reversed himself and the App Store was up and running within a year. That’s the difference between being visionary and monomaniacal.

            (Of course, it’s also possible that native apps were really part of the plan all along, but the pieces weren’t in place until 2008 and Jobs’s statements were BS. He also kept saying Apple would never make a phone at a time when iPhone planning was advanced. Steve was known to, um, dissemble when it suited his purpose.)

    • FalKirk

      “Microsoft’s missteps originate from Bill Gates” – aardman

      I have a section written on the responsibility of Gates and the Microsoft Board but I’m putting that into part 2 of the article because it falls more into the “why”, not how, things went awry.

  • don108

    ” the job of the sales guy is to bring in the money. And NOBODY did a better job of bringing in the money than did Steve Ballmer…Microsoft more than tripled its annual revenue…”

    This shows a fundamental misunderstanding of the difference between being a “sales guy” and a mere clerk. It’s the clerk’s job to sell stuff and bring in money. Clerks are usually extremely low waged because anybody can be a clerk. All the clerk needs to know are the features of a product and its price.

    A “sales guy” (or a sales woman) needs to know which products have the lowest costs so they can sell the ones that make the most profit. Such a person also needs to know where there are too many products in inventory so they can be pushed. Then, the “sales guy” needs to be able to promote the benefits of those high profit and/or overstocked items resulting not necessarily in increasing revenues, but increasing profits.

    Considering Kin, Zune, Windows 8, WindowsPhone, Surface, etc., as a true “sales guy,” Mr. Ballmer has been a dismal failure. As a clerk, brining in the cash, he’s done fine. So he should be making minimum wage and perhaps be paid in bananas as he jumps around like a gorilla on stage.

    • Lerxst99

      I like to use an analogy to being a soccer coach (or the more correct term, a football coach. Yes, I’m European.).
      Your merits in the past seasons means diddly-squat if you are underperforming in the current season.

    • steve_wildstrom

      It’s true that most of the consumer initiative of the Ballmer era (with the sort-of exception of Xbox) were failures. But most commentators completely ignore the enterprise successes of the same period.

      Ever hear of Great Plains Software? It was a maker of business software that Microsoft acquired in 2001 and which has turned into the very successful line of Microsoft Dynamics products. SharePoint? Exchange? The .NET framework? Azure? Visual Studio? These all became highly successful offerings on Ballmer’s watch. And they were not the work of any salesclerk.

      Give credit where it is due.

      • Anders CT

        Yes, and those are actually pretty good products (except from SharePoint which is horrible). And there is a lot of synergy there: Visual Studio helped C# come to life. C# and .NET in turn propels the Micosoft Server, IIS and MS SQL combo. Not only that, the Visual Studio tool-chain was one of the reasons that developers favoured the X-Box over PS3.

        And Azure is rapidly becoming popular. It’s kind of ironic that Microsoft is beating Google in the cloud, and Google is winning with their consumer-oriented OS-platform.

        Maybe MS should simply embrace the competing platforms, and try to capture the high margin enterprise part of the android and iOS ecosystems. When Android moves on to the desktop, there will be a strong demand for some kind of enterprise integration with internal-appstores, office suites, Active Directory and Exchange integration. Microsoft could offer all this as a service, because Google is not going to.

        • steve_wildstrom

          SharePoint is odd. Everyone who uses it hates it, but most enterprises depend on it, largely because of lack of alternatives. Box may come to the rescue.

  • Alfiejr

    great post, JK. but you don’t give Ballmer enough credit for the one big thing he did right: “Microsoft’s real customers, IT departments, still trust Microsoft and still buy from them”. MS’ enterprise server/services business have grown strongly and still lead their markets, and there is a solid future business base there. desktop Windows (W7, not W8) and Office are really part of that MS enterprise ecosystem. the world’s hundreds of thousands of IT guys will never shift from MS – they hate change.

    it is the consumer markets that are abandoning MS. all portables of course as everyone notes, while the consumer PC and laptop market is also shrinking dramatically to niche status. turns out having a PC in the house was a temporary thing until something much easier to use finally came along. and W8 poured gasoline on this fire.

    you have not yet fingered the real culprit tho – Gates. after all, with all these failed consumer products Ballmer was just doggedly trying to fulfill Gates’ “Windows Everywhere” mega-ambition of the 1990’s, and W8 is the culmination of that.

    turns out it was a dead end. but Chairman Gates still calls the shots while Ballmer takes the fall.

  • Rene Stein

    It isn’t like Microsoft missed out on all the technology opportunities. They just weren’t any good at them. Microsoft was doing tablets before tablets were cool. Microsoft was doing smart phones and pocket computers before smart phones and pocket computers were cool. I’ve even heard that they were playing around with MP3 players before MP3 players were cool. They were doing email and real-time messaging before it was cool. They’ve all failed. The new xBox One was going to fail HUGELY until they did a 180 on a lot of their policies with it.

    There is a great Simpson’s episode: Homer Defined. In it, “to pull a Homer” is defined as being successful in spite of one’s idiocy. I think Microsoft has “pulled a Homer” for 35 years. The shift from corporate based consumption to individual based consumption has shined the light on their greatest weakness. They have never been good at building products people like to use.

    • FalKirk

      Interesting post, Rene. I’ll try to address the issues you raised in next week’s article on why Ballmer failed.

    • peter

      I think the key insight in the Innovator’s Dilemma is the fact failure is sometimes predictable and virtually inevitable. Companies miraculously cope with all sorts of complex new technologies and customer demands to increase the performance of their products. But some of the seemingly mundane stuff — changes to inferior form-factors/sizes and the prospect of cannibalizing your own high margin sales — is in fact highly dangerous and very likely to trip entities up.

      The thing about ‘disruption’ is that it happens both to incompetent companies and to very competent CEOs. If you follow the ‘MBA handbook’ and listen to your current customers, improve performance of your products and seek higher margin businesses then you are programmed to ignore lower-margin lower-performance products. The term ‘disruption’ is not meant as an excuse for incompetent CEOs, it is merely a warning that well-managed profitable businesses are very capable of missing out on the next big thing.

      A few examples: What is happening to Microsoft today is very reminiscent of what happened to IBM a generation ago (remember ‘nobody has ever been fired for buying IBM’). Also, Microsoft’s move to higher margin higher performance enterprise IT was as predictable as their seeming inability to move to lower margin low performance mobile computing.

      Another: Intel has the best factories (by all accounts about 18 months ahead of its competition), performance and margins, but for some reason they have so far failed to claim the mobile processing business. Technically there is no reason on earth for that to happen, but fear of cannibalizing their own high margin sales goes a long way to making sense of what is happening.

      Another: Kodak built its first digital camera in 1975, by the mid-80s they already had a 1.2MP camera. Somehow they never made it in digital photography — they stuck with their comfortable film and print business — and now they are gone.

      Incompetence, fine. But if incompetence is the failure to succeed then disruption offers some interesting insights as to when/where/how those failures are likely to arise.

      • Rene Stein

        Maybe. But I’m not arguing that incompetence is the failure to succeed. I am arguing that Microsoft had a fundamental flaw that has followed them from the beginning. They have hid this fundamental flaw with brilliant marketing and business management. Now that flaw has come to light, and they are being punished for not correcting this any time in 35 years, despite not listening to critics.

        The other thing I am saying is that they are NOT being disrupted. Imagine that Intel, in the example above, had been making and marketing crappy, unpopular mobile processors for years, even since before ARM came along. Then, ARM comes along and introduces better mobile processors and Intel has no more market. That’s not really a disruption, that’s one company making a crappy product that can’t stand up to competition.

        That’s what has happened here. Microsoft has made crappy products in the mobile space that nobody really wanted. Then, someone comes in with a good product, and whoosh! They don’t have a market anymore

        Android’s licensing scheme could be considered disruptive to Microsoft’s model, i.e. give the licensee control over the licensed software. However, this happened years after Microsoft had been trying to ignite the smart phone market with crappy products.

  • TobyBeagle

    I don’t cut him any slack, nor Bill Gates. The brilliance of Microsoft was the way they licensed their software, particularly with the OS. The perception was that windows was “free” and this made it difficult for others to sell a competing OS for the PC, and MS did some rather snarky things to keep their monopoly position, until the DOJ yanked their chain. The whole “Windows Everywhere” was doomed to fail, because that is the wrong focus. The focus should be on bringing about killer apps that truly add value to the consumer! If you look at any market where MS had to compete, they have failed miserably. Yeah, some will talk about the XBox, but I believe it is still a cumulative financial loss.

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