Technology: Microsoft Should Outsource Its Leadership

The recent news that Steve Ballmer will leave his position as CEO of Microsoft (MS) within the next 12 months caused the global financial markets to improve their forecasts for this behemoth technology company. Aside from signaling displeasure with the Ballmer-tenure, the higher stock price shows the markets believe there is some life left in the old workhorse.

I, on the other hand, don’t believe that to be necessarily true.

Firstly, though, let’s be clear about Ballmer. He is an excellent manager who kept MS stable and humming following the departure of its co-founder – a William “Bill” Gates. Given how profitable MS actually is and Gates’ influence on the company, that could not have been an easy task and Ballmer should be rewarded with the appropriate kudos and huzzahs.

The problem for MS is that while the company is currently quite successful, its future doesn’t look very bright, and that is not entirely Ballmer’s fault. Unfortunately, the technology model changed around the MS CEO and he was left looking like a dinosaur leading a buggy-whip manufacturer.

Ballmer is a great manager but he isn’t a strong innovator and that is why, under his tenure, MS has not been able to crack the mobile market; the recent $900 million inventory write-off of its Surface tablets shows the extent of that failure.

While Ballmer has tried to right the ship by reorganizing MS and make it more Apple-like, its unclear if this change can, or will, make any difference. Furthermore, its unknown if these failures are due to leadership ineffectiveness or a problem with MS’ culture.

Clearly, one problem – and a good one to have – is that MS is a victim of its success. It generates boatloads of profit from a crappy product (the Windows OS) that is tethered to a very specific computing platform. Consequently, convincing company leadership to change course can be quite a challenge, especially for someone who came up through those same leadership ranks.

As a result, MS missed the boat when it comes to creating a high-quality mobile OS (the Google model), developing a new mobile market (the Apple model) or decreasing development timelines (the Samsung model).

In addition, the Washington-based company’s quality issues remain consistently inadequate. This means that when consumers are faced with an equitable choice in tablets or cell phones, they inevitably choose products from companies with better quality control.

There are two ways for MS to remain on, or near the, top of the pyramid. The first is to develop an exclusive new market and the second is to improve the quality of its product. Given its history, there are no indications that either can be accomplished by anyone inside MS because, unless Gates and Ballmer have people chained in the basement, none of the company’s leaders have shown any affinity for that kind of work.

The answer, therefore, is obvious: MS needs an aggressive external leader who can change the company culture and redirect it towards a new market and better quality products.

On the other hand, the Board could split MS into two companies: a traditional MS with a leader chosen from within and a new mobile (and other markets) focused company led by someone from the outside.

However, if MS’ leaders choose another CEO from within the company and don’t change the business structure, this once-proud company will slowly recede from our vision and become a historical story like Pan-Am or Texas Instruments.