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DECISION-MAKING

Steve Ballmer and the Problem With Rock Star CEOs

Steve Ballmer could have been known for a much more successful tenure at Microsoft. Here's what got in the way.
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Steve Ballmer showed so much promise. As one of the first 30 employees at Microsoft, he was once the golden child of arguably the greatest technologists of all time, Bill Gates. He became heir to the throne of the most important and successful tech company at the time. He was the rock star CEO that could maintain Microsoft’s pole position in a fiercely competitive industry with numerous examples of once iconic companies made obsolete by young innovators.

But, well, he didn’t. Microsoft’s stock value is about half of what it was a decade ago, and has been surpassed by the likes of Apple and Google. With Ballmer at the helm, Microsoft missed the boat on search, on mobile, and on the cloud, three of the most important trends since he took office in 2000. If it weren’t for the Xbox, and the legacy of enterprise customers too invested in Exchange to make a switch, there wouldn’t be much for which Ballmer could claim success. The big problem with his tenure? He tried to be a rock star CEO.

The "Rock Star CEO" Trap

Being a rock star is a pretty good gig if you can get it. You get to sit around and play music all day, hang out with celebrities, and enjoy loads of fame and fortune to keep your ego in the clouds. Your skills and talents drive your success. And because your success is all about you, you call all the shots. 

Thing is, rock stars don’t work so well in the world of business. A successful company is never made by one super star. Even the great CEOs who founded their own companies with their own ideas--Ellison, Benioff, and Gates--relied on their "band" to help execute on their vision. 

The problem with Ballmer was that he was the rock star CEO--without the hits. So many tech companies fall into this trap. It’s all about the CEO whose views and opinions are the company’s views and opinions. Ballmer drove the ship with strong opinions that were stale (think Vista, Microsoft 2007, Office 2012--yawn) and didn’t do enough to cultivate innovation among his ranks. In fact, for most of his tenure, he singlehandedly steered Microsoft out of some of the fastest growing and lucrative tech markets (mobile, music, tablets). 

Fresh ideas come from leaders and contributors across the organization, not just the CEO’s office. Ballmer, acting as the rock star CEO, failed to loosen up the reigns and develop a team-based culture of innovation and a next generation of leaders that could drive the future success of the company. We’ve heard about innovation labs at Google and Apple (we even have one at ServiceMax), but not so at Microsoft.

It's All About the CEO

It has oft been said that Microsoft doesn’t have a succession plan, and chief after chief has left the company for a CEO or leadership position elsewhere. Windows chief Steve Sinofsky and software chief Ray Ozzie are recent prominent examples, but the list is long. It’s inexcusable that Ballmer (and the board) didn’t execute a mature leadership development plan like that of GE.

But that’s one of the problems with rock star CEOS: Succession planning isn’t a priority because they can’t think past their own ideas. They don’t think they need anyone, and they don’t even really believe that anyone can succeed them. Ballmer had tense relations with many of his senior team members, and even sparred with Gates during the transition, reportedly saying of him, “I’m not going to need him for anything. That’s the principle... Use him, yes, need him, no.” 

This attitude might actually have been OK if Ballmer had kept churning out the hits like Bono or Jay Z. But he was constantly stuck in the past and, unlike with music, it’s not cool in technology to “only like the old stuff.” 

Even worse, under Ballmer’s helm, divisions routinely competed against each other. Dynamics On-line is the company’s cloud apps offering, but it doesn’t run on Azure, the company’s cloud infrastructure. That’s like telling your guitarist that you’ll write all the songs with him, but he doesn’t get to record or perform them. That’s just plain bad strategy for teams and bad strategy for business. 

Ballmer will soon be gone from Microsoft, but it might just be too late for Microsoft to turn it around. Comeback tours may work in rock music, but tech fans have already moved on to the next big thing.

Last updated: Aug 27, 2013

STACEY EPSTEIN | VP of Marketing, ServiceMax

Stacey is VP of Marketing at ServiceMax, a leading SaaS start-up. Previously she was VP of Global Marketing Communications at SuccessFactors, where she was instrumental in the company's successful IPO.




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