Steve Ballmer Steps Away From Microsoft: It Was Time

Steve Ballmer’s tenure was mixed, yet not without accomplishment.
Posted August 19, 2014
By

Rob Enderle


This week Microsoft announced that ex-CEO Steve Ballmer has left the company and I think it was time.  There is such a thing as too many chefs in a kitchen and too many CEOs, or ex-CEOs, on a board. 

Even one ex-CEO of a company on a board can be problematic and Microsoft had two, as both Bill Gates and Steve Ballmer stayed on. But Steve has moved on to other things, and given how he left Microsoft, and Bill Gates’s continued value to the company, he was the right one to step down.  

In fact now Bill will likely be a better asset for Nadella then he ever was for Steve. And the end result should be a far stronger Microsoft.  Let me walk you through how I get there.

Steve’s Ballmer’s Problem

Steve didn’t leave Microsoft on his own schedule – he was pushed out of the top spot largely due to poor performance in areas that founded the company, personal operating systems and platforms.  Most of the stuff he helped build in the enterprise space did very well and Microsoft’s execution in the cloud was actually impressive while he was there. But the company was founded around the end user and the end user was getting lost in the shuffle.  

But even though Steve is an incredibly sharp guy, failure in some of Microsoft’s founding core areas substantially weakened his credibility and made him a poor mentor. It is his failings Nadella now has to correct. 

Satya Nadella, coming out of the Cloud space himself, already knows as much or more about it than Steve does and the cloud and enterprise spaces are reasonably closely aligned, suggesting Nadella wouldn’t have a deep need for Steve’s experience even there. And the one place that Steve was instrumental in, the Xbox, also has started to slide. This suggests Nadella will need to make a significant course correction even there.  

So the places where Steve would be most useful are areas Nadella is either already comfortable or needs to move away from Steve’s in-place strategies, dramatically lowing Steve’s value as a board maker.

Gates Remains Iconic

Even if Bill Gates doesn’t do anything he is largely viewed as the founder of Microsoft and still tied tightly to the brand. He is also the guy that drove the creation of the core efforts that are not at risk, with the exception of the Xbox, and would be a very useful resource both as a mentor and as a figurehead if one is needed for an event. 

More important, he has been far more removed from day to day decision making and is less likely to aggressively defend strategies and plans that need to be changed for fear the change will make him look bad.   

I also expect there was a great deal of tension between Bill and Steve given the circumstances surrounding Steve’s stepping down. That likely reduced the effectiveness of both men. So, if one had to go, Steve was the logical choice. 

Trigger Event

One thing I would look for is a trigger event.  Steve Ballmer has been with Microsoft for much of his adult life and his connection to the company is very deep.  Since he wasn’t asked to step down from the board when he resigned as CEO, something likely triggered Steve’s decision to leave.  

Now it could have simply been a board meeting where the other board members asked him to go, but that kind of an event is very rare and normally tied to some other problem.   I would anticipate an as yet unannounced executive departure, an executive Steve let go coming back, or a major strategic change to one of Steve’s pet programs (like Xbox) that might have triggered Steve’s departure from Microsoft’s board. And I’d anticipate his starting to divest his shares shortly but in a controlled fashion so he doesn’t collapse the market for the shares.  Typically when a CEO departs all aspects of the company they divest their holdings in it and Steve’s holdings are substantial. 

Wrapping Up:  Stepping Out

In general this move takes Microsoft fully out of Steve Ballmer’s shadow and should allow Satya Nadella to increase the rate of change he is implementing.  I would anticipate something big that hasn’t been announced that likely precipitated Steve’s decision to leave. Steve has other things on his plate and Microsoft doesn’t need the complexity of multiple ex- Microsoft CEOs on their board. In the end this move should make Microsoft more effective and result in a faster rate of change, both of which are needed by the firm.  

Ironically Steve did leave Microsoft better than he found it but, unfortunately for him, he’ll likely be remembered for other things.   However the firm and Steve got there it was the right move for both and a good sign things will continue to improve at Microsoft.  

Photo courtesy of Shutterstock.




Tags: Microsoft, steve ballmer, bill gates


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