Why Steve Ballmer Should Resign: Page 2

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The Governance Thing

In order for a company to function at full potential, the CEO needs to be accountable to the board. But how accountable is Ballmer?

The elephant in the boardroom is Ballmer's relationship with Gates. Ballmer is the best friend and college buddy of the founder, chairman and biggest shareholder of the company. Ballmer probably can't be fired unless Gates wants him to be fired. And Gates is a loyal friend. Ballmer is also a board member and major shareholder, with 4 percent of the company (Bill Gates himself owns less than 10 percent). It's an unhealthy situation for Microsoft and its shareholders.

Maybe the Microsoft board can fire Ballmer, and maybe it can’t. But it’s a problem for Microsoft that firing Ballmer is an entirely different proposition than a normal board not dominated by the CEO’s best friend.

The Success Thing

The other problem, ironically, is that Microsoft is consistently profitable. But profits today won't prevent disaster tomorrow. Microsoft is faced with challenges to its operating system dominance from the likes of Apple, Google, Linux and others. The company is still largely coasting on momentum from the past. The Titanic enjoyed smooth sailing and full steam ahead -- right up until the point where the Captain’s errors sank the ship. The errors happened not during the disaster, but when all seemed well.

And, no, I’m not saying Microsoft is heading for decline. The problem is that on its present course, Microsoft will fail to live up to its potential. Keeping Bill Gates’ friend employed isn't sufficient reason for Microsoft to allow itself to slouch toward second-rate status.

Ballmer is the wrong CEO for Microsoft, but he can’t easily be fired. That’s why he should do the company a favor and resign, initiate a controlled CEO headhunt and transition process, take his $15 billion and go away.

The Microsoft board needs a different kind of leader right now, and one it can fire.

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