Sunday, June 16, 2024

Steve Ballmer vs. Larry Page: Success for Both May Reside in the Other

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My thought process on this issue started from a tweet by Ed Bott suggesting that Larry Page had become the next Steve Ballmer.

I first took the pro side of this argument, pointing to how Microsoft – headed by Steve Ballmer – is now growing at double digits, while the growth of Google – helmed by Larry Page – has dropped to single digits. Furthermore, Google’s growth appears to be on a declining trend.

Both CEOs have had troubled times. Larry Page is still in his early years in the job, while Steve Ballmer clearly struggled for the first years of his tenure as well. The now growing Microsoft appears to be doing better in execution, but still lacks in vision and broad innovation. Google, while clearly slowing and having execution problems, seems to have a new vision for something every month. The company continues to innovate, albeit largely in areas (like self-driving cars) that seem far removed from their core business objectives.

In short, Google appears to still represent a youthful company (though this is clearly changing) that is still exploring what it wants to be when it grows up. Microsoft, in contrast, is in increasing need of reinvention to keep up with external changes.

Sum it all up: Google can’t spell focus, and Microsoft is struggling with change. Google’s at risk of becoming Netflix and Microsoft the 1980’s version of IBM. Neither outcome is particularly attractive.

I think there’s a lesson here someplace.

Microsoft Needs Product Passion at the Top

This isn’t to say Steve Ballmer is some decrepit guy who uses a walker and naps all day. There are few people in our business who work harder.

However, what made the young Microsoft different than the old is passion for product. The young Paul Allen had that, as did Bill Gates. Up until the mid-1990s, while Microsoft was increasingly arrogant, they were also very passionate about product, and Windows 95 was introduced when that passion peaked.

Microsoft then brought in people from companies like DEC who were focused more on process and a combination of expertise in internal politics. And a desire to contain costs forced out the senior folks who were passionate about product.

In the end they ended up with Steve Ballmer, a very competent manager and top graduate of Harvard, running a company that should be run by a software engineer. Much like it would be a bad idea to ask a General to lead a naval fleet, or an Admiral to lead a land-based army, the company asked someone who doesn’t have a deep passion and expertise in software to run a software company.

Give credit to Steve Ballmer for doing a rather impressive job, given that he was the wrong guy for it. But, in the end, for Microsoft to truly thrive it will eventually need to recreate that product passion at the top. And if whoever replaces Steve doesn’t have Steve’s drive and still lacks a deep understanding and passion for product, Microsoft will likely begin a slow slide.

To use a Star Trek Metaphor, Steve running Microsoft is kind of like Scotty commanding the enterprise. He is very capable operationally but not creative and not good in a complex fight (but really good in fighting rhetoric, if you recall the TV series).

Google Needs Business Process

I used to think I’d seen the extremes of arrogance when I covered Microsoft in the 1990s, but nothing prepared me for Google under Larry Page. Here is a guy that actually seems to think software engineers should run all aspects of a company – because he is one.

That’s like saying everyone in the Air Force should be a pilot or everyone running a hospital should be a doctor. It belittles every other area of expertise because the person at the top has no deep job knowledge or experience.

Yet that is what Larry appears to believe and, let’s be clear, while Google is stalling it has not collapsed. However, what we often forget is that Google doesn’t make money from the products they make, they make it from their near monopoly control of Internet advertising, which obfuscates how well, or in this case, how badly, they are doing.

Take Android, for example. Recent court filings indicate that Google is only making around $550M from it, and any one of a number of the major lawsuits surrounding this platform could dramatically exceed this number. And they mostly aren’t going well.

Someone with deeper business training might suggest not only a broader expertise in Google staff, but a process where incubated non-aligned projects were sold to other companies or spun out as separate firms. These projects would then no longer be constrained by Google or become a distraction for Google management, who should remain focused on Internet advertising.

For instance, for self-driving cars to take the next step, the technology will need to be integrated into the car design process. And that likely means the unit will need to become more deeply embedded in car design and less attached to Google.

Both Microsoft and Google Need to Fund to Success

One common problem for both companies is the tendency to be cheap. Cheap is different than frugal. Frugal means you don’t over resource; cheap means you under resource and the latter is often the bigger problem because it is the parent of failure. There is a price to success. Both companies have huge cash reserves and both companies would rather accept failure than use those reserves to assure success.

There is an old saying that “if it is worth doing it is worth doing right” and that implies fully funding the effort. Part of the problem for both companies is that neither top executive appears to regularly ask the question “what will it cost to make this successful?” before funding an effort. Or they don’t listen to the answer, or they correct it downward.

Given that we tend to fund things we are passionate about, this suggests that both Google and Microsoft have a product passion problem at the top. And while Ballmer has an excuse, he isn’t a software guy after all, while Page comes off more as a rich but cheap guy, which isn’t a great combination.

Back to Star Trek: this would be like Kirk in the episode where the command staff is turned into children. Page is the right guy, he just lacks the seasoning to know what Paul Allen and Bill Gates knew when they hired Ballmer. You need a deeper talent pool.

Both companies could benefit, with the existing CEOs, if they adopted more of the Oracle “office of the president” model to close the passion and experience gaps.

Wrapping Up: Immortality

I’m reminded that the famous CEO at IBM was Thomas Watson Jr., who was the son of the founder, not the founder, and that even Steve Jobs started out failing (he was initially fired from Apple).

I think Steve Ballmer, if he won’t accept a partner, would be more successful in a firm offering a product or service he was truly passionate about. And Larry Page likely needs to be fired once or spend some time working in a more mature company to understand how to run one well. I doubt either CEO wants to go down in history like James Barksdale did at Netscape, as either forgotten or tied to the death of their firms.

In the end, the job of CEO often means either sharing leadership or developing skills you don’t currently find all that interesting. This is why CEOs make the big bucks and why most don’t really earn what they make. Leadership is about choices and whether folks are willing to do what it takes to win. Often CEOs aren’t and therein lies the problem.

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