25. August 2013 · Comments Off on Ballmer Never Was a Product Guy · Categories: Management · Tags: , , , , ,

Thank God he is gone… well, he is going. 

The problem with Steve Ballmer was or is that he never was a product guy. Steve Jobs said so, as mentioned in in his authorized biography. The reason, I am pretty sure, why Microsoft declined lies directly with the fact that Ballmer was not a product guy. He put revenues and profits before good or excellent products. He sacrificed long-term growth and long-term revenues for short-term profits. And the stock market, showing for the first time some intelligence, reacted with stable or declining share prices.

The announcement that Ballmer is planning to leave Microsoft within the next 12 months actually increased Microsoft’s share price by nearly 8% on the day of his announcement.

From what I gathered talking to Microsoft employees (current and former), the main reasons for Microsoft’s demise was that all the innovative products that came out of various MS R&D departments were killed “because they were not Windows”. 

Usually, it was the middle-management killing these products so in most forums I see that people comment that it was not only Ballmer’s fault that Microsoft declined over the years and missed such great opportunities as the Music Player Market (iPod), Smartphones (iPhone) and Tablets (iPad).

Yes, it was not only Ballmer’s fault – but as I mention time and again in my book “Wealth & Wellbeing – Volume 1: Management”, it is always the manager’s fault when his direct reports (or his/her employees for that matter) don’t perform. In the end, it is the manager who hires (or keeps) these underperforming reports or employees. 

Especially in the case of the CEO, it is the CEO who decides which direction the company should go and it is in his domain to decide to “live with what is” or “change to how it should be”.

Ballmer never understood the customer and he never cared about the customer. What he cared about mostly was short-term revenues and profits. He never understood that revenues and profits are a side-effect of an excellent product and excellent product marketing.

This is what differentiates Steve Jobs from Ballmer or Gates. Steve did understand that great products is what makes a great company. Yes, in order to generate revenues you need to sell these products. But it doesn’t start with “selling”, it starts with a “great product” and then “great marketing”.

Understanding the customer (in this specific case: the consumer) means really trying to put one in “the consumer’s shoes” (as a German saying goes). It is the understanding of not only what the consumers are wanting but rather what they might want and trying to figure out what is the best possible solution for a given situation/problem from the consumer perspective, not necessarily from the company perspective.

The next step then is trying to calculate whether one can provide that solution within the consumer’s budget. If one cannot, one should ignore it and try doing something else. If one can, then one must relentlessly and without compromises deliver on that solution.

This is what Steve Jobs did – and this is something that neither Bill Gates nor Steve Ballmer ever understood. Their point-of-view was clouded by their success with Windows and Office. Everything had to somehow either use Windows, protect Windows, or enhance Windows. It was never the approach  “what is best for the consumer”, it was always “what is best for Windows” (Note: It was not even “what is best for Microsoft” as that question would have probably resulted in “what is best for the consumer/customer”).

“What is best for Windows” is not going to save Microsoft anymore. In fact, it stopped helping Microsoft about ten years ago. Windows is now a drag on Microsoft’s future and there must be a change in thinking in Redmond up to the point of even being able to ditch Windows as the the core of every thinking.

When one looks back at some huge successes in the last decade, it wasn’t the OS that drove them: Facebook, Apple, Google, Twitter, … it was always a combination of an excellent service/product combined with the thinking of “what is best for the user”. Especially when Facebook started ditching this thinking in the last couple of years and started thinking “What is best for Facebook (as a company)”, users complaints and dissatisfaction grew exponentially.

Nowadays, if one can believe some analyst, Facebook is losing its mojo – and customers at an alarming rate. Good thing that there are still enough Internet users who have never used Facebook before so that the decline in existing Facebook user base compared to new additions is still net-positive. The question will be: for how long.

Same is/was true for Yahoo!: until Ms Marissa Mayer took over as CEO, Yahoo! had lost its mojo as well and was losing users at an ever-increasing alarming rate. Flickr was one of the greatest photo-sites — until it introduced some stupid rules. Even I had left Flickr and was using other services. When Marissa Mayer ditched all those stupid rules and made Flickr completely free and changed its user interface to be more user-friendly, I started rethinking my approach. Nowadays, I have completely ditched Facebook and other services and am coming back to Flickr.

Couple of years ago, one of the comments I made after some serious month-long negotiations with Microsoft was: “Microsoft is not a customer-/consumer-oriented company. They don’t understand consumers and they probably never will.”

Microsoft was, similar to Nokia, such an inward-looking company (it was around 2011), that it was impossible to explain to them that there was a world outside of Microsoft made up of people – other people. Even with regards to its partners, it was such an inward-looking and sometimes arrogant company that one could extrapolate its decline. One of my sayings was: “If Microsoft cannot gain at least 20% marketshare in mobile phones quickly, within the next five to ten years it will have lost all of the consumer market and will be part of IT history in another ten – unless they change their approach, they will be gone around 2025 – at latest…”

“The fish starts rotting at the head” is a German saying. That was the case at Microsoft. Now the head has been cut off. We can hope that they can replace the top-most management (it is, after all, not only Ballmer who made major mistakes) with fresh, customer-oriented product people. After all, we still need Microsoft – even if it is to keep the other players on their toes (imagine an Apple or Google with Microsoft’s hubris — …)

So, good bye Mr Ballmer. We won’t miss your management style – but we will miss your shows – “Developer! Developers! Developers!”

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