Microsoft: From Gates to Ballmer

7/30/2019 Microsoft: From Gates to Ballmer

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MicrosoftRobert HedgesAlex HudockSam KantnerEvan KimelTim Koenig


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Microsoft under gates Gates was passionate about his work; inspired

employees

Microsoft stressed long term profit margins Employees encouraged to meet 100% of target

market


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Microsoft employees

Considered to be very intelligent

A-Players

Outside the box thinkers Not just intelligent, but also wise and knowledgeable


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Microsoft mentality Never fear failure

Used failure as a chance to learn

To succeed, you must sometimes fail first Managers had to be qualified to manage those

under them

Performance based


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Gates as a CEO Talked with all of his managers on a weekly

basis

Required monthly emails with performanceupdates

Regularly communicated with core-level

employees


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The Problem WithMicrosofts Practices,

Leadership, andOverall Culture


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Stack Ranking Each team member = top, good, average or poor

performer

Horrible for team dynamics

Result = More individualistic approach to projects. Notteam.

Negative comeptition among teams.

Class example: Army Crew Team JV- all worked towards a common team goal

Varsity- became more individualistic and turned oneach other


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Stack Ranking Team dynamics is not only problem

Poor Feedback!

Compare to other members rather than focusing onbettering the company itself

Designating A, B, C players rather than improving them


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The Innovators Paradox Microsofts success has lead to its downfall

Why Leaders Dont Learn from Success (Ducati)

Innovators Paradox: when you dont need the growth,you act in ways that lead to you not getting the growthyou will need.

During Bill Gates period, great success due toinnovation

After success, did not realize the need for continuedinnovation. Did not move with the times. Still rely mainly on Windows (~80% of revenue)


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The Innovators Paradox


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Limiting Culture Upper management feel threatened by younger

generation and shut down new ideas

Management all 50 years 0ld or higher, still living inthe glory days of Windows

Comparison to Apple: At Apple, everyone respectsJony Ives, the head of design. At Microsoft, there is no

respected head of design, but rather individualsbargaining with each other


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Leadership Bad culture can be seen in leadership problems

Recall the Leadership Continuum The leadership styles of the upper management

demonstrate a high use of authority This gives the subordinates little freedom

In the technology world, innovation is key

This backward, strict leadership style hurts Microsoftsinnovation

Also consider GE Case. Once established, allow employees to voice opinions


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Leadership Leadership Continuum


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Cutting Costs And Morale Gates was always very frugal

Flew coach when traveling

earned the respect of his employees

Recently, Microsoft cut costs for employees as well Cuts in office supply and healthcare

decrease in job satisfaction

Recall Sears Case Job satisfaction happy customersmore profit

For Microsoft, an increase in satisfaction may lead tomore passionate and successful innovation.


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Lack of Product Knowledge Known for being a business orientated person

Knows little about computers and other Microsoft

products Impacts product reviews

Doesnt have input on the actual product

Focuses only on the business side of the product

Opposite of Gates who had highly detailed productreviews


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Lack of Product KnowledgeAlso hurts his leadership

Doesnt have the right knowledge of products to knowwhat field to put efforts in leading to poor decisions

Underestimated rival products: iPhone

Failed to enter the phone market

Wasted tons of money on R&D that resulted in no

products


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PersonalityVery aggressive in meetings; shouts a lot

Has a short temper

Mark Lucovsky case Results in negative interactions with employees, which

can hurt employee performance


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Ousting of Executives Neurotic about someone trying to overthrow him as

CEO

Neuroticism is the worst employee trait one can have

Forced out 5 high up executives in the company shortlyafter being promoted

Ex. Richard Belluzzo- creator of Xbox

Destroys leadership and cohesion at the top with thehigh turnover of executives

Company loses valuable employees


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Eliminate Stack Ranking Policy In technological industries, worker creativity is highly

important

Stack ranking policy stifles creativity by pittingworkers against each other rather than coercing themto work with each other toward solutions

Competitors such as Google, Apple, and Amazon boast

excellent workplace conditions and the idea that workcan be fun. Microsoft should be doing the same


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Hire Better Managers Capable managers are a crucial bridge between

executives and rank and file employees

Many employees have complained that Microsoft has

hired managers who are very conceited and greedy Overall, employees complain that the bureaucratic

structure at Microsoft means one has to know the rightpeople and kiss your managers butt to move up the

company ladderWe learned in the Brussels and Bradshaw case how

lack of communication between manager andemployee can be disastrous


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Value Consumers More Microsoft resides in an industry that highly depends on

creating products that appeal to the consumers, specificallythose of teenage-young adult age A lot of the industry involves making cool products that can

help establish a loyal fan base If you release one bad product, customers will f lock

elsewhere (Windows Vista, for example) Microsoft needs to be more aware of the trends that are

happening in their industry Missed out on the shift to mobile and are paying the price

Think of the near cult Apple has created with its products,a company which values innovative products that appeal totheir customer base


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The Big Question: Should Ballmer

Be Ousted? There are pros and cons to this decision

Major pro: His leadership style upsets many; rules somewhatlike a dictator; Microsoft could improve if they bring in a

CEO who mirrored Gates management style Major con: Hes been CEO for the past 13 years; probably

knows the position the best out of anyone else in thecompany; Microsoft would possibly have to hire outside thecompany, but could they bring someone in dedicated to turnthe company around?

Ballmer is too focused on maximizing profits fromMicrosoft Office instead of innovation and creating newproducts


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THANK YOU

Documents

Microsoft: From Gates to Ballmer