At the turn of the new millennium, Microsoft was ubiquitous and reigned supreme when it came to discussions of technological innovation and product development. Riding the back of a decade of massive growth, buoyed by its landmark Windows operating platform and a series of missteps from major rivals, notably the much-maligned Apple, Microsoft and its legendary figurehead Bill Gates remained the gold standard for new software and pushing the technological frontier forward. As Gates stepped aside to take control of his philanthropic Gates Foundation and ceded the reigns of Microsoft to Steve Ballmer in 2006, there was no reason to suggest that the company would remain anything but the innovative juggernaut it had been for years.
What a difference seven years can make. In 2007, as Microsoft continued to focus primarily on the desktop computers that it had dominated for years, as well as its new version of the popular Windows OS, Vista, the little comeback company called Apple began a run of innovation that not only caught the tech world by surprise, but singlehandedly began to demonstrate just how out of touch Microsoft was with the growing hordes of gadget and tech-crazed consumers. With the iPod, iPad, iPhone, and iOS operating systems, Apple managed in just a half decade to remove Microsoft’s decades-built dominance over the industry, while likewise managing to paint the company as an aging dinosaur, clinging to hoards of cash and revenue from still-successful products like Windows and the Xbox 360, but unable to match Apple and founder Steve Jobs’ unbelievably rapid push into the future.
So what happened over those few short years to sabotage Microsoft and leave it where it remains today? While a combination of factors led to the fall of Microsoft from the top of the tech pyramid, much of the blame traces its way back to the feet of Steve Ballmer, the company’s next big hope to replace Gates. Through a series of missteps, personal shortcomings, and missed opportunities, Ballmer’s stewardship of Microsoft provided the opposite lesson for those watching the giant from the outside. Instead of ensuring a new realm of flexibility and innovation, the likes of which was necessary to stay current and compete with not only Apple but the other new kid on the block, Google, Ballmer sabotaged the company with a series of unfortunate entrepreneurial mistakes and miscues. Let’s take a look at 4 specific spots Ballmer went wrong:
1. He Got Cocky – Toward the end of Star Wars, as most fans remember, Han Solo famously admonishes the brash young Luke Skywalker, “Great kid…don’t get cocky!”. It is common advice, a lesson familiar to us all, but Steve Ballmer’s ignorance of this rule was a major player in Microsoft’s underestimation of the competitive and innovative challenges it faced as the 21st century rolled on. Ballmer mistakenly assumed two things at the beginning of his stewardship: that Microsoft had built an insurmountable market advantage thanks to the Windows platform, and that mobile devices would not replace desktops, at least for the near future. Unfortunately, Apple and Google bet heavily on the second assumption, and Microsoft was left holding the bag. The Zune music player was a widespread flop. More recently, Microsoft took a nearly $1 billion loss in covering costs of its Surface tablet, which failed to carve into the tablet niche. These days, Microsoft is playing catch up along with the rest of the also-rans, fading further into the distance behind Android and Apple-powered devices.
2. He Acted Cocky – Ballmer did neither himself, nor his company any favors by his public persona and brash behavior on various occasions. In 2007, Ballmer famously slammed the new iPhone, mocking its potential and assuring gadget lovers that there was no future to it. If you need any indication of when a tech entrepreneur has lost touch with consumer wishes and demands, this is perhaps the most iconic example. Six years later, Apple has made untold amounts of money off the smartphone and its successors, while Windows Phone remains largely a novelty and devoid of the apps that drive customers to Apple and Android. Never bash the competition, it makes you look weak.
3. He Stopped Innovating Ahead of the Game – Whereas luminaries like Steve Jobs at Apple and Sergey Brin and Eric Schmidt at Google have consistently demonstrated a focus on developing gadgets not only for upcoming release, but also with an eye on years down the road, Microsoft has been playing catch up since Ballmer’s tenure began. Indeed, the company has failed to release a truly groundbreaking product in over a decade, which by today’s technology standards may as well be a century. The new generation of young tech consumers have little to no memory of Microsoft’s former dominance, and the company stands doomed to lose what little reputation it has remaining with these future users.
4. He Wouldn’t Change – Despite these aforementioned missteps and blatant mistakes, Ballmer continued his tenure as CEO with little change either to his vision for the company, as well as his personal affect and behavior as its leader. Instead of admitting some of the failures in vision and execution that had obviously plagued his company recently, Ballmer doubled down on the arrogant persona that drove many away from the company (including its employees) in the first place. The CEO should reflect the personality and vision of his company at all times. In Ballmer’s case, that was nothing to be proud of.
As the tech battles of the future continue to be increasingly waged over the mobile and digital realms, and desktop computers fade further and further into oblivion, Microsoft faces a serious long-term dilemma. While its video gaming arm continues to hold serve and bring in millions for the company, and the company continues to sit on huge reserves of cash accumulated during its heyday, the need for rebranding and innovation is perhaps more strong here than anywhere else in the tech world.
Microsoft needs a CEO that has the vision to not only completely refocus long-term innovation efforts, but also to reshape the image of the company to appeal to the new generation as well as Google and Apple have been doing for years now. Ballmer’s sad legacy at the chair of this once-unquestioned tech giant remains a legacy of entrepreneurial lessons for future venture leaders, a veritable list of things not to do when facing stiff competition and a dearth of new ideas. Learning from Ballmer’s missteps can show the rest of us that flexibility, realistic evaluations and expectations, and a constant desire to innovate remain among the most important qualities for any entrepreneur and business leader.
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