Steve Ballmer runs the most powerful software company in a world that appears to be dominated, at least in terms of visible innovation, by the Web and companies like Google, Facebook, Amazon and Apple. That was a comment by Eric Schmidt who recently left Google either involuntarily because Google's performance sucked, or voluntarily to become the U.S. Commerce Secretary (he didn't get the job) after missing the whole social networking wave.
But in this I agree, and Microsoft's influence has dropped off sharply and CEOs are measured by how much value their companies gain during the CEO's term. Microsoft's value has dropped sharply and were Steve Ballmer to look at his own performance (he is very metrics-oriented), he'd likely agree that he isn't performing well. Bill Gates is defending Steve at every opportunity and I doubt he'll ever force Steve to move, but Steve currently isn't a success in the job. Though that may be changing (I'll get to this at the end).
My friend, Roger Kay, makes the point this week on Forbes that Microsoft may have become unmanageable in the late '90s before Bill Gates left. While I believe every problem has a solution, Roger may be right in that Microsoft's complexity appears unmanageable. However, Apple was unmanageable when Steve Jobs took it over and it was failing, which would seem to be a harder job, yet Jobs has been successful where Ballmer has not.
Success to Failure
One of the first books I read when I was going for my own MBA and long before I was pulled into the Executive Resource program at IBM was "Peter Principle," which argued that employees tend to be promoted to their level of incompetence. The not-so-subtle point was that all CEOs were basically incompetent to some degree. Whether or not you believe in the argument, that is what appears to have happened to Steve Ballmer who was clearly very successful until he became CEO and then hit a wall. However, I think the problem resulted from three key avoidable mistakes.
Lack of Mentoring/Management
Every employee needs to be managed, from an entry-level employee to a CEO. We have seen a large number of CEOs fail because they weren't effectively managed. One of the most painful was Carly Fiorina who, although brilliant, refused to do the job and refused to allow the board to hire someone to supplement her so that her weaknesses were covered by someone who had more operational capability. She had been very successful as a marketing executive but failed as a CEO largely because no one drove her to do the job of CEO and she'd never done it before.
A CEO is a unique position particularly in a large complex company. You have unique responsibilities, unique measurements and the job is arguably the most political you can get in business. In many cases, you become the face of your company and while you are given a massive amount of latitude, you are also given very little in the way of mentoring or guidance and this why so many CEOs end badly.
Everyone needs to be pushed to do things that a complex job requires. CEOs have the power to say no and they need someone over them with the authority to push them to do the complete job, and that, unfortunately, rarely happens.