I’m fascinated in a somewhat morbid way by the fall of Steve Ballmer. Before he was CEO, he was Microsoft’s fixer. He was the guy they called on when they had a problem and he generally made that problem go away. I’d met with Ballmer shortly before he stepped into the role, and he accurately predicted much of what he would later face. He is one of the smartest people I’ve ever met, but once he landed the CEO job, he seemed to have an increasing level of really bad luck in everything from product decisions to staffing decisions. And where Bill Gates had a near magical PR team covering him, Steve Ballmer didn’t seem to have any protection whatsoever from the PR folks, which is particularly strange given his wife, Connie, was one of the best in that field at one time.
So I’ve been questioning other analysts, ex-Microsoft employees and some folks still working for the company, and one name keeps coming up over and over again, which seems to suggest that Ballmer was shot from inside. This came to mind a bit this week with the latest IE security problem. The company has provided no apparent cover for Nadella even though the issue (sourced back to IE 6) arguably predates even Ballmer. So is Nadella being set up like Ballmer was?
The Power of No
I saw something similar happen at IBM when I worked there years ago and mostly it was out of the IBM legal group. Thanks to the old anti-trust consent decree put into place years before I joined the company, the legal department learned it had a ton of power and was at no risk by saying “no.” I don’t really care what it was, generally if you asked legal if you could do it, rather than walking you through a process where risk was minimal, they’d just say “no.” If you pushed, they’d generally point back to that consent decree and because no one really wanted to read it, you just didn’t ask legal or didn’t make any provocative moves.
Now the reason the legal group did this was because it learned that if as a group, they said “no,” and if whatever the plan involved was done anyway and blew up, they’d look brilliant. If they said “no” and it wasn’t actually done, they’d look brilliant. And if they said “no,” and the plan was carried out anyway and actually worked, no one would remember that legal had said “no.” Saying “no” might screw the company, but it was a great career builder and safety net for that department.
With that mentality in place, it wasn’t a wonder why IBM failed; it was more of a wonder why it took so long to fail. This is the equivalent to fighting a battle with some of your most powerful folks acting as obstacles to progress.
In hindsight, a lot of really strange moves look like someone inside Microsoft was working against the company. Zune started out with funding and an ugly product and ended with a decent product but no funding. The attempted Yahoo acquisition cratered Microsoft’s stock and wasn’t even consummated (it was almost as if Microsoft paid for the company but didn’t get it).
Each of these happened after Microsoft’s anti-trust problems, and it too had a consent decree to operate under, which clearly made the firm squeamish about being aggressive. I think Windows Vista was really the turning point. Even when Apple took the gloves off and did the PC vs. Mac campaign, clearly disparaging both Windows and Bill Gates (Microsoft’s iconic founder), Microsoft didn’t really respond. At Microsoft, Ballmer was the warrior, not Gates; although Gates was (and I imagine still is) Ballmer’s closest friend. How could Ballmer stand by and let Gates be made fun of by Apple month after month? I concluded that someone in power was saying “no” to any counter attack.
Now eventually Microsoft did counter attack a bit with two phone campaigns: one that made fun of non-Windows phone users (some of these were really great) and the later, better one showcasing the advantages of Windows phones and positioning both Android and Apple phone fans as stupid (not unlike Samsung’s own campaign against Apple). But, as I understand, most of these ads were created by someone going around or over a powerful person inside Microsoft who constantly said “no.”
If I’m right, the person who caused Ballmer so much pain is waiting to do the same thing to Nadella for all the right reasons and with some very ugly outcomes.
Wrapping Up: Advice for the CEO
My advice to Nadella would be to do his homework and find the person(s) I’m referencing. Then, find a way to get Google to hire them away from Microsoft and then the “no” problem will be gone and the next CEO fired will more likely be Brin and not Nadella. And, as a general thought, if you have people who love to say “no” in your own organization, well, you might want to find these people positions at competitor shops, as well. It is always safer to just say “no,” but people should be rewarded and retained based on results, not by how they game the system and prevent solutions—particularly if their game hurts the company. Chances are, most of the Microsoft senior staff knows who I’m talking about. I wonder if Nadella does? I expect we’ll find out soon enough.