Steve Ballmer's change of heart is touching, but it's five years too late

S-o-o-o-o, if the unnamed sources cited by Bloomberg are to be believed, Microsoft's CEO wants to shakeup management by shaking out the sales and marketing guys and bringing in more technically-oriented leadership. Oh yeah? Then why has Microsoft lost so many technically-savvy managers over the past 12 months or so -- including Robbie BachBob Muglia and Ray Ozzie, all of which got Steve Ballmer's boot out the door? Then there is Ballmer, who started this marketing management madness in a September 2005 reorganization. That's right, Ballmer is responsible for placing so many sales and marketing execs in key management positions and allowing them to appoint others.

According to the Bloomberg story, by reporter Dina Bass, Ballmer "plans to extend a management shake-up aimed at adding senior product executives with an engineering background." Bass is a veteran reporter who has covered Microsoft for many years, and she typically has impeccable sourcing. Her report is believable. The questions: Why? Why now?

Consolidation of Power

The two answers are intertwined. In mid-January post "Steve Ballmer finally shows who's in charge of Microsoft," I explained how the CEO is consolidating his power base like at no other time during his 11-year tenure. I posted in context of Muglia's sacking: "Ballmer has something to communicate here...He's in charge and will do whatever is necessary to make Microsoft more competitive in the decade 2010. No Microsoft leader is sacred enough; anyone can and will be sacked if they put personal agenda or perceived Microsoft agenda ahead of the company. Nearly all the major executives exiting Microsoft over the last year -- J Allard, Bach, Muglia and Ozzie, among others -- share something in common: They had a following within the company; purposely or not, they had established mini-fiefdoms."

The era of fiefdoms is over at Microsoft, but that's only part of the answer to the two questions. Some of Microsoft's brightest technical minds -- those focused on Ballmer's priorities -- have performed magical feats over the last few years. For example, Windows & Windows Live President Steven Sinofsky restored dignity, execution and trust to Microsoft desktop operating system development. Following the Windows Vista debacle, it seemed nothing could restore Microsoft's operating system image. But Sinofsky and his team did just that by balancing priorities and deftly executing a development plan that brought Windows 7 to market on time and tweaked in all the right places.

Surely, when Ballmer surveys the competitive landscape, where Microsoft's mobile ambitions collapsed and those of upstarts Apple and Google advanced, he has to look at leadership failures. It's why there's so clearly a new era of accountability at Microsoft. The days of seeming civil servant job security are over. But what about Ballmer's responsibility? He created the situation he's trying to correct -- again assuming a reorg is coming of the likes reported by Bass. It all goes back five-and-a-half years to the first truly major management change put in place on Ballmer's watch.

Problems Started in Late 2005

The September 2005 reorganization established three divisional presidents; today there are officially five but not all positions are filled. Right after the reorg, I wrote about the changes in the defunct Microsoft Monitor blog: "The new structure essentially puts marketing leaders at the top of the Microsoft organizational pyramid. The older structure put more product people in direct touch with Microsoft CEO Steve Ballmer. Looked at another way, the new organization sidelines some successful product managers...The question: Should the marketing problem be solved top down or bottom up? Bottom-up approach would more closely align marketing and product development, and earlier in the product development process. I can't answer that question, because Ballmer and his new presidents haven't articulated their strategy."

Marketing managers at the top filled the ranks lower down the structural pyramid with like kind. More recently, Microsoft's top-tier management structure is more a mix of marketers and engineers but nothing like when cofounder Bill Gates ran Microsoft during its heyday. In January 2007 Microsoft Watch post "Who runs Microsoft now?" I looked again at what the management changes had wrought: "As the sun sets on Jim Allchin's Microsoft career, the dawn ahead holds uncertainty about the company's direction under its predominately sales and marketing leadership." At the time, only 7 of Microsoft's top 20 leaders had technical or engineering backgrounds; most of them have since left the company.

"The question: Is a sales and marketing culture going to resonate or conflict with the company that Gates built?" I asked "From private conversations with Microsoft employees closer to product development, I've heard a fair bit of grumbling about swelling middle management and a priority of hiring more MBAs or sales people than technical staff." I'm still hearing those grumblings today. I must wonder about the question in reverse: If Ballmer puts more engineers in place, will that cause disruptive cultural conflict with the sales and marketing hierarchy?

A year ago tomorrow I posted here at Betanews: "Why former employees say Microsoft can't innovate." Their answer: Too many middle managers. Guess what? Many, perhaps most, of the middle managers are MBAs or have backgrounds in sales and marketing. I'll reiterate what I wrote 12 months ago: "Microsoft manages middle management by way of seemingly perennial reorganizations."

Another reorganization may soon come. If Ballmer is really serious about stirring up innovation, he can't move around the deck chairs on the Titanic. He's got to save the ship, starting by jettisoning some of this unwanted ballist over the side. Ballmer can't just swap out MBA and sales and marketing managers for engineers, he must get rid of them, too -- reduce the bureaucratic management structure. Even that won't easily restore Microsoft's engineering and software development culture. That's going to take a lot of time, which the company doesn't have much of right now.

Can Ballmer do the right thing? You tell me, please, in comments.

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