Gates, Ballmer to Employees: All is Well

Following a news conference announcing that Microsoft chairman Bill Gates would be leaving his role as chief software architect in two years to focus on his Foundation, both Gates and Microsoft CEO Steve Ballmer sent company-wide e-mails to employees. The memos provide a look into what the future will bring when the software era of Bill Gates comes to an end.

E-mail from Steve Ballmer on June 15, 2006:

I wanted to share some important news with you, and talk a little bit about some of my top priorities in the coming months.


Today we are announcing the news that – effective July 2008 – Bill will transition to a part-time role at the company. While this is significant news, it's important to note that for the next two years Bill will continue full-time as Chairman, and that even after July 2008 he will continue as Chairman and an advisor on key development and business issues.

This is not a decision that either Bill or I take lightly. We have a solid transition plan, and Microsoft is well-positioned to make this transition given the depth of senior leaders we have, and our strong pipeline of products over the coming year.

As Microsoft has grown, Bill also has taken on another challenge – the amazing work of the Bill & Melinda Gates Foundation to confront critical issues like global health and education. The Foundation's efforts have begun to have a major impact, and there is growing need for him to spend more of his time on Foundation activities.

Bill and I have talked over the years about scaling the company's leadership and about succession planning. Our efforts to expand the company's leadership and delegate more authority to meet the challenges of our expanded scope of innovation are well underway. At the same time, we agreed that when the time came for Bill to reduce his time at the company, we would announce it far enough in advance to ensure a smooth transition, giving him time to work side by side with new leaders. Bill and I are confident this plan will ensure Microsoft's future and build from the steps we have already taken.

You can't replace everything that Bill brings to this company with a single person, but Bill and I are confident we've assembled a great team that can step up and drive Microsoft innovation forward without missing a beat.

  • Ray Ozzie will immediately take on Bill's role of Chief Software Architect. In Ray's expanded role, he will partner with the Presidents to drive technical, strategic and business decisions that have cross-divisional impact.
  • Craig Mundie takes the newly created position of Chief Research and Strategy Officer. Craig will assume Bill's responsibility for the Company's research and incubation activities and partner with Brad Smith to guide our intellectual property and policy work, in addition to his existing responsibilities.
  • Effective immediately, Rick Rashid and his organization will report to Craig, and David Vaskevitch, our CTO, will report to Ray and work closely with him on company-wide technical issues. Their roles are unchanged. Eric Rudder and Jon DeVaan will also stay reporting to Bill. In a year, we will transition all Bill's direct reports so we are fully in our new roles.
  • Ray, Craig and I will be instituting regular meetings with Technical Fellows, Distinguished Engineers, and other top development executives, to ensure that we are incorporating their insights into our strategic thinking and decisions.

    About a year ago, we organized our operations into 3 major divisions and an operating group, and gave those units broad authority. This was a first step toward greater speed and agility, by pushing decision-making and accountability out to the individual businesses. We have great leaders in place to run our businesses including our COO Kevin Turner, our division presidents Kevin Johnson, Jeff Raikes, and Robbie Bach. And, of course, with Jim Allchin's remaining time here before retirement, he's focused on shipping a high-quality Windows Vista release. As we enter this second phase of transition, I am especially excited to see key product leaders like Steven Sinofsky, J Allard, Bob Muglia, and others step up to new and expanded responsibilities.

    We have great teams running our businesses and spearheading our technical leadership. I am drawing from my direct reports and the people highlighted here on both the business and technical sides to form a kind of Kitchen Cabinet of advisers. They will help me make the right decisions that cut across all our businesses -- about where to innovate, where to invest, how to evolve our brand, how to manage our people and improve our effectiveness.

    In the third phase, by the first of the year, many teams will have completed important milestones, giving our leaders the chance to take bold steps to further improve agility, focus on Live and other new priorities, and give exciting and expanded responsibilities to top performers.

    As we move forward, there are some basic principles that will continue to be key to our success.

    First, we take an incredibly broad view when it comes to innovation. We invest in long-term research and we invest in product features that are ready to come to market right away. We nurture small teams, and we do large scale projects. We innovate in development and incubation groups as well as through external acquistions. Innovation is the top priority for the company.

    Second, we are a products and services company. We hire the most brilliant and passionate technical people, and give them the tools and environment where they can do their best work. We have never had a better year than the last one in recruiting. The number and quality of campus and industry hires was fantastic and our retention of good performers is near an all time high. Great products brought to market by first-rate business people is the key to our long term success.

    And third, we're patient, we're relentless, we keep working and investing and listening to our customers and improving our products until we rise to the top. Windows, Office, and Server all took a number of years to get to critical mass. We are applying the same tenacity and long-term commitment to break through in all areas from Windows, Office, business applications and servers, to advertising, search, TV and gaming, and mobility.

    Perhaps most importantly, we will be tenacious and persistent in driving our Live initiative with all the technology and business model implications that it has.

    We do also need to be relentless in improving our agility, quality, and impact as a company – ensuring our products come to market on a timely basis, decisions are clear and stick, and our time and energy are focused on customers and creating new software.

    We have an amazing opportunity ahead of us. We have only scratched the surface of what software innovation can do for our customers, and the value we can create for employees, shareholders and customers alike.

    Later this afternoon we'll be holding a company webcast to discuss our transition plans over the next two years and take your questions. Please join me, Bill and other senior leaders at 4:30pm for the Employee Town Hall webcast.



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