|Gates vs. Ballmer: Leadership at Microsoft |
|Thought Exercise 6 |
|HRM 601 |
|Vickii Bacchetta |
|April 5, 2009 |

Broadly defined, a leader is someone who sets a direction for a company. This vision needs to be created and then fiercely believed and upheld. The leader must inspire others to work toward the vision. To do this well, a leader has to first be followed, trusted, and respected by their subordinates.

Typically leaders have this vision because they also have a strong aspiration to make their mark on things. They aren’t happy with the way things are and believe they can make a substantial change. These characteristics may seem to make a person egotistical and arrogant but a good leader is still able to admit to and learn from faults or mistakes.

What is Bill Gates’ leadership style?

Bill Gates was great at setting direction for the company. He had a vision of the world and successfully moved Microsoft in that direction. That vision was “a computer on every desk and in every home”. Gates started the first major software company at a time when personal computing hardly existed – a radical change that has helped lead us into the Information Era. Gates believes, “it will affect the world seismically, rocking us in the same way the discovery of the scientific method, the invention of printing… did.”

This is the first mark of a transformational leader. He had a major commitment to a huge goal and backed it with his own values and beliefs. In his book, Business the Bill Gates Way, Des Dearlove writes, “Bill Gates is a modern business phenomenon: the greatest of the cyber-tycoons. His is not simply a story of technical brilliance and enormous wealth; it is one of remarkable business vision and an obsessive desire to win. It is also about a leadership style that is radically different to anything the business world has seen before.” He not only wanted his company to make an impact on the world, but he wanted to be “driving the bus” that did it.

He did this with a combination of leadership styles. Gates is directive in terms of what he wants and the strategy of the company. He has accepted that his major role is to be the visionary. He likes confrontation in a sense that he wants things out in the open so they can be dealt with and resolved. He had the ability to respond to market changes by quickly reinventing the company.

He is also, however, participative and consultative. He does seek advice from subordinates but makes his own decisions. During his reign he considered the input of all employees and in most cases even responded to their emails within 24 hours. Gates also participated in what Microsoft calls “Think Week”. Think Week is where Gates is the sole reader of over 100 documents written by employees pertaining to company issues and future technology. Decentralizing the process of gathering information led to a stronger company and helped stay away from the bureaucracy that Gates did not want.

This also helps him gain the trust of his employees. It shows them that Gates cares about their opinions and wants their advice in running the business. Being a programmer himself also enables him to interact with employees on a common ground. He isn’t just another MBA or manager, he’s one of them. This makes him a border-line craftsmen in terms of leadership, however he did a good job over the years in becoming interested and on top of other aspects of the business. It was this ability to handle both the business and technical sides of the company that made Microsoft so successful.

Being a transformational leader also makes him charismatic yet humble. He is hard working and motivates people. After all, he did get Steve Ballmer to drop out of Stanford to come and work with Microsoft. Successful ventures are defended heartily keeping employees inspired to do more. He also gives credit to competition when they have a great product. In the video, Bill Gates Praising Apple Computers, Gates praises Apple for their standard setting products. He really cares about the evolution of technology and not just his own personal development.

What is Steve Ballmer’s leadership style?

Steve Ballmer’s leadership style is much less defined. He is not very big on radical change and does not seem to have the same bold vision that Gates had. I’m not quite sure what his greater goal is. They have already achieved Gate’s goal so now what is Ballmer’s? Ballmer once said the focus was no longer Windows or web developers, “Not any more baby, it's advertising, advertising, advertising!” (Microsoft’s Ballmer and his ‘brother’ Bill Gates) He’s staying true to his business background but that isn’t what Microsoft is all about.

This does however open up a few doors for Microsoft. It is believed by Louis Carter, CEO of the Best Practice Institute, that one of Ballmer’s strengths is that he understands the industry’s market. “Ballmer allows for a huge pipeline of information around him,” says Carter. “He is willing to stand up and hear the feedback. And he closely monitors the needs of his audience - market demands, perceived competitors, customers and employees - to immediately change his position at any given moment.”

As Ballmer comes from the business side, he is more financially and task oriented. There is no technical confrontation with him as he is not a technical person and probably doesn’t know how to interact with programmers or designers in the same way Gates did. In spite of this perceived downfall, he does believe that talent is crucial to reaching technical goals. “According to Ballmer, Microsoft must maintain a corporate culture that nurtures and rewards innovation in order to tap the full potential of technologies...” (Ballmer Foresees Growth in Information Management Technology)

As will be discussed shortly, his focus does seem to be more on beating the competition and raising values and revenues. This seems to make him more transactional leader than transformational. However, charisma is a defining characteristic of Ballmer and he is able to inspire people. He even classifies himself as more “bubbly” than other leaders. Even so, his emotional and charismatic antics are not sufficient for a leadership role as suggested in the lecture. Perhaps these antics are more of a publicity stunt than feelings backed by values and a true belief in the company.

If that is the case, he may not be a leader in the full sense of the word. Maybe a gamesman would be a more accurate depiction? He seems to believe in something but will still do anything to win and can disguise moves with crazy behavior. Of course it’s impossible to determine one’s true thought and beliefs so this is purely hypothetical speculation. At least he says he realizes that some adjustments need to be made regarding his leadership style. This shift to CEO has forced these changes, and also changes to his personality as described by some executives he works closely with.

These changes have not subdued his blatant arrogance. In the video Microsoft CEO Ballmer laughs at Apple iPhone, he actually laughs at the idea of the iPhone and believes Microsoft’s strategy is clearly better. He almost seems confused and insulted when then interviewer asks him “How do you compete with that?” He does go on to mention that the iPod is in the lead for music but quickly goes on to say the Zune is gaining ground. I wonder how he feels about that interview now…

The same arrogance is displayed in regards to Google. In The CEO Must Steer the Corporate Culture, Says Steve Ballmer, Ballmer notes that Google’s success is not a threat to Microsoft but that their business built on search technology is very good. He went on to say “everything else [it produces] is sort of cute.” And he disagrees with Google’s tactic of letting employees work on their own projects by saying “pet projects aren't ‘paying for me to come down to Stanford Business School.’” He can never compliment a competitive business without subsequently mentioning that Microsoft is better in his opinion.

This could be in part due to his philosophy on partnerships. He wants to pass a stable vision of Microsoft onto its partners and customers to convince them that even with all of the hype surrounding Google and iPhones, Microsoft is still not only in the game, but a leader in the industry. “I have learned about business partners that business partners are your partners because they make money with you, they succeed with you. And if you don't succeed, eventually you don't have any partners.” (Steve Ballmer speaks passionately about Microsoft, Leadership… and Passion)

What effect did Gates have on Microsoft?

James Collins, co-author of the book Built to Last: Successful Habits of Visionary Companies, said, “To my mind, Microsoft has never been a company. It's a single remarkable individual, Gates, with thousands of the smartest, best-paid people anywhere helping that individual. It's basically like a big wheel, with Gates at the hub.” (Leadership the Bill Gates Way)

He was a very smart, hardworking, goal driven individual who had the ability to inspire people to follow him. That was his biggest contribution to the company as a leader. Once the vision was clear, the company could speak for itself. He reinvented and refocused it frequently, always with a great degree of confidence. Although he enjoyed beating the competition he typically did not cast an arrogant or vindictive vibe and praised competitors for products he felt were superior.

When asked about competition by Peter Jennings in an ABC interview, Gates said, “Well, competition is always a fantastic thing, and the computer industry is intensely competitive. Whether it's Google or Apple or free software, we've got some fantastic competitors and it keeps us on our toes.”

Gates also had the greatest talents hand selected for him. He liked to work closely with his employees as much as he could and greatly considered their feedback. A great deal of effort was put into retaining these employees that Gates considered invaluable to Microsoft’s success. The culture reflected the importance of these employees and Microsoft set a high standard for how technology companies should treat their employees. There was a big focus on career development and healthcare. Early on, all employees could email him directly with comments, suggestions, or complaints. He also created a campus that employees never had to leave. They were offered free drinks and health club memberships, laundry and grocery services, and even counseling. “Bill Gates understood the value in paying well, giving great perks, and investing in his employee’s future. He has probably made more people wealthy than any other CEO alive. He also understands what it takes to motivate his employees so they were engaged and excited about their work.” (7 Awesome Lessons from Bill Gates – Love Him or Hate Him, He is a Genius)

It also was a culture that nurtured employees in conjunction with the innovations and products they were working on. Gates put a great emphasis on innovation and believes, “In fact, the way software works -- so long as you are using your existing software -- you don't pay us anything at all. So we're only paid for breakthroughs. We have to make a new version of Windows or Office that you think is worth going out and buying.” (One-on-One with Bill Gates) As a result, Gates tried to meet with every product team for a “Bill Review”. As described by Chris Caposela, a senior Vice President in the Business Division, “Bill Review’s” were “famous for the intense barrage of questions Gates would fire at product teams. Those are sort of legendary for teams to get a big morale boost from how that product review went. [They] got a lot of mileage out of the feedback that he would provide.” (Ballmer focusing on next big thing for Microsoft). This kept him in direct contact with all of the company’s offerings, as well provided as a visible, involved, and enthusiastic leader to employees.

What effect did Ballmer have on Microsoft?

While Bill Gates liked to focus the majority of his time on technology and production, Steve Ballmer focuses more on the business aspects of the company. He reorganized the business into units and tried to expand on core products as a new strategy. Ballmer has also tried to make efforts to remedy customer and partner relationships.

It’s not clear if his business oriented approach to these problems is actually helping or not but it’s a step in the right direction. It is also not clear if he has the same overall vision and tenacity for technology as Gates. He says his focus is on the long-term and wants to work on markets until they are competitive. Rather than accomplishing this by focusing on maintaining loyal customers with useful and meaningful new product offerings and updates, he instead half-heartedly focuses on catching up to and beating the competition, no matter what the market might be.

For example, Microsoft originally had two main offerings – operating systems and Office. They recently added the Web and Software as a Service to that list. So why bother with the Zune music player? It’s an obvious reaction to the iPod/iPhone which Ballmer publicly scoffed at. This is nasty spin on the once positive “embrace and extend” mantra at Microsoft. Combined with Ballmer’s flagrant attitude, it leaves those loyal customers wondering why Microsoft has not released a decent product under his reign. And furthermore, why he isn’t doing anything to improve the products he does have.

As of late, Ballmer has realized some of his faults and actively tried to change his style. He has transformed himself and the business. As a person, he is more reserved in appearance and portrays his attitude as passionate and energetic. His entrance into seemingly random markets is now portrayed as a base for future growth. He is also working to save Microsoft’s reputation as a mature and trust worthy company.

Internally, Ballmer is trying to make some changes for the better. He created Vision Version 2 which is supposed to energize employees and help them focus on customers. He wants to improve current service and support while still staying/becoming the industry leader. To help accomplish this he is giving more authority to employees and running with some of their ideas. This will streamline some of the recent bureaucracy so that research and development is not slowed. In some ways this might be a combination of his lack of technical expertise and his financial management skills. The new vision saves money and allows a Microsoft without Bill Gates micromanaging projects to succeed.

Still a lingering concern for many, Ballmer is pushing forcefully for expansion beyond Windows. “Moving into these areas may be the riskiest part of Microsoft's strategy under Ballmer. It involves a tricky balancing act that pits Microsoft's growth aspirations against its pledge to be a better partner and leader in the industry.” (Microsoft CEO wants company to broaden its reach, burnish its reputation) Part of the maturation plan will have to be learning to play nicely with these competitors and partners. The other part of the plan will be getting the employees and customers on board. Ballmer says “When you are not the first guy in the market, you have two choices…: Get in or don't get in. ... Are you a company that is afraid to get into something where there is a clear market leader? We put our hands up and said, 'No, we're not going to be afraid of that.'” (Steve Ballmer speaks passionately about Microsoft, Leadership… and Passion) If Ballmer can get these two key parts nailed down he will have a really great chance to do something big with the company.

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