An Open Letter To Steve Ballmer by Steve Baldwin , Monday, July 28, 2008
EVERY TIME I READ ABOUT Microsoft these days I'm reminded of the tagline from "Hellboy II" ("Believe It Or Not, He's the Good Guy"). Much as it's hard to like Microsoft these days (especially if you've recently attempted to install Vista and found that none of your old printers work, or tried to get your brand new Windows Mobile-powered device to connect to Exchange), Microsoft represents the only remaining counterweight to a complete dominance of the online advertising business by Google. For this reason alone we should all be rooting for it, and it is in this spirit that I have written this open letter to Steve Ballmer.
I was pleased to hear you refer to search as "a killer app" at your annual Analysts Day. I would have been even more pleased had I heard this term uttered five years ago, but I understand why this revelation has been late in coming. Search is a truly disruptive technology, and companies confronted with such disruption often display ostrich-like behavior. We find this same behavior at work in the mainstream agency world, at big media companies, in politics, and in every other sphere touched by the Internet. Just because you folks at Microsoft had a big hand in bringing usable computers to the masses doesn't mean that you're immune from the same reactive behavior displayed by other business incumbents.
I was also pleased to learn that you are splitting your Platforms & Services Division into two groups, because having your cash cow Windows product in the same business unit as your online efforts made as much sense as housing foxes and chickens in the same pen. Like it or not, the sun is setting on Windows, and while the revenue stream it provides will not slow to a trickle in the next several years, the future of computing lies beyond the desktop. If you are serious about challenging Google, you must allow your new Online Services group to compete freely without regard to whether the products they come up with threaten your traditional desktop hegemony.
This may be difficult to do, but here's a tip from the past that I believe will help you. Remember that little company called IBM, which realized that personal computers might be a disruptive threat to their Big Iron back in the early 1980s? Although senior management dismissed the idea that there was any mass market for PCs, they couldn't rule out the possibility that such devices might prove a threat, so they allowed a small "skunk works" group to develop such a PC at a remote location far away from corporate HQ. I'm quite sure that if this group had been housed at Armonk, the IBM PC would never have been developed, because somebody in some obscure IBM committee would have shot it down.
Microsoft is facing far more serious threats today than IBM faced decades ago. The capacity to develop disruptive innovations has been spread globally, and product development cycles of these innovations have accelerated exponentially. What you need is what Google's got: a culture that is disciplined, single-mindedly focused, and yet free enough to conceive and develop concepts that can be test-flown without undergoing time-consuming and bureaucratic approval processes. I don't expect that you or anyone else at Microsoft has the power to create such a culture companywide, because Microsoft is far too big, with too many legacy products to protect -- and a winner-take-all ideology that needs to be less Roman and a bit more Grecian.
Still, as IBM discovered, such a regeneration can be accomplished at the divisional level. To paraphrase Sting, "if you love your online group, you must set them free." Move these people away from Redmond, give them a leader with a blank check to innovate, and insulate them from anybody at Microsoft whose response to change is to say "we can't do that." With Bill Gates gone, and the Yahoo distraction out of the way, it's time for you to step from behind your PowerPoint slides, cut your ties with the past, and get serious about competing. Because, Mr. Ballmer, when you get right down to it, you can't compete with Google without first competing with yourself.
Sincerely, Steve (not the actor, just an SEM guy) Baldwin
You are receiving this newsletter at firstname.lastname@example.org as part of your membership with MediaPost. If this issue was forwarded to you and you would like to begin receiving a copy of your own, please visit our site - www.mediapost.com - and become a complimentary member. For advertising opportunities see our online media kit. If you'd rather not receive this newsletter in the future click here. We welcome and appreciate forwarding of our newsletters in their entirety or in part with proper attribution. (c) 2008 MediaPost Communications, 1140 Broadway, 4th Floor, New York, NY 10001