Caitlin Fitzsimmons Online editor

Caitlin covers social media, marketing and technology and is BRW's social media editor. She has worked as a journalist in Sydney, London and San Francisco, writing for titles including The Guardian and The Australian Financial Review.

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Steve Ballmer’s successor must create culture of innovation at Microsoft

Published 26 August 2013 11:01, Updated 29 August 2013 00:45

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Steve Ballmer’s successor must create culture of innovation at Microsoft

Leaving the office: Steve Ballmer is set to exit Microsoft in 12 months. Photo: Bloomberg

As the board of Microsoft looks for a successor to chief executive Steve Ballmer, they should seize the opportunity for cultural change.

Innovation is the lifeblood of a technology firm and hiring talented people and filing patents is only half the equation – the other half is imagination and culture.

Ballmer, who will retire within 12 months but remain in charge until a successor is announced, was Microsoft’s consummate salesman and few could doubt his passion for the job.

He deserves credit for doing a decent job in tough times – he followed founder Bill Gates as CEO just as the turbo-charged growth of the 1990s ended and weeks before the end of the dotcom crash.

Under Ballmer’s leadership, Microsoft trebled revenues, but it also came late to trends like web search, smartphones and cloud computing.

Microsoft owned the 1990s but Google and Apple were the technology megastars of the early 21st century. It attempted to catch up in 2008 with a failed bid to buy Yahoo!, a company that was then also past its prime and is now worth much less.

Microsoft still has a solid business, while companies like BlackBerry are scrambling to survive, but if it wants to reclaim the mantle of innovation, its culture needs to change.

Ballmer’s successor should abolish “stack ranking”, the employee performance management system used at Microsoft.

Many people believe this system, which ranks all employees along a bell curve, did more to destroy the company’s culture than anything else.

Within every team, a certain percentage of employees are declared as top performers, good performers, average, below average or poor. Those at the top received bonuses and promotion, while those at the bottom were often sacked.

Former employees report that this led to a poisonous culture where collaboration was anathema because employees were directly competing with one another. People would avoid working alongside strong performers and routinely sabotage each other’s efforts and withhold information.

A culture of innovation needs constant maintenance and can be undone by complacency and eroded by a lot of small decisions taken in the name of efficiency.

Google, Apple losing their edge; Yahoo! searching for serendipity

There are troubling signs that Google could be losing its way on innovation.

Google drove a lot of innovation in the early days by letting employees spend 20 per cent of their time on their own pet projects. By giving staff autonomy and breathing space, Google benefited immensely; products such as Adsense, which accounts for about a quarter of revenue, came out of “20 per cent time”.

Now it seems Google’s commitment to “20 per cent time” is waning. It is no longer seen as a right for all staff but requires management approval in many cases and it has also reportedly been eroded by a culture of relentless efficiency and increasing workloads. Google also closed Google Labs, which showcased many of the projects, in 2011.

Meanwhile, the jury is out on whether Apple’s innovative culture is surviving under new CEO Tim Cook . Much of Apple’s innovation was driven by a cult-like culture under charismatic leader Steve Jobs. Cook’s more consensus-driven approach could lay down a good foundation for the long term, but the Apple of the future will inevitably be different.

At Yahoo!, chief executive Marissa Mayer is recreating a culture of innovation by buying start-ups and demanding employees stop working from home and come together in the office to allow the serendipity of unplanned collaboration.

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