Monday, September 1, 2008

Microsoft’s Ballmer Says Nurturing Innovation and Top Talent Are Priorities

STANFORD GRADUATE SCHOOL OF BUSINESS — As Microsoft has grown from an upstart to an international computer technology giant, CEO Steve Ballmer says his leadership style has had to evolve, too.

“It’s almost like two completely different universes,” said Ballmer, who dropped out of the Stanford Graduate School of Business to join Microsoft after being recruited by his college roommate, company cofounder Bill Gates.

Ballmer outlined his thoughts on leadership and challenges ahead for Microsoft on September 25 during a View from the Top speech that drew a standing-room-only crowd of Business School students.

What it took to be a good leader of a company with one line of business—personal computers—and 30 employees back in the early 1980s is vastly different from what it takes to run present-day Microsoft, which has nearly 90,000 workers and an increasing number of products, including internet search. In an effort to grow beyond the desktop software business model, Microsoft has also expanded into servers, consumer electronics, and information/media.

That’s led Ballmer to evolve from being strictly a hands-on manager.

“Moving levers everyday; that’s not what I’m doing” now, Ballmer told the group. “I know the advertising business, but I’ve never operated our advertising business. You’ve got to really delegate and trust people.”

Instead, Ballmer determines the best business strategies for the company and spends time getting to know key employees, whether they are new up-and-comers or members of the senior management team. “There are about 300 to 400 people I really feel like I can and should have some real involvement helping shape what they do next,” he said. “Nurturing and developing the top talent; for me, that ends up being the number one thing I spend time with.”

If he could change one decision he made since becoming CEO, Ballmer said he’d have pushed the company to start developing internet search products years earlier. Right now Microsoft has about 10 percent of the search advertising market, Ballmer said, trailing both market leader Google and Yahoo.

“No question,” he said. “We really got into the research and development business around search five years ago. If we’d gotten in eight years ago, we’d be in a very different place than we are today. We should have gotten started even though the business model wasn’t clear.”

To ensure they recognize future trends, the company has made changes. “I have more time invested thinking about how you run an innovation-based company than most people do,” said Ballmer. “We have big projects, little projects, incubation efforts, research, acquisitions, and internal development."

Soon after Microsoft was founded, Ballmer dropped out of Stanford’s business school in 1980 to work for the tiny startup at the invitation of Microsoft cofounder Bill Gates. Gates was one of Ballmer’s former classmates at Harvard, where Ballmer had received a degree in applied mathematics and economics in 1973.

Ballmer said he passed up summer job opportunities in consulting, finance, and other established industries in 1980 to join Microsoft, what he called a “crazy little software company.” A short time later, after Gates vigorously balked when Ballmer said the 30-person firm needed to hire 18 more people, Ballmer said he almost quit in disgust.  But, Ballmer said, Gates assured him that the company would “put a computer on every desk and in every home,” a phrase that became Microsoft’s mantra. Ballmer stayed, and over the years went on to hold a variety of roles that placed him second only to Gates.  Ballmer played a crucial role in Microsoft's growth, and became Microsoft's president in 1998 and chief executive officer in 2000.

When asked by a curious student for more details about his decision to leave Stanford’s business school, Ballmer said it was the right thing for him to do.

“It’s not for everybody,” Ballmer admitted. “You’ve got to be in the right place in your life and it’s got to be the right opportunity. If you see the right opportunity, you should seize it.”