Why image is everything: Steve Ballmer isn’t the problem at Microsoft
Microsoft recently reported very strong earnings, beating the street on the top and bottom lines (revenue and profit) with strong performance with both consumer (Xbox) and Corporate products.
Surface did surprisingly well (it is vastly improved this year), Office 365 and Azure did very well, and Bing continues to chew into Google search at an accelerating pace.
However, PC revenue continued to decline but at a slowing rate. This kind of performance would typically assure a CEO’s tenure or, had a new CEO been selected, showcase the selection was successful. Nevertheless, Steve Ballmer is leaving without a clear heir, so perhaps it’s time to rethink that strategy.
I believe Microsoft is making a huge mistake in getting rid of Steve Ballmer, simply because I doubt anyone else can do a better job with what is a very complex company. And if they don’t fix the real cause of Steve’s failure the next CEO will do far worse. Let me explain.
Yahoo vs. Microsoft
If you were to look at the public coverage of both companies you’d conclude that Marissa Mayer was a resounding success and Steve Ballmer was a colossal failure. Mayer - the latest in a line of Yahoo CEOs - is a media darling and on stage at CES was hailed as the next Steve Jobs. The company stock is up and folks are feeling pretty good about the company until they look in depth at the financials and find that the improved financial performance is due to an investment in China (Mayer didn’t make and wants to get rid of), rather than ongoing operations which showcase increasing weakness.
Steve Ballmer doesn’t have the corporate marketing or PR of Mayer, and he isn’t as photogenic, but Microsoft could still buy Yahoo several times over, has showcased consistent massive profitability from operations Steve Ballmer did control and just reported one of the most profitable quarters in Microdot’s history. Yet Ballmer is pummeled for not having better mobile results (something Yahoo lacks as well) and for and for the decline in PCs even though he has clearly diversified and sheltered Microsoft from this decline.
Image is actually pretty easy to fix, operational excellence not so much, suggesting that maybe rather than replacing Ballmer Microsoft should focus on the cause of Ballmer’s problem because if Microsoft can’t defend its CEO’s image the next man or woman will be equally screwed.
The Importance of Corporate Marketing and PR
The one major mistake that Steve Ballmer made was that during his time in office Corporate Marketing was largely gutted and Corporate PR went from being Microsoft’s greatest asset to its greatest liability. It lost the ability to control how people viewed the firm. Granted, Microsoft also had some very high profile screw ups like Zune, Windows Phone 6-7, and Vista but Apple had a few big screw ups under Jobs like Apple Servers, MobileMe, and the horrid ROKR phone. However, Apple’s marketing and PR folks successfully made it so we only saw Apple’s successes which, while amazing, weren’t without issues like losing market leadership to Samsung and Google.
Image is Everything
What the successful executive generally learns early in their carrier is that it doesn’t matter what you do, what matters is how people perceive you. Image is everything. If they think of you as a success then they take whatever you do and fit it into that impression, if they think of you as a failure they do the same thus the difference between Ballmer and Mayer. They think of Mayer as this fantastic ex-Google executive and whatever happens goes to her credit. In contast, they perceive Ballmer as a horrid failure and the same thing happens with the opposite impact.
If you have a sibling, you likely saw this when you were growing up: one of you was an angel and could do no wrong and the other was hell spawn and could do no right and neither impression was accurate. This is often why celebrity marriages don’t work, people think they are marrying a magical character they played in a movie and they aren’t that person in real life. Some are real monsters, some are surprisingly nice, but virtually none of them are like the people they play on TV or in movies.
Wrapping Up: The Real Problem
A new CEO at Microsoft, unless they specifically fix the image problem the firm has, will likely be less successful than Ballmer was. He knows the company better and as the current financial report showcases, is actually running it very well. But neither Microsoft nor Ballmer are getting the full credit for what the firm is accomplishing and the company have been punished as a result. They have the talent to fix this in people like Kathleen Hall who know specifically how to address this problem but they clearly haven’t focused these people on the broad problem. If they do, they may find they’ll be better off if Ballmer stays, if they don’t the new CEO will be even less successful than Steve was. Something to noodle on this week but always remember in public and private life image really IS everything.