Gates out; Ballmer in - Microsoft Leadership Change Announced

Bill Gates is a smart man. You don’t get to be the richest man in the world by being dumb.

Bill Gates is a sharp businessman. You don’t grow a "two guys in a basement" operation into a business with a market capitalization of over $500 Billion if you’re not.

Bill Gates is a good manager. He just announced that Microsoft President Steve Ballmer has been promoted to Chief Executive Officer (CEO).

"Gates Gives No. 2 Ballmer More Control", thestreet.com
"Gates Drops The CEO Reins", CMP's Tech Web
"What change at the top means for Microsoft ", Seattle Times
"Gates passes CEO title to Ballmer", Puget Sound Business Journal

Gates' New Role
Gates will remain Chairman of Microsoft, but he won’t fade away. He has created a new position for himself that lets him continue what he enjoys and excels at - Chief Software Architect. Meanwhile, Ballmer will remain President in addition to his new duties as CEO.

In my article Professional Management vs. Entrepreneurial Management, I talk about when, or if, an entrepreneur should turn over control of his company to professional management. Gates was smart enough to hire professional managers, like Ballmer, early in the growth of his company. The point at which it became appropriate to cede control to them apparently just arrived.

My article The Right People in the Wrong Jobs talks about the need to put the right people in the right jobs to maximize both company profits and employee satisfaction. This change in Microsoft leadership looks like a good change on both counts.

You couldn’t find two more different individuals than Bill Gates and Steve Ballmer. Gates is quiet, reserved, thoughtful and bookish. Ballmer is energetic, outspoken, and athletic. Yet the two have formed an amazing team since Gates hired Ballmer twenty years ago.

Why Change Now?
While "Wall Street takes Gates news in stride", the question now is will this power shift at Microsoft make any difference to the Department of Justice (DOJ) and their monopoly lawsuit against Microsoft? Is this a smart move on Bill's part to protect his company and his shareholders investment and his own fortune?

I think a lot of people, including a lot of people at DOJ, think Bill is a softie, a pushover, because he is quiet and bookish. They think they can push him around. He may be smarter, but they're tougher. The old schoolyard bully thing. But not Steve Ballmer.

I don't know if Steve Ballmer was a schoolyard bully, but he sure could have been. He is brash and opinionated and outspoken. Anybody who gets in a fight with him is gonna know it. He is so imposing that a lot of people choose not to even take him on because they think that even if they win they are sure to get beat up on pretty bad.

I'm betting Bill Gates thinks the DOJ will feel this way too. With Steve Ballmer across the table they are going to get bloodied. They'll puff up and bluster, but they'll propose better initial terms to Ballmer than they would have to Gates. That will result in a better-negotiated outcome for Microsoft. And, after all, isn’t that what companies expect their management to do.

John --

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