Microsoft Executive Exits Could Provide Opportunities

In the past few months, Microsoft has announced several high-profile retirements or departures from the executive ranks. The list includes Rob Short, Jeff Raikes, Bruce Jaffe, and Bill Gates. This could be an excellent opportunity for the new leaders to take the company in a different direction.Microsoft has reached middle age for a technology company. Many of the departing executives were with the company during a time when it was an innovative market leader, but both Microsoft and the market have changed significantly in the meantime. Its twin cash cows, Windows and Office, are still strong, but most of its new ventures are not successful in a business sense. Microsoft has lost several billion dollars since it launched the Xbox, nearly $2 billion last year alone. The most charitable way you could characterize its attempts to challenge Google in search and advertising is that it's been a slow starter.

Microsoft's $30 billion cash pile is a potent tool, but it also removes motivation from the company's actions and may be preventing it from succeeding. Sure, $30 billion is a problem we'd all like to have, but think of what excess cash has done for the judgment of Paris Hilton and Britney Spears. There's no sense of urgency, no need to focus, and no significant penalty for failing to listen to address customer needs.

At the beginning of my career, I worked at General Electric during the early Jack Welch years. Before Welch took charge, it was common for one GE division to be forced to use the products of another GE division, even if they weren't the best product. Welch turned that around; when a division chose a non-GE product, the GE division that made the competing product was called on the carpet to explain why their product wasn't even good enough for internal use.

In the past, Microsoft seems to have taken the old-style-GE approach of forcing the different divisions of Microsoft to coordinate their efforts, even when it hurts one or both divisions in their market. That sort of centralized planning didn't work for the Soviet Union, and it won't work for today's Microsoft. Perhaps that could have worked when regulators weren't on their case about tying their OS monopolies to the markets they want to enter, but those days are gone in both the USA and Europe. If the rising executives take a Jack Welch approach to managing Microsoft's wide-ranging businesses, they might be able to succeed at more than just Windows and Office.