Here is a slight paraphrase of the line from Microsoft’s press release making the “Steven Sinofsky leaving Microsoft” news public that counts the most: “Sinofsky will be leaving the company effective immediately.”
Our own immediate reaction is: thank goodness! Stay with us, we’ll dig into why.
There is something in that press statement that lacks any sort of goodwill on either side – Microsoft’s or Sinofsky’s. Clearly the parting was not amicable, and clearly this goes all the way up the ladder to Steve Ballmer, but keep in mind that there was only one rung on that particular ladder. Given this we can only conclude one thing – the bottom line is that Steven Sinofsky was kicked out of Microsoft because of his Surface skateboard – apparently Ballmer did not get one and he was not happy about it.
OK, we’re kidding of course, but in truth that reason is just as good as any other. You will hear about Sinofsky demanding that Ballmer designate him as Microsoft’s CEO heir apparent and that Ballmer refused; you will hear that Sinofsky was possibly too abrasive and politically incorrect with a lot of politically correct ‘Softies (personally we’ve never known anyone politically correct at Microsoft – it takes up too much valuable time from doing insanely smart things to waste it on being politically correct); you will hear that Sinofsky was on the outs with the hardware partners, specifically because they were blindsided by the Surface tablets; you will hear that Sinofsky didn’t get along with other executives – much the same as the criticism Scott Forstall at Apple was painted with; and finally, you will hear that Sinofsky is out because the early returns on Windows 8 sales are not looking too good.
If the Surface skateboard reasoning doesn’t resonate as the likely excuse, we strongly suggest that in reality it was all of the above and in no particular order (with or without the Surface skateboard as a factor). We would leave the entire issue of Windows 8 sales out of the argument however – it is simply too early in the sales cycle to make such a call on this front. And we should note that whether or not Sinofsky walked or Microsoft pushed him out, we still count it as Microsoft dumping Sinofsky, and not the other way around.
Just for the record we’ll note that effective immediately Julie Larson-Green will lead Windows engineering and have responsibility for all product development for Windows and Windows Live, in addition to Surface. All of the current Windows engineering teams will report into Larson-Green and she will report to Ballmer. Tami Reller will lead business and marketing strategy for Windows including Surface and partner devices.
Reller will also report directly to Ballmer.
Now, rather than wasting time handwringing over yet another fall of Microsoft as Google and Apple eat its lunch while the best man for the CEO job takes a walk, we going to take a different approach and suggest that Steven Sinofsky is the very last person who should run Microsoft after Ballmer leaves. We haven’t been all that happy with Ballmer staying on as long as he has, and having yet another person taking the Microsoft helm who dates back to the Microsoft of the 1980s is not going to be our choice.
About the CEO Role at Microsoft
Interestingly, the CEO role at Microsoft isn’t quite the same as what the CEO role at Apple is. Microsoft is blessed (or cursed, depending on your point of view) with consisting of a number of huge, multibillion dollar businesses – most of which have their revenue streams locked tightly to the enterprise. One of the things that Ballmer has done well over the years is to have transformed himself from being a tech maverick (yes, that’s right, he was indeed a maverick once) to being a true member of the Fortune 500 elite management corps. Those staid blue suits, white shirts and red ties he usually wears these days exist for a reason.
As CEO, one of the things Ballmer must do is to protect and grow all of Microsoft’s massive revenue streams. This is something he has done extremely well. Unfortunately, it is something that turns Microsoft, from a stock market perspective, into a value company (and value investors like owning it for this reason) and fully diminishes any notion of Microsoft as a growth company – by which we mean the kind that is able to deliver a new vision, drive exciting new technology things (such as Kinect) and deliver amazing innovation that can send a stock price soaring. Even when it manages to do so the much bigger core Microsoft ultimately ends up bottling up the new things that drive vision.
That isn’t to say that Microsoft can’t have both. The problem has long been (for at least a decade now) that Ballmer went too far over to the blue suit and red tie side, and coupled it with an enormous amount of hubris over the decade about how Microsoft always knows best, how Microsoft always knows more, how Microsoft is always on the cutting edge. The blue suit and red tie version of Ballmer lost touch with the ultimate immediacy of innovation – over the last ten years or so Microsoft has been late to the new technology game at every turn, but would always end up pontificating about that technology as if it were the cutting edge two years after it actually was.
For example, when Windows Phone 7 first emerged, Ballmer spoke of it as if iOS and Android hadn’t already existed for two years and hadn’t already well-defined modern mobile operating systems. Ballmer spoke about mobility as if he’d been in suspended animation for two years.
Mobility is a great case in point here – and mobility has proven itself to be so large that Microsoft could not paper over its failures. But let’s give Microsoft credit too – over the last several years it has put in place a great game plan for getting back into the mobility game – and Sinofsky deserves a good bit of credit for moving the strategy along. Today’s strategy will not pay off over the course of a few months. It will rather pay off over the course of several years. In 2015 the mobile landscape – especially in the enterprise, where all of Microsoft’s core revenue streams sit – will have turned into a Microsoft landscape.
Windows 8 in its various forms, along with its user interface and user experience, as well as upcoming new releases of Windows, will be entirely mobile-centric. And these mobility pieces of Microsoft will have fully evolved into yet another core multibillion dollar “value investor” business that Microsoft’s CEO must protect. Ballmer has noted from time to time that he intends to stay at the helm of Microsoft until 2017 – 2018, which means he will still be “blue suit and red tie” charge of the grand collection of Microsoft businesses in 2015, of which mobility will have simply become yet another major revenue stream.
Sinofsky headed up Microsoft Office for a number of years and delivered significant improvements on it – so that the case can be made that he had some sort of handle on key Microsoft enterprise business. But it wasn’t anything new. And he has stewarded Windows from the ill-fated Vista to today, but in the end Sinofsky never delivered a vision for something new and bold. In the end, the new Windows interface is ultimately still derivative. It reflects today’s mobility, but it doesn’t define anything new or visionary about mobility either for today or tomorrow.
Here is the other thing about Sinofsky that must be noted – as one of those Microsofties dating back to the 1980s he brings with him that very same hubris that Ballmer exhibits. It was most amazingly on display during an interview Walt Mossberg conducted with him at the last All Things D conference, and it was a mighty scary thing to behold. Here was Sinofsky channeling Ballmer, and pontificating about technology two years behind the times as if the clock had stopped running. It was scary to behold.
Public hubris and pontification do not mix with vision and leadership. We’ve noted elsewhere and often the refreshing lack of both of these qualities in the ways that Joe Belfiore (Microsoft’s man in charge of Windows Phone) and Panos Panay (Microsoft’s man behind the Surface tablets) conduct their public events and interview statements. They both operate in the here and now but do so with humility rather than hubris. They don’t do this to be specifically politically correct – they do it because this is who they are.
They are not tied to the old Microsoft, and they represent the new directions Microsoft must head in from the trenches.
New Visions or Protecting the Old?
Beyond the trenches, protecting the substantial old lines of business requires being able to ensure generally frictionless interactions between the CEO and the leaders of these old technologies. Doing so would likely not be Sinofsky’s strong suit. Causing a great deal of consternation amongst hardware vendors is also not encouraging – Ballmer (in full blue suit and red tie mode) would have ensured that this did not happen, but Sinofsky (who has not made any such transition) viewed it as a necessary evil.
One has to assume that Ballmer and no doubt other significant board members took note of it, and probably believe that Sinofsky is not someone who would make either a happy “blue suit and red tie wearing caretaker,” nor someone who would be a careful caretaker of those businesses while pushing new initiatives. That is certainly our view of Sinofsky relative to Microsoft. Let’s not confuse that with negating any sense of the guy being brilliant in many other respects – he is.
In a letter to the entire Microsoft workforce, Ballmer provided the following line: “At the Windows launch in New York, at the Windows Phone event in San Francisco, and again at the Build event on Redmond campus, I was struck that while externally many people look at these events as the finish line, they really represent the starting line of a new era.” It may be a starting line, but it doesn’t change the inherent nature of today’s Microsoft. And Sinofsky is not the value-investor CEO Microsoft’s board will always want at the helm.
We do note that this scenario has implications for what the answer will be for those among us who would like to see Microsoft take a real shot at becoming a $200 per share company once again. That’s another story but the short answer is, don’t hold your breath that it will ever happen – there are too many old businesses to protect.
Steve Jobs would have quickly failed at Microsoft. We need to remember that when Jobs returned to Apple all of its lines of previous business had terminally failed. He started a new beginning. Microsoft will never find itself in that space – those old businesses (and the new ones that eventually become old, such as mobility), will keep Microsoft safely in value investment land. It is as blue a blue chip as one will ever find (even if it is still a NASDAQ stock).
Notably, Apple is now evolving into the same scenario. The i-devices and iOS are no longer new things being built on what was a terminally ill foundation – they have evolved into those lines of multibillion dollar old businesses (sound familiar?) that now need to be protected at all costs. We predict that Tim Cook will evolve into a Ballmer (though without the blue suits), and that his new teams he has put in place will be the purveyors of new businesses – but Apple as a revolutionary entity can be considered retired.
Sinofsky isn’t a Tim Cook. We do not believe he is a protector of old businesses. Look for Sinofsky to probably pop up as the CEO of a startup or fairly new technology company in need of the things Sinofsky is brilliant at – these companies don’t need a safe harbor – they have yet to find any harbors, and this is where Sinofsky will help one of them. The technology underpinning any company he is likely to join will already be established, but Sinofsky will drive the needed refinements.
By the way, Sinofsky’s Windows predecessor Jim Allchin decided to retire and become a blues rock guitar player. We don’t anticipate Sinofsky doing such a thing, but maybe he’ll end up heading up a tablet skateboard company!
Edited by Braden Becker