Ballmer Realized He Was a Problem at Microsoft

The Wall Street Journal has a very long, if not moving, article about Microsoft's Steve Ballmer and his decision to step down as CEO. In the interview, he admits that perhaps he's an emblem of an old era, and that he needs to move on. The best way for Microsoft to enter a new era is to seek out a new leader that will accelerate change.

"At the end of the day, we need to break a pattern," he says. "Face it: I'm a pattern."

Microsoft's board didn't push Ballmer to step down. Both agreed that Microsoft, while maintaining its software business, must reorganize its management structure and refocus on mobile devices and online services. The company must also reduce its dependence on the fading PC market and allow those new services to take the center stage, enabling future profit growth. Thus the board was pushing Ballmer to go faster with change, not asking him to step down.

"At this critical juncture, Wall Street wants new blood to bring fundamental change," says longtime Microsoft analyst at UBS AG, Brent Thill. "Steve was a phenomenal leader who racked up profits and market share in the commercial business, but the new CEO must innovate in areas Steve missed—phone, tablet, Internet services, even wearables."

The beginning of the end seemingly began with a conversation with long-time friend Ford CEO Alan Mulally at a Starbucks near Seattle. Ballmer dumped a bunch of devices on the table and asked how Mulally turned around Ford, who spent the next four hours detailing how teamwork and simplifying the Ford brand helped to reposition the company. Taking that information, Ballmer decided to develop a new reorganization plan and approached the board. They liked the idea, and demanded he expedite it.

But Ballmer didn't want to "shift gears" until he shipped Windows (8.1). So he began drafting a management reorganization plan in March 2013. He also began changing the way he interacted with others within the company, consulting with unit chiefs together in a circle in his office to bring everyone closer together; previously, he consulted with them individually. Baller said that the senior team struggled with the New Steve, some resisting large matters like combining engineering teams. He asked for smaller reports to encourage simplicity, and saw some resistance there too.

In May, after seeing that he had essentially trained everyone to "see the trees and not the forest," he began to wonder if he was capable of meeting the pace that the board demanded. He finally decided that Microsoft would change faster without him after winding down from a run one morning. Thus he secretly began drafting retirement letters, and a few weeks later began planting the idea that it was now time for him to go.

The board wasn't shocked or surprised by the news. In fact, they believed that "fresh eyes and ears might accelerate what we're trying to do here." Chairman Bill Gates reportedly said that he supported Ballmer's early retirement only if it ensured that Microsoft remains successful.

On August 21, the board held a conference call to accept Ballmer's retirement: the procedure took less than an hour. Then during his final annual employee meeting in September, Ballmer gave high-fives and then ran off the stage while one of the songs from Dirty Dancing was playing in the background:

(I've Had) The Time of My Life.