Shaken and stirred

By Matt Cooney, March 20, 2006 @ 5:02 pm

Microsoft global CEO Steve Ballmer talks exclusively to Idealog about ideas, innovation and the infuriating iPod

Idealog March/April 2006, page 58. Photograph by Alistair Guthrie

When Steve Ballmer shakes you, you stay shaken. Microsoft’s chief executive is a big man with a big presence and is happy to give a journalist a vigorous shake of the shoulder when he wants to make a point.

So when the Ballmer mitts close over my iPod it’s a worrying moment. “It’s for recording …” I stammer. Ballmer is unfazed. He lifts his head towards the ceiling, squeezes the annoying piece of white plastic and roars. “Aaaaarrrrrrrgggggghhhhh!!!!!”

Ballmer is the country on holiday but can’t help working and appears to be enjoying himself. This morning he’s talking to technology entrepreneurs and business mentors at Auckland’s Icehouse technology incubator and will meet with local Microsoft staff in the afternoon. In between he’s meeting a few Government ministers, a TVNZ crew, and Idealog. TVNZ wants to know why Ballmer decided to spend Christmas in Godzone. The ministers want to talk broadband and probably would like to get some of that Microsoft R&D budget relocated here. Idealog wants to know how a monster company like Microsoft keeps its staff motivated and their creative juices flowing.

Bill Gates remains the face of Microsoft but Ballmer has been driving the ship since 2000, when he took on the CEO role. Gates is chairman of the board and the company’s chief scientist, but these days much of his time is devoted to giving away his massive fortune. Ballmer is the man responsible for keeping Microsoft fit, focused and fearsome. He’s spent half his life at Microsoft since Gates hired him as the company’s first business manager in 1980.

So, I say, eyeing my still-intact iPod: working at Microsoft seems a bit like being a cog in a machine …

No way, says Ballmer. “Because we’re a bigger company people assume everybody works on the same thing.” Microsoft employs about 7,000 programmers but they’re spread thinly. The team working on Excel, for example, is fewer than ten people, he says. “That’s it—and we’re changing the world and the way people do numerical analysis. Our next version of Excel does boldly go where no man went before. Seven, or eight, or nine guys—creative guys with ideas.”

Already we’re talking about changing the world. But much of Microsoft’s innovation is evolutionary, isn’t it? Is Ballmer annoyed that Microsoft is cast as a company that copies the work of others?

Hardly. “The thing everybody likes to do is be the first guy to do something, and hardly anybody has ever been the first guy to do anything,” he says. “Take all the things people think are hot in the world. We weren’t the first to do operating systems. Apple didn’t invent music players—not even close. AltaVista invented [Web] search. Let’s face it, most companies that people rave about aren’t the original inventor of the original idea. Now, they respect the innovation … but they improve. I think that all great companies have to be unafraid to borrow from the inventions of the past.

“Everybody loves to be the inventor of future ideas. You know, we’ll be the first guys to really get digital television right—Internet television. There’s no doubt about it. I like being first, you know … [with] Nokia and RIM [the inventor of the BlackBerry wireless handheld], we’re the three guys leading the smartphone generation.”

Publicly, he’s kind about his competitors. During his off-the-cuff talk at the Icehouse he acknowledges the iPod changed the market (“I wish it was ours”). The Xbox team at Microsoft, he tells me later, has some catching up to do with Sony.

“There’s kind of this myth that says everybody’s good in the start-up and everything moves fast and nobody has to be pushed, and in a bigger company the reverse is true.”

Yet when I suggest that Microsoft’s sheer size makes it less likely to create groundbreaking products—that disruptive innovation tends to be the preserve of smaller companies—he’s quick to disagree.

“There’s kind of this myth that says everybody’s good in the start-up and everything moves fast and nobody has to be pushed, and in a bigger company the reverse is true.

“When I joined Microsoft we didn’t have a very good team, we really didn’t. It was young and all that, but it wasn’t really a good team. We have a much better set of talent today than on average when we started the company, actually.”

So big companies can be as creative as small companies?

“Absolutely! Look, you can’t name that many creative small companies and …”

We’re sitting in a technology incubator. Just look around here, I guess …

“Sure, sure. But are they going to make good as companies? You can’t say somebody is a good creative company, big or small, unless they actually stay in business. And they actually have to have some impact on the world, right? Isn’t that what it’s about? Creativity has got to be measured by its impact.” Ballmer looks around the desks at the Icehouse. “These are great companies, I’m not trying to take anything away from any of these companies, but I’m saying just being a small company with an interesting demo … I could take you inside Microsoft and I can show you 5,000 demos that are interesting. And yet there aren’t 5,000 interesting business propositions that are going to pop out of that.

“Being creative and having an impact is hard at any size. It would be harder for you to cite ten creative small companies than it would be for me to cite ten creative large companies, because for every one of the ten that you list, the jury is out—will they really have an impact?”

This commercial focus is admirable, but if the Xbox project had been a complete turkey the company would still be profitable and still be able to invest in new ideas. Startups like those at the Icehouse, however, have one idea and will either make a success of it or die trying. Microsoft can afford to fail.

Ballmer’s delighted grin suggests that’s no bad thing. “That part’s good actually. It means we can take more risk. There are very few things we take risk on that are life-threatening to the company. These guys”—he gestures around the room—“are all life-threatening to themselves.”

But there’s no danger of complacency, he says. “Microsoft wouldn’t have gone away if Xbox had failed, but those guys want to change the world and they still do. They’re not done—they’re not number one. Sony is number one.”

The Xbox team, Ballmer repeats, feels “compelled to change the world”. There’s that phrase once more. But although it’s easy to dismiss some of his grander statements as corporatespeak, there’s no doubting Ballmer’s sincerity. He means it. He’s a believer.

Ballmer joined Microsoft when the company had just 30 staff; now it has over 60,000. He says the transition from being a young, risk-taking upstart to an established business is very sudden. “It takes five minutes. And that happens with every company, every great company, every creative company.” And how do Kiwi companies get across that threshold? Ballmer’s advice is simple: give yourself “big, bold goals” and work like hell to achieve them. Microsoft is famous for its tenacity but Ballmer suggests that global ambitions require world-class ideas. “You really do have to have a vision that you believe in.” And, presumably, always pick the demos that will make the serious money.

Originally published in Idealog #2, page 58