Former Xbox manager: To save Microsoft, Ballmer and thousands of others must go

“When Jennie Locati heard that Microsoft is looking to restructure the company, she decided to offer CEO Steve Ballmer some advice: Don’t restructure: renew,” Emily Parkhurst reports for The Puget Sound Business Journal. “In a blog post this week, Locati suggested Microsoft implement voluntary layoffs with generous severance packages for as many as 20,000 to 30,000 people, including high level corporate vice presidents. That, she said, would cost a small fortune, but it would release all the brilliant innovators to start companies of their own that Microsoft could potentially acquire several years down the road.”

“Locati isn’t just an armchair quarterback. She recently left her job as a director of strategy and business management in the Xbox studios division and has spent eight years working in various divisions within Microsoft,” Parkhurst reports. “One of the biggest problems Locati sees for Microsoft is the man at the wheel: Ballmer. ‘He’s truly out of touch with the market,’ she said. ‘He’s never been a product guy. He’s a money guy. He thrives on the competition between companies, not products.'”

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Parkhurst reports, “But the market has changed, she said, and Microsoft has maintained its technology xenophobia. ‘People are pushed to not recognize innovation if it’s not on the Microsoft platform,’ Locati said. She got to know this first hand while working in Mac Business Unit for several years. ‘If you acknowledge the value of another platform or product, you get called out for it,’ she said. ‘It’s a very bizarre environment.'”

“For example, when the iPhone hit the market, Ballmer was quoted saying there was no chance the iPhone would ever get any significant market share. Locati said he told Microsoft employees the iPhone sucked,” Parkhurst reports.

Parkhurst reports, “‘What he should have done was get up on stage and say, ‘I’ve been using this thing for a month and I think it’s great. And I think we can do better” … ‘The company is just so broken,’ Locati said. ‘It is truly a case of too many fish in too small a pond. There’s not enough air.'”

Read more in the full article here.

MacDailyNews Take: For as long as it takes.

Excerpts from a BusinessWeek interview with Steve Jobs, October 12, 2004:

Steve Jobs: Apple had a monopoly on the graphical user interface for almost 10 years. That’s a long time. And how are monopolies lost? Think about it. Some very good product people invent some very good products, and the company achieves a monopoly. But after that, the product people aren’t the ones that drive the company forward anymore. It’s the marketing guys or the ones who expand the business into Latin America or whatever. Because what’s the point of focusing on making the product even better when the only company you can take business from is yourself? So a different group of people start to move up. And who usually ends up running the show? The sales guy… Then one day, the monopoly expires for whatever reason. But by then the best product people have left, or they’re no longer listened to. And so the company goes through this tumultuous time, and it either survives or it doesn’t.

BusinessWeek: Is this common in the industry?
Steve Jobs: Look at Microsoft — who’s running Microsoft?

BusinessWeek: Steve Ballmer.
Steve Jobs: Right, the sales guy. Case closed.

[Thanks to MacDailyNews Reader “RobM” for the heads up.]

51 Comments

  1. Here’s how Steve Jobs saved and re-built Apple.

    Cancel things that don’t make a profit. Result – Newton gone. “Dozens” of Mac models reduced to just a few.

    Revitalize things that are your strength (your “core”). Result – iMac (followed by iBook and new pro Macs)

    Leverage your strength and extend outward. Result – iTunes and iPod (starting with support for loyal Mac customers only)

    Leverage and extend outward. Result – iTunes Music Store and support for Windows (Windows customers now equal to Mac customers for iTunes/iPod)

    Leverage and extend outward. Result – iPhone (the best iPod ever and also a revolution in smartphone design)

    Leverage and extend outward. Result – iPad (a “must have” for every iPhone fan)

    Leverage and extend outward. Result – ?

    Say what you want about Bill Gates, but when he was in charge, Microsoft did “leverage and extend outward,” which almost put Apple out of business. Under Steve Ballmer, Microsoft game has been to start from a position of weakness, throw money at it, and hope for the best. Result – Zune, Kin, Windows Phone, Windows RT and 8 (as a tablet OS)

    And THAT is what Microsoft needs to change. Cancel the things that don’t make a profit. Revitalize the core business, which is STILL Windows for PC (without touchscreen). Build from that position of strength.

  2. During Jobs’ 10 year absence, Apple focused on innovation and couldn’t care less about telling anyone. That is what nearly killed Apple. Meanwhile, Microsoft and the PC industry advertised like mad (such as a wildly successful 1995 Compac TV spot pushing text-to-speech, which the Mac had since 1984, but Apple couldn’t be bothered to promote it). People forget that Windows OS did not catch up with Mac market share until 1992. By they Jobs had been gone for half a decade.

    If MS wants to hit a string of home runs they need to pay attention to rival products and make theirs better than the competition. They can’t even be bothered to bring IE to support anything than basic HTML5 and Excel is a good ten years behind (try pasting a photo into a cell and trying to make it look decent). Apple suffered like crazy because they had their heads up their tailpipes for ten years. Microsoft is doing the same thing.

    1. Actually, during the bad-old-days, Apple may have been innovative, but it was UNFOCUSED innovation. They forgot the part about “a thousand NO’s for every YES.” They were somewhat like Google is now.

      In other ways, they were trying to be Microsoft, attempting to profit from software by licensing the Mac OS to third parties. Unfortunately, the third parties undercut Apple on pricing, and the revenue from licensing was not close to making up for lost Mac sales.

      AND, they were trying to be like Dell and HP, creating endless beige variations of Mac models, with names like Performa, Centris, and Quadra (followed by a three or four-digit number). Some “variations” were identical.

      Those three things are what almost killed Apple. Acute lack of focus, trying to profit from software instead of using software to profit from hardware, and turning into a “PC box-maker.”

      Steve Jobs REALLY turned it around, by bringing intense focus (into every aspect of the business) and putting an end to software licensing, because he knew that software was (and would be) what differentiated Apple from the competition. Advertising only became important again, once Apple had stuff worth advertising again.

  3. Unfortunately, too many of the top 500 publicly traded companies in the USA are run by “the money guys”. It’s an upside-down paradigm. Apple, from what I can see, is the only company today that focuses on building the best product, at a reasonable cost, capturing the market (as well as investors) in the process.

  4. “Parkhurst reports, “‘What he should have done was get up on stage and say, ‘I’ve been using this thing for a month and I think it’s great. And I think we can do better”

    That is actually some really great advice. By I don’t know if the lay off people let them start companies will work. For some unknown reason, Microsoft and for that matter Cisco can’t seem to acquire companies right. They totally waste billions of dollars on Mage aqcusitions that doesn’t do anything… I have no experience but I think I would do a better job than them in acquiring companies. Apple on the other hand acquire small small companies that has a certain technology or know how they want and integrate it. Like PA Semi. Look how much profit and flexibility for Apple that small acquisition has generated. Incredible.

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