Thinking Managers

With news of changes at the top at Microsoft, Robert Heller of asks, when is the right time to drop the pilot?

Stepping Down

The remarkable events taking shape at Microsoft are both important and interesting. Their significance goes far beyond the company’s customers, employees, investors, competitors and suppliers.

Bill Gates has made the decision to step down from the summit of the company he created. But as is usually the case with Microsoft, the situation is complex.

It is not unusual or incorrect for a founder to step down or retreat from the limelight. It is inevitable as nobody is immortal.

The key to the issue is timing. If the pilot is dropped too early, the organisation could suffer chronic damage. But that is also possible to an even greater extent if the pilot stays in charge too long.

Microsoft's monopolies and associated quasi-monopolies have been invulnerable to attack by competitors, and political and legal movements against them have proved nothing more than an undesired irritation.

But monopolies have a finite lifespan. The economic and technological background changes eventually – which is what appears to be happening in the world of PCs, where Google is the new kid on the block.

Gates has given himself two more years to conclude his business strategy successfully. But is it already a lost cause?

Microsoft was the Share of the Century – but that was the last century. In this century, as with other blue-chips, the stock price has not budged despite excellent performance of earnings per share.

The Canute Syndrome threatens all managements. You might kid yourself you can turn back the tide and you might have put your soul into establishing a great ‘business model’ generating growth, profits and reputation. But emotional factors can cloud the view when the investment is challenged. You cannot see that times have changed simply because you do not want to.

For Gates to hang around ‘fully committed’ for a further two years is understandable considering all the uncertainty around. Those two years will give him time to keep an eye on the development of the new strategy and the performance of the people whose job it is to instigate it.

No doubt there will be further twists to the story in the coming months and years. But the future of this excellent business will rely on dropping the pilot – it is only natural.

About the author
Robert Heller is one of the world’s best selling authors on business management.