Microsoft CEO Steve Ballmer came back to the Stanford Graduate School of Business on March 15 to share his insights into the world of corporate leadership, management and to call for more students to embrace a career in technology.
The event, titled “A Conversation with Steve Ballmer,” was attended by several hundred Stanford students and was moderated by Robert Joss, the dean of the Stanford Business School.
Joss introduced Ballmer by telling attendees that Ballmer grew up in Detroit, was active in high school basketball, got a perfect 800 on his mathematics SAT, and went to Harvard, where he got his undergraduate degree in applied math and economics.
Several years later, after a stint at Procter & Gamble, Ballmer returned to his studies, this time at Stanford Business School, class of 1981, but he left after his first year to join Bill Gates at his startup called Microsoft, where Ballmer was the first business hire.
Ballmer received applause when taking the stage and thanked the students for their welcome. Asked about the state of play at Microsoft, Ballmer responded that the companys core competence is writing software for broad, horizontal things, but he noted that applying that is also very important.
“The power of software will continue to positively change society,” he said, citing how Gates and other Microsoft executives had recently come up with the top 100 technologies that will change the world going forward.
“I asked him for just five, but Bill said that, as we spend $7 billion on research and development every year, he wanted $70 and $100 million for each,” he said.
Ballmer said that while Microsoft had reached a milestone with Vista—acknowledging that it took longer than he would have liked to get there—the release of that operating system had enabled the next generation of growth.
Asked what it was like being one of his direct reports, Ballmer said there was enough for him to do without having to micromanage those executives.
He said 35 percent of his time was spent on representing the company externally, a third was tied up in coaching and mentoring staff, doing review and execution strategies, board and recruiting meetings, with a third of his time spent on things he wanted to focus on—big challenges or areas of strategic growth.
On leadership, Ballmer said there are several important things CEOs had to do: insist on accountability while also encouraging people to stretch themselves and their goals, as well as managing delegation while knowing enough to be an intelligent participant in the decisions and funding of those businesses.
“Businesses are complicated, yet one of a leaders great value-adds is being able to simplify things to a number of core principles, while being realistic and optimistic at the same time,” he said.
Microsoft has just finished its best recruiting year ever, despite the fact that there is more competition than ever, “so getting the best people remains a big issue for us. Just as many people thought Windows needed a competitor, and we got this in Linux, we also got a competitor in the hunt for talent. But there is no better place to work than Microsoft is you want to work on the broadest range of technologies that affect the most people,” he said.
Ballmer also noted that most new graduates are enthusiastic about devices and consumer-like products, and he said Apple has done a good job with the iPod, but that it remains to be seen how successful the iPhone will be. “Great companies have to figure out a way to remain vibrant,” he said.
Asked about the culture at Microsoft, Ballmer said the company likes people who are very bright and very intense.
“Thats part of the culture. But we also have integrity as a core value, as is accountability. We also want people making big, bold bets. Who else would have done anything as nutty as take on Xbox the way we did,” he asked.
When the floor was opened for questions from students, Ballmer was asked why he dropped out of Stanford to join Microsoft. He responded that he was trying to decide what to do as a summer job after his first year. His options were to join a consulting firm, join Morgan Stanley, Progressive Insurance or the Ford Motor Company.
He had decided to visit all of them on his spring break, during which time Gates called him about a job. “I knew Microsoft was a world leader at an emerging something,” he said.
So Ballmer went to see Gates at the end of his spring break tour and “he got his parents to work me over as well. We agreed to try it out and that I could leave or he could fire me by the end of the summer,” he said.
Stanford administration questioned the wiseness of the decision, as did Ballmers father, who also questioned who would actually need a computer.
“After six weeks I decided I had make a big mistake and should go back to Stanford. Bill [Gates] and his dad took me out to dinner, where Bill told me that his goal was to put a computer on every desk.” That pitch sold Ballmer and he stayed.
Asked about Googles rapid staff growth, Ballmer said doubling your numbers of staff every year is a “crazy” scenario. “I dont think it has been proven that a random collection of people all doing their own thing adds value,” he said, eliciting laughter from the audience, before adding that this scenario still had to play out.
Asked what his greatest personal challenge is, Ballmer responded: “time. I have a spreadsheet with 35 columns in it and I allocate time to each. I drop the kids off at school when Im home and get home in time for dinner—though my wife would say that its in time for dessert.”
Asked how he felt when Gates announced his intentions to leave Microsoft, Ballmer said that discussion started three years ago when Gates told him that he wanted to start working at Microsoft part-time.
Ballmer said it was clear to both of them, though, that the move had to see Gates move from company leader to coach, and that his replacements needed to be put in place two years before he left so that he could coach and mentor them.
“The one thing is that is always nice is to have a partner, and Bill has always been my partner at Microsoft. But now Im transitioning,” he said.
Asked what, as a leader, keeps him up at night, Ballmer said: “I sleep very well. I do. I sleep very well at night. I do have a fundamental optimism about our business. But the things that eat at me the most are things like developing a new business model.
“Take the open-source business model, which is a radically different business model. We grew up with a business model, we had to learn to embrace the enterprise business model and, while we couldnt embrace the open source business model, we had to learn how to compete with it,” he said.
Keeping staff happy, retaining top staff and getting them to collaborate well together are some of the other things at the top of his mind, even though they do not keep him awake at night, he said.
Asked about Microsofts recent organizational changes and the appointment of Steve Sinofsky, the former head of Office, to head up Windows development, Ballmer lauded the new user interface in Office and the taking of a systematic approach, which is Sinofskys style, even though he did say that this was not the approach taken by the Windows leadership over the years.
“We employ talented people with different styles, qualities and capabilities, which has always worked really well for us,” he said.