Loss of Focus at Microsoft Worries Top Exec

In his annual internal memo to company employees, CEO Steve Ballmer admits that the company must renew its culture and values-particularly accountability.

Microsoft CEO Steve Ballmer on Tuesday sent his annual e-mail update to all full-time staff telling them what the companys business priorities are and how the company is faring in meeting its areas of strategic focus.

In the lengthy e-mail, which was seen by eWEEK and is timed to coincide with the start of the software makers fiscal year on July 1, Ballmer moved to clarify the core issues facing the Redmond, Wash., company, telling staff that "looking ahead to FY05, I am excited.

"However, reading some of your comments in the MS Poll and in mail I have received, there are core issues that are not as clear to you as I would like. Will we be first with important innovations? Will process excellence lead to greater ability to make an individual difference?

"Will our focus on costs hurt employees personally and will it hinder new investments? Will we grow and will our stock price rise? Will the PC remain a vital tool and will we remain a great company?" he said.

Ballmer went on to say that he is "incredibly optimistic" about the future and that while Microsoft Corp.s strategies and initiatives are critical, it also must renew its culture and values—particularly accountability.

"Nothing breeds confidence like success—success in the hearts and minds of our customers, and success versus competitors, be they established, open source or startups. We must continue to compete as relentlessly as ever, while also reflecting our industry leadership responsibilities …

"We will work this year to bring more focus and rigor to developing our people: as individual contributors, as teammates, as thought leaders and as people leaders. Microsoft is the best place to be, and we will make it even better," he told employees.

Ballmer also addressed Microsofts vision of "integrated innovation" and how this would play out in the next generation of Windows products, code-named Longhorn.

Integrated innovation, he said, is about an experience in which a customer using Microsoft products together gets a "whole" that is greater than the sum of its parts.

"It is not about creating technical dependencies across groups for their own sake. Longhorn will be another major step forward on which we can add value to customers through integration," he said.

"We have a lot of hard work yet to do on Longhorn to deliver the right capability. We decided to release a number of products before Longhorn so we can take the time to get it right, and to prioritize the important security features of XP SP2 [Service Pack 2]," he said in the e-mail.

Next Page: Products must be better segmented for different users needs, Ballmer says.