Kicking Bill Gates Off The Board Is The Best Thing Microsoft Can Do

Kicking Bill Gates Off The Board Is The Best Thing Microsoft Can Do

JULIE BORT

JAN. 31, 2014, 6:19 PM 5,862 14

Microsoft is an insanely profitable company standing on the edge of disaster. It desperately needs new thinking.

With word that 22-year Microsoft veteran Satya Nadella is likely the new CEO, attention turns to the leadership of the company’s board of directors. It will have two former CEOs, Bill Gates and Steve Ballmer.

So new thinking is unlikely to come from them.

In fact, Gates has a track record of huge strategic errors that have cost the company years of progress in market share. Here’s why he should be the one to go:

1. Gates’ world was: Go slow. Microsoft needs to change its corporate culture. Today’s tech companies try to move fast and fail. They can fail because they move fast, which means that they can fix a mistake as fast as they create one. Microsoft has a historical culture of moving slow and not failing. That comes from a time when people installed software once very three years. Times have changed. Now companies deliver software via the cloud and can add or roll back new features every day.

2. He almost missed the Internet. The Internet rose during Gates time as CEO, and he actually wasn’t an Internet visionary. He entered the browser market long after Netscape, for example. His efforts to catch up and crush Netscape led Microsoft into an epic antitrust judgement and 10 years of oversight by the Department of Justice. Ultimately Microsoft’s Internet products (browsers, web servers to development tools) did well and grabbed lots of market share. But Microsoft and Gates didn’t lead here, they followed, and almost disastrously so.

3. Speaking of the Internet, there’s Bing. Bing is a fine service, but Microsoft will never beat Google by being a me-too search site. New leadership needs to figure that out.

4. Gates not only missed the software open-source revolution, he was its No. 1 enemy. Open source, which is where developers freely share the code they create, has been a major change in the software industry in the past decade. It’s almost a religion with young idealistic programmers. Gates (and Ballmer) saw it as a threat and threatened to sue it out of existence. They’ve since softened their stance about some forms of open source. But bad blood still exists. Gates got this one very wrong.

3. Like Ballmer, Gates missed the mobile revolution. By a mile. For years, Microsoft maintained that the PC would be the central device in all personal computing. Now, the PC is just one of many devices that are powered primarily by the cloud. And there are now fewer PCs sold than smartphones and tablets.

4. Gates didn’t spot the cloud early, either. Salesforce.com was founded in 1999, when Gates was still CEO of Microsoft. Once again, Microsoft entered cloud late and is now playing catch up to Amazon with Azure, and to Google with Office 365. Gates is not a cloud visionary.

5. Gates could have nipped the Windows 8 disaster in the bud. There was exhaustive user testing while Windows was being developed indicating that people didn’t like Windows 8. Then Windows chief Steven Sinofsky plowed ahead anyway. Gates was chairman during all this. Windows is his legacy. Why didn’t he step up with one of his epic rants and turn that ship around?

6. Gates let Ballmer do the Surface tablet. The Surface, which combines hardware and software, was guaranteed to cause trouble with Microsoft’s biggest hardware partners. And it has. HP, for instance, one of the world’s biggest PC makers, has publicly called Microsoft a competitor and run to Google. Then Gates let Ballmer double down on hardware and buy Nokia for $7 billion. Meanwhile, Google has announced plans to sell its own hardware business.

7. Gates let Ballmer buy Skype for $8.5 billion. The grand strategy of that was … what?

8. The late bloomer thing has got to stop. With Gates at the helm, Microsoft became a company that tried to enter every successful tech market late, and then spent enormous resources catching up. This worked for a while, when the PC really was the center of the world. But now that has changed, and following won’t work anymore.

9. Gates is a brilliant philanthropist. In recent years, Gates has found his visionary role solving hard problems like poverty, illness, education, which obviously thrills him.

Having two former CEOs on the board will hinder a new CEO’s ability to make the changes Microsoft needs to move forward. So, it’s time for Bill Gates to leave Microsoft and concentrate on the philanthropic work that he loves.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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