Steve Ballmer Presentation Microsoft Ltd – UK

Microsoft Ltd – UKSteve Ballmer Presentation26 April 2006

Inspiring Leadership

Steve Ballmer

Chief Executive Officer, Microsoft
I.  Preamble

It’s my honour and privilege to have a chance to be here with you today; I’m excited for the opportunity. I certainly don’t think I’ve ever spoken in a hall that’s quite this grand, and I hope I do it justice here today. I thought it was a little ironic: Andrew’s up here talking about how do you motivate 61,000 people, and then he goes and gives a pep talk about how other guys are doing better in some parts of the market than we are. He gave me a pep talk just sitting backstage and listening, I would say.

What I want to talk to you a little bit about today is leadership and just some thoughts about leadership. And, frankly, because I would probably be disappointing everyone – myself, the folks who work for me, and all of you – I want to tie a little bit about to some of the things that great leaders can do actually with technology to facilitate, empower and inspire the people that work for them.

II.  Galvanising an Organisation
1.  Size Does Not Matter

I have worked probably – I think it’s probably fair for me to say – I have worked for companies of more sizes than anybody maybe in the world, and certainly in the audience. I have had the privilege of working for a 30person company, a hundredperson company, a thousandperson company, and a 61,000person company. Now, in my case it’s been the same company at all stages, but I think it’s given me a lot of perspective that maybe I’ll share on what it takes to really galvanise and excite an organisation, and, frankly, I find a lot of similarities in many aspects independent of the size of the company. The way you reach people, the way you touch people – that does vary as companies grow and they spread geographically; you build up subcultures of people inside the company, so there is evolution and there is change. There is no doubt about that. But, some of the principles I think absolutely remain the same.

2.  The Number One Asset

We’ve been involved in some research with PwC here in the UK with business executives in smaller and mediumsized enterprises and, not surprisingly, 78% of business leaders here in the UK will say that people are their number one asset. I certainly will tell you that one of the things that was clear to Bill Gates before I joined Microsoft, and it was certainly clear to Bill and I over the course of the last 26 years that we’ve worked together, is that people absolutely are our number one asset – no question. Starting from the very earliest days of my time at Microsoft, we actually recognised that a good programmer was about 10 times more productive than an average programmer – 10 times more productive than an average software developer. When you start with that as a kind of ratio, mindset or framework, it means you have to hunt out and find the best, the brightest, the most energetic, the most talented people around the world.

III.  A Virtuous Cycle
1.  Great People
  1. Maintaining momentum

In some senses, I believe in this virtuous cycle. Great people make companies great, but I also believe that great companies attract great people, and so you get this kind of real momentum. You bring in great people, you let them do their best work, and then more great people want to come on board and join. The opposite, unfortunately, is also true. If you start losing success in the market or you start losing great people, things will slow down on this flywheel. Great people, great performance; great people, great performance. I would say that has really been a hallmark of our view of what it takes to inspire people.

  1. A common set of values

Start with the two principles. If you want to have great people, what are we looking for? At Microsoft, we look for essentially two things: number one, we look for people who share a common set of values. We believe that we talk to our people about six core values:

▪  Integrity.

▪  Passion for technology, passion for customers is very important to us.

▪  We look for people who are open and respectful and dedicated to making others better.

▪  Software development is a collaborative exercise. Our company is a company that has literally hundreds of thousands of business partners around the globe. Our model is fundamentally one of collaboration. It is not necessarily the thing we’re best at at all times, but we emphasise it and stress it in our people.

▪  We look for people who are dedicated to selfimprovement. Every day, how can I be better, better, better, better? What did I do wrong? How do I improve? Relentless dedication to selfimprovement.

▪  We want our people to show big, bold goals, to set big, bold goals, but nonetheless to have a great sense of accountability.

It turns out some of these things almost have a little bit of tension in them. How do you set big, bold goals but then want to be very accountable? It is easier to set low goals if you want to be highly accountable. There is a tension, but that tension is, in a sense, the source of greatness, and we want people who confront that. How can you be dedicated to a team but still be relentlessly dedicated to selfimprovement? That’s fundamental in our culture. Our culture is part of how we inspire people; our culture is an important part of what we think lets our people and our company be great.

  1. The best and the brightest

The other thing we look for in our people, as I said, we look for people who are incredibly, incredibly bright and incredibly hardworking. In any job in the company, I want to have somebody who is brighter and harder working than the guy who is doing their job at our competitor. If we do, in the long run we’re going to be okay. That’s the people environment. In a sense, when you ask, ‘How do you inspire people?’ it partly does depend on what kind of a culture you’re trying to create and what kind of people you’re trying to inspire.

Even inside Microsoft, frankly, we have subcultures. Let me just take two extremes: we’ve got salespeople and we’ve got engineers. Whenever we bring them in the room at the same time and you give them the same speech, you’ll get different perspectives on exactly the same message from the two communities. You get up in front of a group of salespeople, it’s: ‘Come on, let’s go. Let’s take the hill. Gosh, we have great opportunities in front of us.’ You do the same thing in front of a group of engineers, you might get a little bit more, shall we say, cynical reaction. You’ve got to sort of build from the reality up as opposed to from the heights down. Having people who share these values is key.

2.  Great Companies
  1. Making it great

The second part of this flywheel – ‘Great people, great company’ – sort of says, ‘What does it take? What do the people have to believe the company’s going to look like in order to want to come to the company and to make the company truly a great company?’ I recently had a retreat with all of our executive staff – the top 100 of our people. We put out a memo in advance, and I was trying to talk about what the company would like in the future. We could have started with technology, we could have started with financial goals, and I decided what we should really do is start with what are the key elements 10years from now, what are the things that our people will get excited about, that will allow us to continue to attract great people who will make the company great, and who will attract more great people? I said, ‘Look, a great company, as seen through the eyes of our employees, will be a company that really is successful on the dimensions I raised here’.

  1. Changing the world

Number one: our people want to change the world. They want to know that the company is setting big, bold goals for what we call our innovation quests. We spend a lot of time talking to our people, inspiring our people, on how we change the world. Let me give you sort of a simple example – and you’ll think it’s small and it’s trivial, but it’s just one of maybe 60 of these quests that we use to inspire people. We’ve been talking a lot in the world about the paperless office. We’ve been talking about how newspapers were going to be read online. There’s more paper consumed and printed and used today than there was 10 years ago. Why? We haven’t made software and hardware and computers that actually make reading on the computer a superior experience to reading on the screen. That’s a quest. That’s an important mission for our technologists over the course of the next 10 years. There are literally dozens of people – maybe hundreds of people – at Microsoft who are inspired by that quest.

  1. Being agile

Our people care passionately about our agility. They want to see that we’re fastmoving in the marketplace. Not that we are fast at the expense of doing important longerterm work, but they want to see that we have the flexibility and nimbleness and agility to do what it takes to succeed. Our longterm commitment to Windows made it succeed. It was a form of agility. Our ability to turn our ship and really compete successfully to do great innovation in internet browsing inspired our people. Today, people are asking: How are we going to do with some of our new business challenges? How are we going to do competing with Sony with Xbox? How are we going to do in the mobile category competing with Palm, Nokia, Blackberry and other people like that? How are we going to do in the competitions that Andrew talked about on the internet? We’ve got to be nimble and agile and quick. When we’re not, boy, do I hear it from our people.

  1. Leading change

To be a great company, at least in our industry, people want to know that we’re leading big changes, we’re not following. The move of software to the internet is a big change. We have a big initiative we call our Live initiative. Our people want to see that leadership. Great people, in general, not just in our industry, great people want to work with winning institutions. Whatever it means to say ‘you’re winning’, and I think winning has to include this notion not only of getting a lot of customers, but keeping them very happy. About four or five years ago, we had the start of a real set of issues around security on the internet with Windows, and our people, to believe in our company, to be inspired by our company, needed to see that we cared as much about satisfying our customers as about getting new customers.

  1. Pursuing growth

Great companies apparently need to grow. Now, as a financial thinker, that doesn’t necessarily make sense to me. If you told me I could own shares in a company that was never going to grow but was going to deliver a lot of profit, according to Andrew, and was going to not have huge capital investment, that sounds pretty good. But, our employees want to work for a great company, and a great company grows. We continue to expand our thinking about the areas in which we want to participate, set quests, and grow.

  1. Offering a great deal

Great people want to feel like they have a great deal with the company; that might mean compensation, that might mean work environment, it might be work hours, it might be office space. We spend a lot of time constantly reviewing the deal, if you will, that we put in front of our employees. I don’t think people ever really stay excited and motivated by their deal, but they’re easily demotivated by their deal.

  1. Having great leadership

Of course, great people want great leadership. It takes great leadership to have a great company. Andrew was mentioning to me that JackWelch has spoken here a couple of times and talked about the way GE tries to involuntary terminate 10% of their people per year. The key thing we focus in on, actually, is making sure that we’re applying the discipline of involuntarily terminating executives. You can’t just look at the lowerlevel people; you’ve got to ask everyday: Do we have the right leaders? Are we promoting the right people? Are we moving on the right people out of our leadership team? It’s just so important for the kind of culture and greatness to which we and our people aspire.

3.  People Drive Business Outcomes

I think everybody in this room, and certainly as we said, statistically 78% of UK business executives will tell you that people are their number one asset. People drive business outcomes. It’s not software, or computer systems, or leaders. Every day the people who work for you come to work and they deliver business outcomes. People improve customer relations. People figure out how to take costs and put quality into operations. People collaborate with one another to drive new ideas, new products, new services, innovation. People build connections between your firms and suppliers and business partners that you work with. In each and every one of these cases, I will tell you, we think information technology can assist your people. Believe me, at Microsoft, part of the way we inspire our folks is by investing in the tools and the technologies that really tell them they are our number one asset.

You go to work at – we just hired to be our Chief Operating Officer the former CIO from WalMart, the largest employer in the world, largest revenue in the world, one of the most sophisticated supply chains. You ask: How do they do it? What’s the key? A lot of people will talk about their computer systems. The key thing they did in their computer systems: they opened them up so that people, the buyers in their own company, so that the people selling to them at other companies, could just see so much more data about what was going on, what was selling at WalMart, what was in inventory, and they essentially turned the systems inside out. They didn’t say, ‘Computers are going to solve our inventory problem. They computers are going to give visibility to everybody along the way to the information they need to improve instocks and merchandise selection in our stores’. You see that over and over and over again in great businesses. It’s not about the computers taking care of the problems; it’s about computers facilitating people who drive these kinds of important business outcomes.