Bill Gates and his partner Paul Allen, who sold the earliest PC lingo program to MITS Computer as Microsoft, formed Microsoft Corporation in the year 1975. The firm’s core business is formulating software products. These include operating systems, as well as server applications for both commercial and individual consumers.
They also produce software development equipment and internet software tools. Earning over $32 billion in revenues annually, Bill Gates is slated to be one of the richest persons in the world today. Virtually all personal computers in the world have used or are using at least one product from Microsoft. Microsoft has succeeded in setting a fast pace in the computer software industry and in creating markets in the process. Five years after its birth, Microsoft had a sales branch based in Japan, and the firm was earning $1 million in terms of proceeds.
IBM provided Microsoft with its first significant break when IBM operated MS-DOS as its operating system. Under the agreement, Microsoft had an advantage as it could sell MS-DOS to other consumers, both corporate and retail. The firm came up with the innovative product – Microsoft Office. This was in 1989. The program took over the market, and it topped the charts in Microsoft products. It was their darling project. It was initially a discounted or low priced product until the later versions incorporated the majority of the programs such as Word, Power Point, and Excel, as well as e-mail and the Office professional version that incorporated the Access d-base management program. This was all-inclusive in the standard, shared aspects.
Before the year 1990, Microsoft was first and foremost a broker to hardware makers. This changed after 1990, when the company’s sales volumes came from direct client sales. In the same year, Microsoft hit the $ billion mark in revenues, and the number of employees was over 5,000
Microsoft programming products include BASIC, FORTRAN, and COBOL. In 1983, Word was launched, but it only became a success in 1986. Excel, the spreadsheet program, was developed in 1986, and was able to bring in huge revenues in billions of dollars throughout its history; Microsoft has had a reputation of releasing products that are perceived to be inferior compared to others in the market. Even when criticized heavily, Gates would doggedly hang on and work on improving the product until it became a hit.
Microsoft’s principal divisions include Client; Server & Tools; Information Worker; Business Solutions; MSN; Mobile and Embedded Devices; Home and Entertainment. Within the IT industry, some of Microsoft’s notable competitors are big brand names specializing in hardware and software development. Competitors within the software industry include Google and Sun Microsystems. Additionally, corporates like Sony Corporation, IBM, and Apple are providing stiff competition. It is exceptional to note that many of these companies are front runners in their areas of expertise.
Leadership is the art of getting people to do their work willingly. A good leader develops a mental concept, persuades and influences those around them on the worth of the concept, gets their buy-in and cooperation creates an enabling environment in which the people around can turn the concept into reality and ensures the interest of those around are taken care of.
Leaders thrive during times of crises as the true worth of a person is seen during difficult times when solutions have to be found for seemingly desperate situations. Despite facing numerous product failures and heavy criticism, Bill Gates was able to persevere and pursue his dream of making Microsoft one of the world’s most successful companies today. Leaders use many different forms of power to influence their employees to meet the organization’s objectives.
The first form of power is legitimate power. This power is derived from the title held by a person in an organization and is used by a person who has authority over another. In the case of Bill Gates, who is a top executive within Microsoft, he would use this power when dealing with lower level staff. Legitimate power is structured and is majorly governed by human resource and labor guidelines.
In dealing with top-level executives or one’s peers, rational persuasion is normally used as a form of power. This form of power uses logical arguments and discussions to persuade others to implement one’s actions. This form is a participatory type of leadership and is more ideal in problem-solving situations. Gates would use this during brainstorming sessions and crises moments.
The third form of power is reward power. This form of power is based on one’s ability to influence others with something of value to them. In 1986, Microsoft moved to a 40-acre property. This was meant to provide a distraction-free environment for its employees. The buildings were designed to provide a relaxing atmosphere, and social amenities such as cafeterias were easily accessible.
The dress code was informal. Bill Gates realized that to be at the top of the industry; he had to employ a highly skilled workforce who were mainly the younger generation. This generation was highly creative and preferred a less formal environment. Huge salaries drove them. Bill Gates was able to see this and fulfilled their desires. Microsoft employees earned far less than their counterparts, but this was more than made up by being given company stocks, which turned the employees into millionaires overnight. Loyalty and commitment from the employees increased as they were shareholders of the company.
Coercive power is a form of power which involves disciplining and withdrawing of a reward system. This was a form of power rarely used by Bill gates to influence as it normally has the effect of creating a fear-induced atmosphere, which stifles creativity and innovation.
Expert power is the fifth form of power. It is based on an individual’s skill and knowledge. Being an expert makes one an authority in their field. Employees will always turn to expert power when solving technical and operational problems. Experts are always respected, and the fewer the people who possess a skill, the more power they possess. Bill Gates is an authority in his field having been exposed to computers early in his life. At the tender age of 14, Gates was already writing computer programs as a hobby as well as for business.
The last form of power that Gates uses is referent power. This is based on his relations with others, and the influence is derived from loyalty and friendships. In the case of Gates, he was more dependent on loyalty than friendships. The attrition rate in Microsoft is notably lower than in other companies.
Bill Gates leadership style was a mixture of authoritative, delegation, and participatory. An example of his authoritative style was when a group of developers produced an e-reader in 1998. Gates turned it down as it did not look like a Windows product. Today, the reader is one of Apple’s leading products. His delegation style in leadership can be seen when he stepped down as CEO and appointed Steve Ballmer who was given free rein of Microsoft, though a lot has been said about his leadership skills including poor decision-making.
Gates participatory leadership style is highly evident in that he formed working teams to achieve organizational goals. Gates believed in providing resources of a large company but within a small working group. The different teams would be given different tasks that would eventually lead to one goal — working within a small group provided social security and a sense of belonging, which is essential to a human being.
Despite its phenomenal growth, Microsoft profits have taken a dip in recent years. One of the main reasons is the lack of innovation. Office and Windows, the flagship products of Microsoft are under heavy attack from newer products that are free. The second reason is that Microsoft failed to take advantage of many technological opportunities, e.g., social networking, Smartphone’s, and cloud computing. This is an example of a myopic organization that is always inward looking and never seeing what is happening on the outside.
The third reason is that Microsoft has released some major product failures in its bid to counter number two above. This is a symptom of a rushed job without thoroughly understanding the market forces comprising of consumers and competitors. Good examples of failed releases include Microsoft Bing, which is a search engine, and Windows Vista, which struck the very core of Microsoft’s existence denting its credibility.
Ill-conceived acquisitions are the fourth reason for Microsoft’s decline. A $6.3 billion acquisition of aQuantive to compete with Google’s dominance of online advertising has not brought forth any fruit. The purchase of Skype and Yammer were other acquisitions that questioned the strategic thinking of Microsoft executives. Skype users make free calls over the net, hence deriving very little income while Yammer is the Facebook equivalent for businesses.
An employee survey in Microsoft showed that its CEO scored 50% less in comparison to his counterparts. The low approval rating is a sign that employees have no faith in their leader. Ballmer, the Microsoft CEO, has also been accused of being high tempered, losing his temper with employees. Microsoft seemed to have lost its vision of being an innovator after Ballmer took over the reins. It instead became a copycat playing catch up to its competitors.
The corporate culture of Microsoft changed from one of all staff working towards the good of the organization to that of a highly politicized organization where backstabbing of colleagues was the order of the day. This contributed greatly to the missing of great opportunities as jealous colleagues quickly shot down bright ideas. Poor staff policies like performance ranking led to deep division between the employees, as opposed to unifying them towards a certain goal. The performance ranking worked on the basis that out of 10 people, two were top performers, seven were average performers, and one was below average.
This system did not encourage people to become top performers as it was meant to do but instead was deeply divisive and highly demoralizing. It is worthy of remembering that Microsoft employed highly skilled labor and being termed as an average or poor performer can erode one’s self-esteem. The performance reviews were carried out every six months, and people’s lives were driven by the reviews, eventually making them short term thinkers instead of concentrating on product innovations, which are long term projects.
Legal challenges and government policies have also played a crucial role. Microsoft’s has had its fair share of run-ins with the U.S. Department of Justice due to its perceived unethical practices. Microsoft’s competitors claim that it has created a monopoly through the use of unfair practices. The case generated a lot of interest from the public and had a huge impact on Microsoft whose money was made through policies of monopolizing the PC market
The Department of Justice ruled that they would not enforce a breakup of Microsoft, but reached a settlement that prevented Microsoft from having exclusivity that hindered completion.
In conclusion, Bill Gates leadership style can be said to be largely derived from his expertise power in software development. Having worked with computers at an early age when very few people knew of them, gave him an edge and a technical ability that very few people could rival. His technical ability ensured that he could solve complex problems, as well as assist in developing innovations. One of the biggest mistakes that Microsoft made was being complacent and refusing to understand the changes that were happening in the environment.
Good profit does not equate growth and Microsoft was happy as long as the money came in. Microsoft should have been concerned when it realized that it had stopped growing, and it lagged in terms of innovations. For any company to survive, innovation is key, and anticipating the consumers’ needs is critical. Microsoft has failed to do this by relying heavily on its two flagship products to keep it floating. Continuous dependence on the two products was a major fault. Research and development were concentrated on improving Windows and Microsoft programs. New ideas that were not compatible with the two were quickly shoved aside.
In the world of technology, products are being made compatible so that they can work on different platforms. Touching on the transfer of soft skills, there seemed to be distinct differences between Gates and Ballmer leadership style. Gates seems to be more of a leader providing vision and an enabling environment all geared towards nurturing creativity and innovation. Ballmer’s leadership style is more of a managerial style and is geared towards productivity profits and cost-cutting.
It is also worthwhile to note that Microsoft’s decline in growth happened when Ballmer took over the helms. It is, therefore, important for any organization to ensure that when employing a CEO, their vision, should resonate with that of the organization. A CEO with a different vision can send different signals to employees and the market, which is not only unhealthy but is confusing to the stakeholders as they will be pulling in different directions. Ballmer was a close friend of Bill Gates from Harvard, but he did not have the same leadership skills as Gates.