Stephen, Can You Bring Some Flash to Microsoft?

The former Juniper COO had his formal coming out as president of Microsoft's Business division yesterday. He gave the opening keynote at Microsoft's Worldwide Partner Conference in Houston. Stephen replaces Jeff Raikes, who announced his retirement in early January.

Stephen is a surprising replacement for Jeff, if no other reason being an outsider. Microsoft reorganized in November 2005, establishing presidents over three divisions; the leaders were all company insiders who had been promoted for excellence. Something else: Business is Microsoft's most profitable division, so why hand over control to a stranger?

Stephen sure didn't sound like a stranger yesterday. He talked like one of the boys, as if he'd been employed by Microsoft for years. That's the problem. Microsoft doesn't need a stay-the-course strategy but real visionary leadership. Stephen's topic was change—how Microsoft would, with its partners, bring so-called software plus services to market. "What I must stand for at Microsoft is someone who aggressively facilitated the transition...Our business at Microsoft is changing."

But the change really is a strategy Microsoft already had in motion. What Microsoft customers, partners and shareholders should want to hear is Stephen's vision for the Business division's future.

Some people might point a finger back at me and say, "Geez, Joe, give the guy a break. He's only been at Microsoft a few months." Excuse me, but Stephen started his transition in January. Measured in Internet years, he has been there long enough to at least talk about the future. And the future doesn't have to be next year or the one after, but next month.

But he can't talk vision, not right away. Survival at Microsoft, particularly for outsiders, requires being a good team player or, as is the case with Chief Software Architect Ray Ozzie, support from Chairman Bill Gates. Bill's support will mean less now that he is a part-timer and CEO Steve Ballmer has taken over the big office.

Stephen is no slouch, which is one reason for my critical view of his first major public appearance as a Microsoft executive. Before Juniper, he worked at Adobe, going there following the acquisition of Macromedia, where he was CEO. Macromedia engaged developers in ways that would be innovative for Adobe and Microsoft. Macromedia's Flash player buried Windows Media Video. While Microsoft and RealNetworks waged a brutal video codec war, Macromedia quietly but aggressively wooed developers and content providers to Flash movies. Now Flash is everywhere, and Microsoft is trying to recover a major fumble with Silverlight.

The point: Stephen should be a harbinger of change, and Microsoft needs more leaders willing to tweak the business model for the future. Jeff Raikes took a surprisingly bean-counter approach to Microsoft Office and later Dynamics. The division grew under his leadership, through:

• Aggressive cross-product feature integration
• Desktop software dependence on server-side components
• Dramatic increase in number of product SKUs
• Number of applications or components requiring Software Assurance

I don't see where, under Jeff's reign, Microsoft really tried to increase customer satisfaction, such that businesses wanted to buy more software. Rather, enterprise adoption of Microsoft desktop software is fragmented, with businesses running multiple Office versions. Where's the sales pull? It comes from push, where customers are compelled to get Product B, C and D, because of dependencies created to A. That's a bean-counter, gun-to-the-head approach that sure as hell doesn't endear many customers to Microsoft. Where's that good feeling?

This week, people are waiting in lines outside some Apple stores to buy the iPhone 3G. C`mon, it's a friggin' phone. But Apple is much better at making people feel good about its products, even when in the case of iPhone 2G there are major deficiencies. By contrast, Microsoft's tiniest mistakes are magnanimously magnified. If people had better feeling about the products, Microsoft wouldn't have such a problem. The feeling of being forced to buy, whether or not that's reality, is one reason.

Stephen can be one of the boys, or he could chose instead to be one of the men. Being a man means taking risks. There is some hope. He has great stage presence. There aren't many Microsoft executives who speak so clearly and with so much authority. Stephen could be a reckoning force of change at Microsoft, and I sure would like to see the signs. This post is hard on Stephen in part to encourage him to be more than the messenger of change. He must be its facilitator—its promoter.

Change won't come from hosted services or new channel programs. It won't come from new Business division applications or more product SKUs. The change must be a revolution in perception and customer satisfaction. IT managers should be clamoring to buy the newest Business division products, not be angry for feeling forced to buy applications B and C to get the full benefits of A. If Microsoft doesn't endear customers to itself, they'll settle for good enough. Right now, good enough is an older Office version. But what happens when Google Apps or Docs reaches a good enough threshold? I needn't answer the question.