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Ballmer's chance of changing Microsoft? Don't bet on it

Failed attempts to change corporate culture litter the business landscape, says expert, citing research into fiascos

July 18, 2013 07:30 AM ET

Computerworld - Microsoft's attempt to transform its dog-eat-dog corporate culture into a kinder, gentler cooperative climate is likely doomed, an expert in failed business strategies said today.

"If you look at the research into failures, culture is very resilient to change," said Paul Carroll, co-founder of the Devil's Advocate Group and co-author of Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years. "Culture eats strategy for breakfast."

Carroll's book, which he wrote with fellow Devil's Advocate co-founder Chunka Mui, conducted postmortems on some of the most famous business failures, and is based on research into 2,500 enterprise flops. Devil's Advocate, meanwhile, is an alliance of experts who help corporations evaluate strategy shifts.

That research, and Carroll's 17 years as a reporter with the Wall Street Journal, where he profiled CEO Steve Ballmer and interviewed him several times, gave him interesting insights into the changes that Ballmer has spelled out for Microsoft.

He isn't optimistic.

"In all our research, we did not find an example of a company able to address the problems that Steve [Ballmer] is trying to address," said Carroll. "I just don't think it bodes well for Microsoft if they do the conventional kind of stuff."

Last week, Ballmer unveiled a corporate overhaul that will take Microsoft, which for decades used a "divisional" organization -- one where each product line was run as a miniature company with significant autonomy -- to a "functional" structure, where, for instance, an engineering group handles all product development, and where other responsibilities, like marketing and finance, are centralized.

Functionally-structured companies with multiple products are rare; Apple is one of the few that rely on that organization.

Because a functional org chart requires much more cooperation -- theoretically, internal competition between groups has been downplayed or eliminated outright with the death of product-specific divisions -- Ballmer also said that Microsoft must and would change its corporate culture, which for decades notoriously pitted groups against each other as leaders battled to meet financial goals.

"You role model it from the top, you talk about it a lot, you pinch yourself and remind yourself when you're not doing better, you measure it in the employee poll," Ballmer said in a Saturday interview with the Seattle Times when asked how cooperation would be instilled in the company.

Carroll wasn't impressed with the top-down idea, saying that he couldn't come up with an example where it worked.

But he had plenty of examples of CEOs who thought they could force-feed workers a new philosophy. One who was notable, he said, was Robert Nardelli, who in 2000 took the reigns of Home Depot after he was passed over for the replacement of General Electric's top spot when Jack Welch stepped down.



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