Q&A: Microsoft chief executive Steve Ballmer

Microsoft chief executive Steve Ballmer was in the UK for barely 24 hours this week, squeezing in meetings with the recently-appointed head of egovernment Ian Watmore and Vodafone Group chief executive Arun Sarin.

In a wide-ranging one-to-one interview with Computing, Ballmer says the software giant is listening to customers, and wants to make the company and its employees more accountable for delivering on its plans.

He talked at length about Microsoft's relationship with customers, the company's culture and values, IT security, the need for innovation, and the responsibilities of being such a dominant market leader.

When Computing asks chief information officers about Microsoft, the most common response is to do with software quality problems, patching, security flaws and so on. Do you have an issue about trust with your customers?

We recognise that listening and responding to our customers is and will be a key quality that allows us to continue to see the kind of success we have had. In some very important ways in the past couple of years we have really taken that to heart. The heart of trust is responsiveness - do you listen, do you pay attention, do you learn?

Take security - big issue for our customers, no doubt about it. Starting about two-and-a-half years ago, we made security priority number one, the Trustworthy Computing initiative. There's a lot of hard problems there, the bad guys are out there and going to stay out there.

We've done a huge amount of beneficial work - we're not all the way to where our customers want us to be, but I think most people who look at it objectively will see the work we've done to improve our patch process or the work on management deployment tools, the work we've done to dramatically reduce the number of vulnerabilities in our product, the work we've done on firewalls and other isolation technologies, the work we did in the Windows roadmap.

People sometimes tease me and say you've not had a browser release - I say, we just had a significant browser release - it's called Windows XP Service Pack 2 (SP2). If you want to safely browse the internet, if security matters to you, we just did a significant browser release. You can't have it both ways. This stuff is important. We changed our plans for Longhorn [the next version of Windows] in order to be able to prioritise some of the security needs that we delivered in SP2.

Are we everywhere our customers want us to be? I'm not going to say that. But I am going to say we have done the right stuff, we've taken the message to heart, and I think customers are now seeing that, seeing the outputs, seeing the results and the improvements. The data I see says we are making progress in terms of customers' perceptions. People want to know we are being responsive, that's what trust is based on.

But there is still a degree of lingering resentment from customers about the introduction of the Software Assurance licensing scheme, which was controversial at the time.

We took to heart the feedback on software assurance and made some improvements. We added some benefits to the plan, people saw us being responsive. Will we make mistakes in the future? Hopefully we won't make many mistakes. But we have to assume that if and when we do, we have to have our antenna up, our ears open and our willingness to respond high. If we can prove that to our customers, we'll have the [right] sort of position with them in terms of their trust and respect and the business they give us.

Given the changes you have described, was there a point somewhere in the past where you realised there was a trust issue with customers that you decided to address?

I wouldn't use the word trust. The way I tell our guys is that the thing we can work on is customer satisfaction and customer responsiveness. It must have been 1998 when I really tried to start shaping our organisation about the importance of customer satisfaction, customer experience, customer responsiveness.

I don't think it was very effective in my first year or two, to be honest. I talked a lot. But it took the organisation time to digest the message. We needed to apply our energy to a few things to be responsive on. We needed new tools to let us really understand and hear the feedback from our customers.

We know now what our customer issues are. It puts us in a much better position to improve those products. We're not guessing anymore what the issues and problems are. We have so much more information for our customer complaint management system. There's a very formal way of getting those complaints moved through our system, escalated and responded to in a way that we didn't before. The security issue, clearly people see we responded.

When you're the leader in the market and people are not entirely satisfied with their experience, it leads them to question your motives. If you're the market leader, people say: 'if they are not doing what I want them to do, it must be because they are arrogant.' People will conjecture. But as market leader the test is: how great is my customer experience. If that is perfect, people will say good things and have full trust.

How much of the problem of tackling security in Windows is down to the age of the code base the system is based upon?

Remember, Windows is based on the NT code base. NT was certainly designed with security in mind. I fully admit we weren't fully anticipating everything that happened in the internet, but it was designed with security in mind. The issue is more than the code base - it's the installed base.

If I said to you we have a version of Windows that is perfect, it has no vulnerabilities - even though nobody will ever be able to say that - but if we could, you'd still say there are 600 million machines that need to be protected. There is still some period of time for people to migrate to the new system. The bigger issue than the code base is the installed base of machines.

How do you resolve that?

There are things we are doing. The real question is to focus not only eliminating vulnerabilities, but to also focus on helping systems do a better job of isolating themselves more quickly from problems. So the question is how do we isolate systems, or have blocks. Firewalls is an example, some of the safe browsing technologies in SP2 is part of that, so is network quarantining -checking people before I let them in. It's like what people did for the outbreak of Sars - wear masks, stay at home, the quarantine process, that was as important as trying to get the human body to not be vulnerable to that disease. We have the same issues in the computer world today.

Is Microsoft changing its culture as it becomes a more mature company?

Yes and no. I want to talk about the things we care about. At all points in our history, for better or worse, we keep reminding ourselves of the things it takes to succeed. We talk about our six values - integrity; passion; being open and respectful and dedicated to making other people better; dedicated to self improvement; committed to big, bold goals; and accountability. We wrote those down three or four years ago. They are important. Part of the heart of our culture comes from those things.

Traditionally, we've had stronger muscle on some of those than on others. Passion has never been in shortage at Microsoft. Integrity has never been in shortage at Microsoft. Sometimes we're not always as respectful in our communications, among ourselves, with our partners, we're working hard on that. We've generally been good at setting big, bold goals - we haven't always been as good at being accountable in their delivery. It's not so much a question of changing the fundamental basis, it's a question of committing yourself to continuous improvement as a company on all of those dimensions.

The company's twin pillars are innovation and customer responsiveness. Those are the things that are going to make us succeed. If we only respond and don't innovate, that's a problem. If we only innovate and don't respond, that's a problem. So we've put more muscle behind the responsiveness element. It's not like we've stopped innovating, but I worry that so much of the dialogue externally and with the press is about the responsiveness part that people forget we're still an innovator, so I have to bang that one a bit harder.

Every year I'm going to take all of these things and remind people we have to improve. That's always the core, those things are the core.

We did make customer satisfaction more of a priority starting about six years ago, and we've got some real muscle on that. This year, I'm banging on about accountability - a big theme I have internally with employees. Not that we are bad, but I want us to be better and more accountable in our execution.

Has the approach to innovation in Microsoft changed? Often now, customers say they don't want loads of new features, they want the existing product to work. They want quality first.

Customers need innovation. Nobody ever thinks they need innovation, they think they need improvement in what they've got. That's why I say there's twin pillars - they want both. The companies that succeed have to bring products to customers that they don't know they want. If you think you know everything you want, and you only listen to what your customers want - you will fail. No company in this industry can succeed by only giving customers what they ask for. You have to try things that surprise people. If you don't you will fail.

I don't buy into 'customers don't want more features.' All customers, someplace in their organisation, will use them. If we bring new features to Word, there are people that use those features. Nobody will ask for them, but plenty will use them.

When we bring innovative features to market we can't pretend they will take care of themselves. We have to explain them, we have to spread the word about them, get the users to show the value so others will accept them.

For some of our products, the corporate IT department is important but not the ultimate user of our products. The most sophisticated user of Excel is not corporate IT but maybe somebody in the finance department.

As more people start to use new devices, such as PDAs or Blackberry handheld computers, is that a threat to your market in PCs?

We see the new areas as great opportunities. I want my life, my information, available to me wherever I am, at my desk, at home, in the car, with a customer. Having my information reflected appropriately on a range of devices is a great opportunity for a company like us. But I don't see the PC market being impacted negatively one iota. I don't think that's going to happen, not in the UK, nor around the world.

I think people will become multi-device people. Whether we are the company that benefits from that or not, is up in the air. We're working hard at it.

For Part Two of this interview, click on the related link below.

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