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Microsoft chairman John Thompson: Redmond looks 'like IBM in 1990'

Will new CEO Satya Nadella be Microsoft's Lou Gerstner?

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Microsoft's new chairman, ex-IBM vice president John Thompson, has said that he believes Microsoft's corporate culture needs to change if it is to remain competitive.

"I would argue that there are some attributes to Microsoft today that do look vaguely like IBM circa 1990," Thompson said in an interview with Fortune published today. "The Windows monopoly is in fact under attack, and therefore we're going to have to change or think differently about the management systems and the associated culture of the company as time goes on."

Thompson was tapped to chair Microsoft's board earlier this month when the previous chairman, Microsoft founder Bill Gates, stepped down to take a more hands-on role as mentor to new CEO Satya Nadella.

Prior to joining Microsoft's board in 2012, Thompson was CEO of Symantec, a position he held for 10 years. Before that, however, he was a 28-year veteran of IBM, during which time he led such diverse efforts as sales, marketing, and software development, and served as general manager of IBM Americas.

Thompson told Fortune that he sees Microsoft in a position similar the one IBM found itself in at the start of the 1990s, when its former dominance of the PC hardware market had waned.

"I think one of the things IBM learned was when their monopoly ran out and they had to compete with a bunch of smaller, more agile companies, they needed to have a different rate and pace of change," Thompson said. "And Lou Gerstner coming into IBM certainly brought about a sense of urgency that some would argue the company didn't really have at that time."

Gerstner is widely credited with rescuing IBM from the brink of bankruptcy and returning it to profitability. Microsoft isn't in quite such a precarious position just yet, but it clearly isn't as dominant as it once was, particularly given the decline of the PC market and the corresponding rise of smartphones and tablets.

Similarly, by the end of the 1980s, PC clone makers had all but pushed IBM out of the market it created, and Microsoft was the leading operating systems vendor. IBM's latter-day attempts to regain its footing, including the PS/2 and OS/2, were flops.

Gerstner's genius lay in recognizing that IBM's focus on desktop PCs was a mistake. He consolidated IBM's divisions, unified its branding, and set Big Blue on a path to becoming the world's largest provider of technology integration services, rather than just another PC seller.

It's a lesson that Microsoft and its new CEO Nadella should take to heart. For all its efforts to diversify, most of its business still falls under the twin tent poles of Windows and Office, and the latest versions of both products have not been particularly well received.

But Gerstner's turnaround of IBM wasn't painless. More than 100,000 IBM staffers lost their jobs to layoffs under his tenure and his management style was notoriously tough. It's difficult to see Nadella, a 22-year Microsoft man, making such hard choices, particularly with Gates peering over his shoulder.

And probably we won't. To hear Thompson tell it, we shouldn't expect anything drastic or sudden out of Redmond in the near future.

"You don't change a company's culture overnight," he said. "It's more about the subtle influences and the consistency and predictability of those influences that over time drives that subtle behavior change that we call culture." ®

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