Ballmer memo rallies Microsoft troops

In a memo sent Thursday, Ballmer called on Microsoft's 50,000 employees worldwide to improve relations with customers through a renewed focus on value and integrity. "Customers expect us to hit a very high bar in terms of product and support quality, delivering on our commitments, and providing excellent customer-focused decision making," he wrote.

Ballmer also said Microsoft will add a new board member. "While we like having a small board of directors that is very agile and effective, we will add a member from outside the U.S. to continue to broaden the diversity of the board."

The memo comes as Microsoft winds down its fiscal year, which ends June 30, and as the tech industry stands watch for freshening winds to lead it out of economic doldrums.

In the last 12 months, the software colossus came close to putting an end to its long-running antitrust battles, only to see a renewed push by a number of state attorneys general, with final decisions yet to be made. It also launched a new version of its bread-and-butter operating system software, Windows XP, and took steps--some forward, some back--in its quest to redefine itself as a provider of software via subscriptions rather than as stand-alone applications.

Ballmer reiterated a familar theme in the 2,700-word memo--in essence, a revamping of the company's mission statement--as he emphasized the importance of Windows as a beacon for the industry. He cited Longhorn--the code name of the next major version of Windows, due sometime in 2004--as an important platform for leadership and business.

"We have decided to line up significant innovation in most businesses around big platform innovations--Longhorn will prove the value clearly," Ballmer wrote.

Ballmer made clear that Microsoft had already taken a more aggressive stance in leading technology innovation with Windows.

"We have given business leaders a mandate and resources to fund new customer scenarios in all parts of the business," he wrote. Microsoft Chairman Bill Gates "is spending significant time on this as well as on platform innovation."

Ballmer sent the memo to Microsoft's employees following a retreat he'd spent with other top managers. A refocused mission statement evolved from the retreat, which Ballmer conveyed to Microsoft's employees through the memo.

Software + services = satisfaction?
"Simply put, our mission is to enable people and businesses throughout the world to realize their full potential," he wrote. "Today, we use software to help people get there. Over time, this will evolve to be a combination of software and software services."

Microsoft is spearheading its shift to software services with an initiative called .Net. In the future, Microsoft wants to sell software as a service, such as through subscriptions.

Throughout the e-mail memo, Ballmer repeated the importance of Microsoft's taking responsibility for driving future technology innovations and improving the quality of the company's business conduct.

"But our mission is not just about building great technology. It's also about who we are as a company and as individuals, how we manage our business internally, and how we think about and work with partners and customers," Ballmer wrote.

Ballmer's memo came the same day that Microsoft issued the first beta of an important Windows XP update that addresses changes mandated by a November settlement between Microsoft, the Justice Department (DOJ) and nine of 18 states. Microsoft and nine other states, which continued the litigation, return to court on June 19.

In the memo, Ballmer told employees that a settlement would mean more than just changes to Microsoft's business or technology practices.

"Our pending settlement with the DOJ adds new responsibilities that we must deliver on. We are committed to working with the DOJ and other government agencies to ensure the settlement is a success and that our relationship is positive and constructive going forward," Ballmer wrote.

Improving government relations has certainly been a top Microsoft priority since the settlement. In a March interview with CNET News.com, Microsoft incoming general counsel Brad Smith said one of the company's top priorities is to build a more constructive, less controversial relationship with government officials.

Referring to Microsoft's four-year antitrust struggle with federal and state governments, Ballmer expressed empathy toward the many employees he said feel a "disconnect" between the way they see themselves and they way they have been portrayed.

Priority list
Ballmer set a number of priorities for Microsoft, as he did in a December 2000 memo, following a profit warning by the company. To achieve these priorities, he laid out goals for stiffer reviews of employees, products and businesses.

"Trustworthy Computing and broad customer connection are particular hot buttons for me," Ballmer wrote. "I will take the product quality initiative and customer and partner loyalty work now underway as direct responsibilities."

• People. Employees should lead the industry by example. "We need people who have their own strong personal values, as well as those necessary to be successful at Microsoft," Ballmer wrote. He emphasized the importance of "integrity and honesty," accountability, and "passion for customers, partners, and technology."

• Excellence. "Excellence must be at the core of everything we do and is central to everything we value," Ballmer wrote. He called for high standards for employees, products, and customer and partner relationships.

• Security. Ballmer echoed the Trustworthy Computing voiced at the start of the year by Gates, who told employees that making Microsoft products more secure should take precedence over adding new features.

"As a company and as individuals, we will earn trust every day not only through our products, but also through our responsiveness and accountability to customers and the degree to which we make high-quality decisions with customer issues in mind," Ballmer wrote.

• Customers and innovation. "We have an enormous opportunity to harness innovation in a manner that enables our platform--Windows and .Net--to better help customers realize their potential," he wrote.

• Transcendance. The company has to go beyond the PC revolution by "enabling people to do new things. Microsoft can no longer focus narrowly on the PC or desktop software. Our mission requires that we do excellent work in a broader set of areas to help customers and to enable the company to grow."

Microsoft will look to new ways to extend existing products, incubate new ones, or acquire companies or products from others, as it did with FrontPage, HotMail and Great Plains. "Most of our new product efforts will start with a small team of very talented people inside Microsoft who have end-to-end customer scenarios in mind like Tablet PC," Ballmer wrote.

• A global outlook. Microsoft must be "a company with a diverse work force. This diversity must take account of race, gender, nationality and every other aspect if we are really going to enable all peoples to realize their potential," Ballmer said.