WILL IT make any difference? Of course it will. Bill Gates’s decision to spend more time with his charities will not transform the world’s most successful information technology company overnight. But change will come.
It is a mistake to assume that the period of change starts with Mr Gates’s eye-catching decision to relinquish responsibility for the day-to-day management of Microsoft. It is already changing because competitors — notably Google — have forced it to rethink and reinvent. It has changed because the technological environment has moved on. The convergence of computer, telecom, and media technologies means Microsoft cannot hope to dominate in the way it did for so much of its 31 years of existence. And if it was not changing already, fears about the enormous power it wields are such that it would be forcibly changed by regulatory decree.
In pure management terms, the arrival of Ray Ozzie, the former Lotus Notes exec, in March last year, may be just as significant as the departure of Mr Gates. We can only be sure that Mr Ozzie was destined to take over Gates’s mantle as technology supremo with the benefit of hindsight. But since Mr Ozzie has now taken up Mr Gates’s executive reigns you will be forgiven for thinking that this week’s developments constitute the completion, not the beginning, of the handover.
It may be better to see Mr Gates’s decision to step away from executive responsibilities as representing a watershed moment in the history of this remarkable company. But while a remodelling was already underway, the move may quicken the pace at which change happens.
No one should doubt the enormity of Mr Gates’s achievement, but the new chiefs at the key Microsoft pow-wows might be better off without the great geek breathing down their necks. External relationships could benefit too. It is a sad fact that Mr Gates arouses tremendous feelings of jealousy and paranoia among some customers and some regulators. They are jealous of his wealth and success, and paranoid about his influence. Those feelings will not disappear instantly, but as Mr Gates’s association with the company dissipates, Microsft may find itslef encountering fewer prejudices.
There is a possibility that Mr Gates will not be able to divorce himself from the company he founded. He retains the chairmanship role and says he wants to do that for the rest of his life. There will be temptations to use that non-executive position as a platform for meddling. If things ever start to go seriously awry at Microsoft it is easy to see Mr Gates wresting back control of the firm.
But while Mr Gates may be remembered primarily as a technolgy pioneer, or perhaps as a philantropist, his decision to step away from Microsoft now might be just as important. Free — or at least free-ish — of Mr Gates influence Microsoft will be better equipped to travel on to the next stage in its development. If Mr Gates hung around, Microsoft might have atrophied. Success is far from being guaranteed now he has decided to step aside. But with fresh impetus at the very highest level Microsoft may find its way to devloping ever more impressive products, it might generate ever larger profits, and help raise living standards for ever greater numbers of people.
If Mr Gates steps aside in a genuine way, it might be his best and most enduring gift to the company he built.
Standard Life for whom?
TWO and a half million households will be receiving share packs from Standard Life over the next few days. The demutualising life assurer has embarked on the mammoth task of explaining to policyholders their options in the forthcoming flotation.
Sensibly, the company has rejected the notion of posting the full prospectus to everyone. It is a 488-page blockbuster that few policyholders are likely to give more than passing glance. Those who want the full version can either ask for it by calling the helpline (0845 275 3000) or examine it on the Standard Life website (www.standardlife.com).
Meanwhile, the mini-prospectus at 14 pages is a perfectly workmanlike summary. It lists no fewer than 27 reasons how investors could lose money buying the shares. No one can say they weren’t warned if something does go wrong.
Yet there are some interesting revelations in the full version. Buried in it is the fact that Standard Life has set aside £116 million to meet endowment mis-selling claims and last year received complaints from 57,500 policyholders who feel that they were misled. The mis-selling era may now be in the distant past, but the financial pain looks like extending long into the company’s future as a listed company.
Also buried away in the full version is all the juicy information about boardroom rewards when Standard Life makes the journey from mutual to share-market listing. Actually, though, the pay and options packages do not look particularly egregious by FTSE 100 standards.
Perhaps the one fact that policyholders should know about and won’t from the mini-prospectus alone is information about the cost of this flotation. Investment bankers, lawyers, accountants and spin doctors do not come cheap at any time. The cost of the entire Standard IPO is £236 million.
That alone is an astonishing sum. It is interesting to learn about who picks up the tab. The company is shouldering £65 million of those expenses. But the other £171 million is being borne by the main Standard Life with-profits fund, which is being renamed the Heritage With-Profits Fund. The average cost per member is £62. That might seem fair enough. It is the policyholders in this fund who are getting free shares in Standard Life. Windfalls are likely to average £1,500. But not all policyholders qualify. Anyone buying a policy since the March 31, 2004, cut-off point does not qualify. That amounts to no fewer than 250,000 people.
They may feel decidedly short-changed at being excluded from the windfalls while also being obliged to bear a share of the costs of flotation.
Outside help
John Lewis Partnership’s decision to bring in non-executive directors for the first time is sensible. Britain’s biggest worker co-op can sometimes appear insular and resistant to change. Outsiders will inject fresh perspectives and ideas. There is a sop to the workers, whose five representatives are already outnumbered on the 12-member board: the new recruits will have no votes. Yet for all the emphatic denials from JLP, it won’t stop tongues wagging that this could be the first step in a move to a stock market listing.
