Steve Ballmer has been a polarizing figure in the tech industry for quite a while. Tech savvy folks frequently use him as an example of an old school CEO who just doesn’t get it, while most business folks point out that Microsoft is still bringing in big money despite a rough economy and massive competition. Even with his operational success, the increasing shift to web and mobile platforms has resulted in many pundits predicting either the removal of Ballmer or the slow demise of Microsoft. With the current management structure, these pundits are likely correct. However, there is a better plan.

During Microsoft’s best years, both Ballmer and Bill Gates were key figures at the company, through the 80’s with Ballmer as the first business manager and into the early 2000’s with Steve as CEO and Gates as the CSA (Chief Software Architect). This was a good fit for Microsoft. As a company that needs to appeal to big IT divisions at large corporations and govenerments, as well as individual consumers and developers, having a representative for each market is key. Investors love Ballmer because he’s great at operations and a darn good negotiator. Tech folks and some consumers identified with Gates because he was a nerd who worked his way from a garage to the top and wasn’t afraid to embrace his geeky side.

When Gates left, Ray Ozzie took over as CSA for a while. While Ozzie had some fantastic ideas, he lacked the public presence that Microsoft needed to appear innovative. As a result, his ideas never gained traction, Microsoft looked increasingly stagnant, and the CSA role was been eliminated with Ozzie’s departure.

This leaves Microsoft in a bad situation. Unlike many of their competitors, they provide a wide range of products and services to an even wider range of people. Apple is essentially a mobile device company, Google provides web-based products, Oracle builds enterprise software, Sony and Nintendo build video game hardware and Microsoft is trying to compete with all of them with only one person at the helm.

Rather than fire Ballmer, who seems to be doing a very good job in some key areas, it would make more sense for Microsoft to elevate others. Let Steve Ballmer continue on with operations and enterprise software where he excels and move some of their existing leaders into more high profile roles or let some of their more innovative folks, like Bill Buxton, take a more active role in the company’s vision and leadership.

Innovation is still happening at Microsoft, but it gets lost more often than not. Ballmer has a proven history of operations success, but he is a business leader and rarely succeeds in identifying new technology opportunities. Microsoft needs to break out of their current leadership model and realize that it doesn’t matter if Ballmer is a good salesman if they run out of ideas to sell. Microsoft needs to innovate while they’ve still got the money to make it happen or continue on in a slow decline until the profits of their legacy products dry up.