What's funny about this problem being so prevalent in technology companies is that one of the first sayings taught in programming is "garbage in, garbage out." Put bad information into an application and you'll get bad results. So many CEOs fail, though, because their source of information has been intentionally compromised.
This is especially true in blame-based cultures, as there's a tendency to shoot the messenger. Years ago, I created a report highly critical of the vice president of sales. He turned around and gave the report to a competitor, who cancelled a big deal and pointed to my report as the reason. Fortunately, I tracked the leaked report back to the VP - I owned security for the division and am naturally sneaky. The VP was the messenger who got shot, not me, but it was a very close call.
Ballmer, as noted above, is incredibly bright and was hand-selected by Bill Gates, who isn't a dim bulb either. Yet Ballmer is known not for his bold moves but his bad ones. (How the heck did Yahoo ever look good?) When you give executives reports showing them that what they want to do is brilliant, you get better promotions and raises, but the company makes more catastrophic mistakes.
I performed the postmortem on John Fellows Akers, the only CEO ever fired from IBM. You know the cause? He was being fed bad information - so much so that he maintained until the very end that IBM was still in great shape. IBM spends more time grooming and selecting CEOs than any other company, but even the best can't succeed if they're separated from reality.
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Ballmer couldn't get the support of a blame-oriented culture and couldn't make good product decisions from bad information. However, he was a numbers guy who could make good financial decisions. Throughout his reign, Microsoft turned in strong revenues and profits.