The recent announcements of Steve Ballmer stepping aside, a corporate reshuffling and the acquisition of Nokia—all within two months’ time—can be seen in a couple of ways. A popular view is that Microsoft is adrift in a stormy sea, unable to gain in the tablet and mobile spaces with an aging leadership that is too institutionally invested.

Another view, of course, is that this is an opportunity to transparently remake itself, with new leadership ready to move the company in new directions.

Let’s break it down one point at a time.

Ballmer. When he took the reins as CEO in January 2000 from company founder and inspirational leader Bill Gates, Microsoft was fighting it out with IBM for the heavyweight title of largest technology company in the world. The company’s market capitalization at the end of 1999 was roughly US$447 billion dollars. At the end of 2012, it was $234.5 billion. On Jan. 3, 2000, the company’s stock price was at a high of $118.62. On Jan. 2, 2013, it was $28.23. Granted, there were two major recessions during that timeframe. But from those ashes, companies like Amazon (selling for $67 a share in September 2008 to $312.03 on Sept. 16 of this year), Apple ($128.24 to $464.68) and Google ($431.04 to $903.32) were able to make hay with smartphones, tablet devices and cloud-computing implementations—two areas in which Microsoft has lagged.

Ballmer has done some good things: sales of Office and Windows remain strong, fighting off fierce competition. His big failure, though, was to not capitalize on those emerging markets. And here’s where institutional thinking hurts Microsoft. When phones and tablets exploded, Microsoft was in the middle of creating an operating system (Windows 8) that was a radical departure from anything it had offered before.

Yet Microsoft being Microsoft, it couldn’t simply break cleanly from the past. No, it has to continue to support everyone who has ever purchased anything from the company, so you could run Windows in the new “live tile” mode, or revert to a more standard look. This was not leadership; it was confusing the market.

And, despite the fact that Microsoft has always catered to developers, its moves to create an app store to compete with Apple and Google were so late that many of the most popular consumer apps today still are not available on Windows phones.
The Nokia acquisition. Microsoft could have followed Apple’s lead and created both the hardware and software, or Google’s lead and licensed the software out to multiple handset manufacturers. Apparently, it chose the former. Microsoft had partnered with Nokia for years, so this acquisition did not come out of left field. Microsoft went down this road with the Surface, which has not had anywhere near the uptake it was looking for. However, as Apple’s incremental phone updates lack innovation, there is an opportunity here for Microsoft to pick up market share. But the next-gen phones had better be slick: A better camera and longer battery life would be two good starts.

Corporate reshuffling. Here’s where the company stands the best chance to remake itself, and where the break from institutional “business as usual” can be most profound. Instead of teams competing with each other for resources, and duplicate work being done inside these insular teams, Microsoft needs to establish its priorities, put its best resources there, stop shuffling execs from one team to another, and encourage creative thinking. Google might have yielded some of its position when it decided to shut Google Labs and tell its workers that innovative ideas must be fleshed out on their own time. Here’s a real chance for Microsoft to show it’s not your father’s technology company.

One last point, and it’s a matter of perspective. Ballmer’s tenure has not been a failure at all. Microsoft remains a hundred-BILLION-dollar company. It is ranked 41st in the Forbes Global 2000 ranking of international companies. It has the resources to fuel growth in the markets in which it lags.

It comes down to leadership. Microsoft has a big opportunity in front of it. Now, it must execute.