As early as 1990, Bill Gates saw Kodak’s eventual demise coming, because he knew that digital photography would wipe out the profits to be had from conventional photography. That insight demonstrates how smart he is (which we all knew) and also how much easier it is to see others’ shortcomings than to see your own.

Stories like this one in the New York Times by Dick Brass, a former Microsoft vice president, about Microsoft’s lack of innovation have many in the technology world saying openly that Microsoft, based in Redmond, WA, may be taking the long glide toward the ground that Kodak and its headquarters city of Rochester, NY, have been on for two decades now.

It’s not that Gates and his successor, Steve Ballmer (another ferociously smart guy), haven’t been aware of potential pitfalls. It’s just that successful companies like Microsoft can become so insular over time that it’s hard to change, even when you know what to do. They get too caught up, both organizationally and culturally, in the need to generate near-term earnings to be able to truly innovate. Also, as Brass writes, the leaders allowed infighting to rise to unhealthy levels:

“Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence. It’s not an accident that almost all the executives in charge of Microsoft’s music, e-books, phone, online, search and tablet efforts over the past decade have left.”

To break out of this mode won’t be easy. Microsoft already has loads of smart people. They’re working diligently to meet the goals set in front of them. And, by the way, Microsoft is generating gobs of cash and profits. But all those things could have been said about IBM in the late 1980s, and it still had a near-death experience in 1992 and 1993. All those things could have been said about Kodak in the early 1990s, yet the company’s market capitalization is currently less than its cash on hand.

For Microsoft to shake off its torpor, the company needs the kind of outside perspective on its issues that Gates, Ballmer and the rest of the company had when they saw the problems at Kodak so clearly 20 years ago. That might reignite the necessary innovation. Otherwise, as Brass concludes, “it’s an open question whether it has much of a future.”