Right after the announcement that Steve Ballmer would be retiring within the next year I was bombarded with emails asking if this meant that X or Y would be sold off, or as the subject of a friend’s email asked “Is this the start of the breakup of Microsoft?” Then right after the announcement that Microsoft would be acquiring Nokia’s devices business the question was “Is this Ballmer’s legacy?” And of course there is the seemingly very popular desire for Ford CEO Alan Mulally to become CEO of Microsoft. On a longer term basis there are the repeated calls to dump Bing, or Xbox, or reverse course on devices and go back to being purely a software company. And then there is the general “forget the consumer, focus on the Enterprise”. Frankly, I think a lot of these things miss the mark. Both on actions and on what Microsoft’s real problems are. So let’s dig in.
First let’s address the need for a new CEO and what characteristics that CEO should have. Is Microsoft a company failing so badly that it is rapidly spiraling towards bankruptcy or does it remain one of the most profitable companies in the world? Well, the later! Some people keep talking about Microsoft like it was a few quarters away from bankruptcy, which is where Ford was when they brought in Alan Mulally. Or Digital Equipment was when it ousted founder Ken Olsen. Even mighty IBM was on that path when industry outsider Lou Gerstner was brought in to turn around the company. Microsoft is nowhere near that situation, not that it couldn’t get to that point if it fails to get its groove back. But it isn’t in need of saving so much as it is in need of two things.
First of all, over the last dozen years Microsoft has gone from being a leader or fast follower into being a distant follower on most computing trends. The next CEO has to be sufficiently visionary in the technology space to return Microsoft to thought leadership. This was obviously one of Bill Gates’ strengths. Indeed one could argue that he was so good at it that he drove Microsoft to get into things too early, before the technology or market was actually ready for them. Think Tablet PC as a prime example. I think Bill is a far better (and much broader) visionary than was Steve Jobs, for example, but Jobs was better on driving execution excellence. Jobs had better timing than Gates. As a huge company Microsoft doesn’t need, nor can they probably find, someone with the qualities of either industry “god”. And they don’t need to. But they do need someone who gets the “vision thing” and both sees the future themselves and creates a culture that values it.
Second, Microsoft needs a CEO who will tolerate nothing less than execution excellence. Most importantly, they need one who insists that Microsoft actually does what it says it is doing. I’ll get into this more in Part 2, but let me put this out there: For decades Microsoft has touted the value of being in both the consumer space and the enterprise space yet for the most part it has failed to take advantage of its presence in both places. Microsoft’s next CEO can’t tolerate this. The next CEO has to be willing to say “Nope, Windows 8 isn’t ready to ship” and miss the holiday season rather than damage the brand. The next CEO has to be willing to say “thou shall unify enterprise and consumer email even if it means we take a hit on one or the other for a cycle (or two)”. Or for this week’s embarrassing example, “NO, you can’t announce Remote Desktop support for iOS and Android unless you also announce it for Windows Phone”.
There are a lot of other things Microsoft needs from a new CEO, like fixing the culture of fear that has permeated the employee base the last several years, but those are not unique characteristics in selecting a new CEO. Every candidate that is seriously considered will need to be someone capable of fixing that and a dozen other things.
I’m not going to try to evaluate all the rumored candidates in light of the above, but let’s focus on Alan Mulally for a moment. I think he’s one of the best current CEOs in the world, and perhaps one of the best that there has ever been. But does he have what Microsoft needs right now? On the vision thing one might call out that Ford has been hitting some Grand Slams lately with cars like the Ford Fusion/Lincoln MKZ and taking leadership with the Hybrid versions. And they are out front on plug-in hybrids. And they’ve been in the lead on creating efficient internal combustion engines with Ecoboost. And you can tour Ford’s historic Rouge River facility and see where a vision of modern manufacturing can take you as the Dearborn Truck Plant cranks out America’s most beloved (and profitable) vehicle, the Ford F150. And you say that all proves Mulally’s the guy except for one little detail. That’s all Bill Ford’s vision, he brought in Mulally to make it happen.
More important when it comes to Mulally the question is, what would he really do for Microsoft? He’d fix a lot of the “dozen of other problems”. He’d bring a lot more execution excellence focus. But he isn’t the visionary. And he doesn’t bring subject matter expertise into the picture. Microsoft’s getting into the devices business so one might claim he brings manufacturing expertise, but he’s a heavy manufacturing guy. Planes and Cars. Microsoft is becoming a light manufacturing company, and contracts that out. Mulally is an expert at dealing with a union-dominated blue-collar workforce, Microsoft is nearly entirely white-collar professionals. Go through sales models, partner models, financial models, etc. and none actually match up with Mulally’s expertise. So basically you are hiring a great leader, but not necessarily the ideal guy for addressing Microsoft’s core problems.
There are two groups of people rooting for Alan Mulally to become Microsoft CEO. The first are the financial guys who want a quick boost in Microsoft stock price so they can make a huge killing and then walk away. They don’t care if Microsoft is a leader in 10 years, or even if Microsoft still exists in 10 years. All they care about is how much they can make from events that drive the stock price. They’ll sell after a boost, buy after a dip, and short the stock if they think the company is getting ready for a fall. They don’t care if Microsoft succeeds or fails, they can make money on either. The thing they can’t make money on is a stagnant stock price, and that’s what they’ve had the last decade. Mulally is a quick fix to the stock price problem, and if he doesn’t move Microsoft forward then they’ll profit from the slide down. Individual investors like the idea of the stock price making a major move higher, but many will hold on hoping for better things down the road and then suffer badly if Mulally doesn’t turn around the company’s fortune.
The second group is people grasping at straws for one reason or another. For many, anyone is better than Steve Ballmer and a proven leader like Mulally is easy to grab on to. He’s like a Presidential-candidate who is the opposite of the sitting President. A lot of people fall in love with the idea, not the reality. There may be a lot of alternatives, but there is one who gets the real emotional support. The others are Washington-insiders, he’s an outsider. The others are the same old politics, he’ll bring change. Etc. It’s an emotional thing, backed up with logic but seriously colored by the gut reaction. Mulally, great guy. Not really the right guy.
In Part 2 I’ll address more of what a new CEO has to address and what I think Steve Ballmer’s legacy is. And yes, I promise a quick turnaround on Part 2.