I tweeted the thought in the title months ago but never followed up with a blog entry. If you want to know why Bill was so emotional at the recent shareholders meeting it was probably because this was likely his last as Microsoft Chairman, not just Steve Ballmer’s last as CEO. The founders era at Microsoft is coming to an end. Let me lay out my reasoning for you as well as some of the implications.
First, this is not about pressure from a couple of investors as was reported a while ago. I believe Bill has come close to giving up the Chairmanship on more than one occasion over the years and now the timing is right.
The timing is right for a new CEO because he can’t have the founder hanging over his head. Bill’s personal connection with employees, even those who joined long after he ceased being CEO, is strong. And his influence amongst investors holding a large percentage of Microsoft stock is also strong. A new CEO can’t have Bill undermining him as he seeks to change the company. Sure Steve had that same problem, and he struggled to establish the right balance between his own direct authority and Bill’s moral authority. A new CEO, particularly an outsider, could not succeed under similar conditions. In fact an outsider will almost certainly insist that Bill phase out of any role at Microsoft before he takes the job. An insider might have a different take if he had a long time connection to Bill. Only Satya Nadella probably fits that situation, and even Satya would be better off without Bill as Chairman.
It’s also right for Bill. His interests have moved on, and while Microsoft is still his child it is now a grown child. There are times that his heart must have been breaking over things Steve did that he disagreed with. The pain level associated with a new CEO and the changes they will institute is going to be even higher. And although Bill is still Microsoft’s biggest shareholder, it no longer represents the majority of his assets. He no longer needs to keep his finger in the mix.
Bill’s leaving the Chairmanship will probably be orchestrated in some seamless way. Perhaps he will become Chairman Emeritus for a while, followed by his leaving the board but remaining a “Strategic Advisor” before fading into Microsoft history. Bill would probably nominate someone, perhaps Jeff Raikes, to the board to represent his interests. Assuming he doesn’t accelerate divestiture of his Microsoft stock.
Now the obvious question is, who becomes Microsoft Chairman? There actually is an obvious candidate, and this is a scenario I’ve mentioned to a number of people: Alan Mulally! I have never seen Mulally as a good choice for CEO, but he’d be an excellent choice for Chairman. It’s the right thing for the next stage of his career. It gives the investment community someone who they want to oversee their interests. It fits all the scenarios that have previously called for Mulally as an interim CEO before turning that over to Satya Nadella. Basically you end up with Mulally focusing on shareholder value and Satya (or Tony Bates or…) focusing on the business both short and long-term.
And you want to know the kicker? It totally fits with all the non-denial denials we’ve been hearing out of Ford. Alan Mulally can join Microsoft’s boards, and even be its Chairman, while finishing out his term as Ford’s CEO. Game, Set, Match.
Ok, I may be way out there on the Mulally thing. But I’d put money on Bill leaving the Chairman position within 12 months of a new CEO being named.
Hal's (Im)Perfect Vision 
Jean-Louis Gassée had a similar thought over on mondaynote. Different interpretation, different angle, but same conclusion. Bill Gates and the new Microsoft CEO should not be in the same room together.
Such a scenario scares the living s*** out of me. Look what happened when the penny pinchers took over Apple and ousted Jobs. Look at Wang Labs. Brought in a hatchet man who chopped up the company and sold it off for scrap. Investors have only one interest, lucre. The head of Ford running a software company? Puuleeeze…
On the other hand Wang Labs, Digital Equipment and other mini-computer companies were saddled with management who did not possess the imagination or will to adjust to the changing climate of the PC. IBM itself handed over the reins to a fledgling Microsoft.
I would urge Ballmer to step away not overnight, but gradually. Bring in someone perhaps as vice chairman to learn the ropes, get to know the team, culture, before taking up the rains.
And Gates as founder, with his charisma and popularity among company personnel, needs to keep a finger in the pie.
That’s fine as long as Mulally or whoever takes over as Chairman doesn’t listen to Wall Street’s incessant demand for next quarter’s results over long term results.
I think you’re right about Bill being gone within a year, though we disagree on the role investors are playing in that. My view is after more than a decade of a dead stock and increasing signs MS is being disrupted the activists successfully got the backing of several large institutional holders and “investors” are now driving the agenda or at least able to veto anything proposed by Gates/Ballmer. Removing Steve was their first target and they’ve now achieved that. Gates will be their second. Both are long overdue in my opinion. I actually hold Bill more responsible for what has transpired than I do Steve. He should have made a CEO change years earlier.
Mulally as Chairman would be okay as long as Gates is off the board soon thereafter and Alan can really drive strategic change. Like you, I didn’t really like him for the role of CEO even though Wall Street apparently does. But I’m not convinced Satay has what the next CEO requires or is fully read yet if he does. A last interesting thing is that if Bill keeps selling as he has, and there’s little reason to think he won’t, and Ballmer continues to hold his shares relatively fixed, then Steve emerges as MS’s largest individual shareholder by next year. I could certainly see Steve demanding to stay on the board and being a thorn in the side of those wanting to make major changes to the structure he/Bill created. Interesting times. I hope they at least put an end to this CEO replacement soap opera by naming someone soon.
Right on the mark, Hal! I’m 100% with Bob, Mulally using his judgment and experience would be great chairman and Satya would do a great job as a CEO. The only person they need to find is a visionary to be the next Chief Software Architect (if only Ray Ozzie would come back).
Ray was a horrible CSA and it pains me to see people think otherwise.
I must be a pain in your side, sorry. I remember Ray giving the initial presentation of Azure at PDC. I thought he was lightyears ahead of his audience. I’ve also thought Bill was a businessman, not a technologist. He paid 50k for DOS. Brilliant!
If Bill Gates wasn’t a technologist, then who wrote Altair BASIC on pencil-and-paper?
He forgot the ELSE statement.