Now that some of the dust has settled on Microsoft’s changes last week I’m going to cover three topics. Satya Nadella the new CEO, Bill Gates increasing his Microsoft involvement, and Scott Guthrie replacing Satya as Executive VP of Cloud and Enterprise. I’ll take three different blog entries for this.
Satya is on one hand old-Microsoft through and through and on another he’s more of the startup guy. If you think about what he’s worked on over the last 20 years it hasn’t been classic things like Windows and Office.
When I first met Satya in the 1990s he was working on those early days of Internet-based commerce. The BizTalk Framework if memory serves. A couple of years later we served on the same staff when he cobbled together some acquisitions and re-targeting of existing properties (like Hotmail) to create the bCentral small business Software as a Service offering. This was 2000/2001. Yes, Satya was laying the foundation for, and delivering early implementations of, the Cloud long before the term existed.
Shortly after Microsoft formed Microsoft Business Solutions, by acquiring Great Plains and Navision, Satya became head of its engineering organization. Later he lead all of MBS before being tapped to build the engineering organization for Search and Advertising. And when Steve Ballmer needed someone to accelerate the Server and Tools Business (STB) move into the Cloud he tapped Satya to be President (and then EVP under the One Microsoft reorg) of that organization.
Leading STB was a good test for Satya because he had to deal with two strongly competing goals. He had to engineer a cultural and priority shift away from on-premise computing to the Cloud while at the same time maintaining the health of one of Microsoft’s largest and healthiest businesses. That’s quite a balancing act, but he’s done it successfully. STB has continued to grow its business at a healthy clip, Azure is well on its way to serious success, and STB (now Cloud and Enterprise) is well along in its cultural shift.
Some people may not understand just how much of a challenge Satya faced. A few months into Satya’s term as President of STB I asked him if Steve (Ballmer) had given him any relief on Contribution Margin during the refocus on the Cloud. The answer was NO. We’d struggled with this problem when I was in STB as it forces you to reduce or eliminate efforts that support an existing revenue stream so you can fund efforts that won’t produce a healthy revenue stream for years into the future.
If you mess up the transition then revenue growth, or even revenue itself, will fall off from older streams (because you neglected them) before the new streams are capable of replacing them. Alternatively you might not shift enough resources to succeed in the new efforts, miss the paradigm shift, and your entire business collapses when customers redirect their attention (and budget) to the new paradigm. It was a lack of faith that Bob Muglia could lead STB through this transition that led Steve to replace him with Satya.
Take a look at SQL Server 2014 for a hint of how Satya and Microsoft have managed this balancing act. On the one hand SQL Server 2014 contains the biggest advance in OLTP support (primarily the in-memory tables for OLTP and related features) since 1998’s SQL Server 7.0, while on the other hand much of the rest of the on-premise product has received minor or no change. Meanwhile this week marked release of PowerBI, a cloud-based offering from the same Data Platform (nee, SQL Server) team. For the last few releases on-premise BI has been an area of focus, but for this release cycle those resources were focused on the Cloud. SQL Server 2014 is going to be a big hit, and so too is PowerBI. Revenue stream protected, cloud focus producing results, mission accomplished.
Satya’s ability to lead this key part of Microsoft through a transition cycle while preserving the health of the business no doubt played a big part in him getting the CEO position. Because that characterizes the nature of the entire task in front of the new CEO, taking Microsoft through a number of transitions to renewed industry leadership while preserving the health of the business.
Satya is wicked smart, inquisitive, probing, and a real pleasure to work with. He holds very strong opinions, but is always open to input. I think all constituencies, from customers to investors to employees are going to feel that he is listening to and taking their input into consideration as he moves Microsoft forward. Is the CEO job a stretch for Satya? Yes, but it would be a stretch for anyone!
Some stakeholders wanted a new CEO who would jettison the consumer businesses and focus on the enterprise. Other stakeholders wanted someone with consumer electronics experience precisely so they could do the opposite, find a successful path in mobile devices, Search, and other consumer offerings. Some wanted a CEO who would rock the boat until it looked like a spacecraft. Others wanted to make sure the baby wouldn’t be thrown out with the bath water. Some wanted a CEO who had already led a large F50 company, others wanted someone with more entrepreneurial credentials.
In truth no one person could have met all the expectations for a new Microsoft CEO, particularly since so many are in conflict. What everyone wanted in a CEO is someone who would find the handful of things where Microsoft can establish or reestablish leadership, focus the company on those, and lift Microsoft out of the malaise that has haunted it every day since the antitrust actions began a decade and a half ago. That’s something Satya can do, now he has to actually do it!
Of all the things I’ve seen published about Satya my favorite comment came from David Sobeski, a former co-worker of ours. After Microsoft, David held executive positions at Yahoo and The Walt Disney Company. In one of his comments on Satya’s appointment as Microsoft CEO David compared Satya to Disney CEO Bob Iger, someone he greatly respects. Having a “Bob Iger” as Microsoft CEO sounds like a good thing to me.
I’m happy Satya was chosen to be Microsoft’s new CEO. It gives me a lot of hope that the next decade is going to be a lot happier than the previous one for customers, shareholders, and employees.