Now that Microsoft has formally announced a bunch of Senior Leadership Team changes I thought it appropriate to comment.
The easiest one is Tony Bates. Like many CEOs who join a large company as part of an acquisition it can be hard to find an appropriate role in said large company. I assumed that Tony took the Business Development job as a landing spot until something more appropriate came along (which could have been Microsoft CEO or ownership of a future business). With Satya’s ascension to CEO Tony probably concluded there was nothing appropriate for him in the reasonable future. In fact the most appropriate roles probably required that he, like Julie Larson-Green, would have had to give up his EVP position for a CVP position.
Speaking of Julie Larson-Green, with the closing of the Nokia deal she wasn’t going to be heading the Devices business at Microsoft. So, if you have to play second fiddle you might as well choose a role that you have real passion for and unique skills in. Julie’s new role working for Qi seems to fit the bill. Good move for Julie and Microsoft.
Tami Reller’s departure is a bit of a surprise, but not a huge one. I did not expect Satya’s ascension to CEO to necessarily impact Tami because they’ve worked together before. They certainly were peers in Microsoft Business Solutions, and Tami may have briefly reported to Satya (though I can’t recall all the timing). As far as I know they had a good working relationship. But Tami’s background was finance and her marketing chops relatively limited. So owning all of marketing for Microsoft was clearly a stretch. Whatever discussions have happened over the last month it must have been clear to Tami, Satya, or both that Tami wasn’t the person for the job the way that Satya saw that job. And as much as I respect Tami, I don’t see her leaving as an earth-shattering departure.
Meanwhile, combining Tami’s responsibilities with the advertising responsibilities that Mark Penn had and giving them to Chris Caposella as Chief Marketing Officer is a great move. Chris is probably the most respected marketing leader inside Microsoft. Recall that Chris actually was the Chief Marketing Officer, taking over Central Marketing (as well as creating the Consumer Channels Group), from Mich Mathews 3 years ago after a long spell as the head of marketing for all Information Worker oriented products. Along the way his CMG responsibilities moved to others and he was left with CCG. This reorg not only reinstates his CMO title and CMG responsibilities (which included corporate advertising before Mark Penn took them over) but gives him leadership of all Microsoft product marketing as well. Chris actually was the most logical choice to have been given this role as part of last summer’s One Microsoft reorg, but lost out to Tami in the game of musical chairs. Now balance has been restored.
Which brings us to Mark Penn. I don’t know him and I really don’t know how insiders think of him. Outsiders seem to base their opinions on their like or dislike of the Scroogled advertising campaign. Of course I expect that campaign represented about 1% of his efforts since joining Microsoft and is almost irrelevant in the greater scheme of things. In his revised role it looks like he lost direct operating responsibilities but retained his advisory role on corporate strategy. He even had his title altered slightly to reflect the new focus (and likely to sooth his ego over losing control of advertising). He is still EVP of Strategy, but also is called out as Chief Strategy Officer. Microsoft has been throwing “Chief” around a lot the last few years and I don’t associate any incremental influence or power with those titles. What is important is what the actual job entails. Read Satya’s mail I linked to above for a good description of that.
That just leaves Eric Rudder taking on Tony Bates’ responsibilities on an interim basis. I think the interim part is real and this was just a move to avoid overloading Satya with one or more additional, and perhaps junior, direct reports while he searches for a new leader for this function. Or decides to organize it differently.
I don’t think any of these moves are earth shattering in the short run. They do represent incremental changes that will lead to a more cohesive Senior Leadership Team. They also mean that the SLT is more heavily weighted with people who grew up with the company and were (often as junior individual contributors) part of its glory days. They no doubt are highly motivated to be known as the ones who returned the company to unquestioned leadership status. I can’t give an unbiased opinion on if this is the right direction to take (my biased one is yes), but there is one thing I’m sure of. Steve Ballmer spent a lot of time flailing about looking for a formula, including hiring many outside executives at the Senior Leadership Team level, to propel Microsoft forward. With Satya’s appointment as CEO, and his management moves so far, it is clear that the primary bet is on home grown leadership. That could reignite a lot of passion within the company.
Hal's (Im)Perfect Vision 
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Do you think that Julie Larson-Green’s early move away from Devices and Studios implies that Stephen Elop has signified his “all in” commitment to Satya Nadella when he rejoins Microsoft? In a way his situation would be like Tony Bates’s — a former CEO (and Microsoft CEO candidate) (re)joining Microsoft in an acquisition.
There are similarities and differences. Elop probably has a contract that will keep him in place a year or more. He is re-joining Microsoft with a huge business and charter, and challenge, that is worth his hanging around for. And while he no doubt has future CEO ambitions, his prospects for something really big improve greatly if he turns Microsoft into a successful devices company. So he could be around for a while. But another factor is that he is bringing lieutenants with him that could include a future successor. Or, he gives Microsoft time to recruit someone with extensive devices experience as a successor.
As an outsider looking in Tami appeared to be strong, albeit with the experience shortcomings you note for this particular role. It’s a shame she couldn’t be retained elsewhere. I’m also concerned that Chris didn’t appear to make much visible progress in MS’s long broken marketing during his first run in that position. Was it a lack of senior support then for the changes required? I like the Rudder move. He seems like a resource that MS has failed to take full advantage of for some time. Of course the market responded quite unfavorably to this entire announcement. So not sure what to make of that, if anything.
Most likely Tami fell into that particular trap of not wanting to take a demotion to stay. That also happened with at least one of the other former Windows leaders when Terry did his reorg. It wasn’t that Microsoft forced them out of the company, it was that no position at the same job level was available and they would have had to take a demotion. They chose to take retirement instead.
In Chris’ first run as CMO he just controlled CMG. As best I can tell his main objective in that role was to eliminate tremendous tensions that had built up between CMG and the product marketing groups. Other than that he built CCG at the same time. So I don’t really know how to rate his performance because I’m actually unfamiliar with details of what happened in those various endeavors. But CMG never had an publicly visible role other running corporate image advertising.
Eric is a special case.
Thanks for the additional background/insight.
This is an interesting contrast to Yahoo. Marissa Mayer seems to have no faith in the current Yahoo employees. She seems to be trying to change the culture by acquiring talent/entrepreneurs through failed start-ups. Microsoft believes it has the best talent already, they just need the opportunity to succeed.
These companies are coming from very different places. Yahoo was a failing company with no strategy for survival let alone success. They also had been bleeding senior talent at a rate that left them hollow. Microsoft continues to be a very successful and very profitable company with no let up in its strength amongst enterprises. And unlike the client, and particularly the consumer client, part of the business it got on the cloud trend early enough and is one of the leaders in that space and is growing fast. So what you have at Microsoft is a mix of healthy and unhealthy businesses, not a company in a death spiral.
And while a lot of key talent has left over the years, they actually have more senior people than they need (as a general rule, though not necessarily true in individual areas). That’s a key reason you see people leaving, because there just isn’t an appropriate role for them. In this case Microsoft’s loss is everyone else’s gain. They won’t be shy about filling openings from the outside when they need to (e.g., expertise they don’t have). It’s just they still have an embarrassment of riches in most areas.
Microsoft also has a bunch of cultural issues to be fixed, but again unlike Yahoo they have time to do so (unlike the situation when Mayer became Yahoo CEO). And over the last 18 months or so a lot of the tensions between senior executives that have made fixing those issues difficult has been addressed. It appears Satya is continuing that trend. So again bringing in outside people isn’t necessarily the answer for them.
In terms of specific areas they are of course bringing in a ton of outsiders, specifically in the devices business. The OS business didn’t need outsiders, it needed to bring back the insiders who knew how to do operating systems. And they’ve done that.
One other thing for Microsoft. As the smoke clears and the morale improves a lot of ex-Microsoft people are going to be open to the idea of returning. So even when Microsoft does need to go outside they will have the option of brining in people who understand the company, but have been bolstered by a few years at startups, Google, Amazon, and other organizations. So they can bring in that external perspective with a much higher chance of those people succeeding than failing.
Thank-you for taking the time to respond. Big fan of your blog! Keep up the great posts 🙂
I agree, but I do have several items on my wishlist for Satya, including ending the Yahoo-Bing and the MS-Novell deal, ending the Android patent attacks, putting an end to the SCO lawsuit, etc…
I don’t know why he would do any of these things.
For example, the MS-Novell deal is so bad that FSF put a provision in GPLv3 against it. I don’t know how much power MS has right now to end the SCO lawsuit, but it was quite famous. So is the FAT/exFAT patents and how it has been used to attack Android and other things that uses them (I am thinking that existing patents should go to the public domain and any remaining exFAT patent applications withdrawn from USPTO if possible).
And I forgot to mention OOXML. I just realized that Office for Windows don’t use the “Open XML” term that much inside the software. I am thinking of a proposal where the standard would be withdrawn from ISO, the “Office Open XML” term would be depreciated, and the “Strict Open XML” option would be removed (I doubt it is catching on). Note this don’t change the file format itself in anyway, the contents of the ISO standard would be merged with MS-DOCX/XLSX/PPTX.
You still haven’t answered my question. Why would Microsoft do these things? What benefit would it be to Microsoft to make these moves? FAT/exFAT patents seem to be responsible for $1B+ in revenue (and much of that profit). Why would it give that up? What would be the economic or strategic benefit to the company?
Well, the original FAT LFN patents are expiring anyway.
Almost expiring actually (most will probably expire within next 3 years).
This wishlist was partly inspired by this comment BTW: https://news.ycombinator.com/item?id=7281319