CIOs are waiting anxiously for Microsoft to pick a new CEO, but they don’t mind that it’s taking its time; the way they see it, Microsoft can’t afford to make a mistake in the selection process.
For CIOs, it’s clear that the chosen candidate will have to steer the company through a variety of challenges both internal and external, and to do so successfully, the person chosen to replace Steve Ballmer will need a rare combination of skills and experience.
What awaits the new boss
Among the top priorities, Microsoft needs to improve its position in the tablet and smartphone markets, fix the problems dogging Windows 8 and 8.1, battle Google Apps for the cloud email and collaboration markets, and complete a broad corporate reorganization that Ballmer announced last July.
“The CEO search is incredibly important,” said Mike Blake, CIO at Commune Hotels & Resorts in San Francisco, and previously CIO at Hyatt. “I’m sure the search committee is doing the best job it can to find the correct customer-focused executive who can unlock the value within the Microsoft portfolio.”
Blake sees two critical issues the new CEO will have to address. One is Microsoft’s notoriously fractured workplace, an issue Ballmer acknowledged in July with his One Microsoft reorganization plan, which aims to unify the company’s business units and create a more collaborative work environment.
“Microsoft is highly structured and very often broken into fiefdoms,” Blake said via email, adding that the new CEO will have to eliminate those corporate silos.
The other area that needs fixing is Microsoft’s licensing, the complexity of which harms the company competitively, even though “the pipeline of products is still very impressive,” Blake said.
It has been about five months since Ballmer made the surprise announcement he would step down by August of this year. Some speculated at the time that his successor would be named sooner rather than later, but the search continues.
Along the way there’s been constant chatter about the potential candidates. Ford CEO Alan Mulally was seen as a front-runner for a while but recently stated he would stay put at Ford. Other names that have been mentioned include Satya Nadella, executive vice president of Microsoft’s Cloud and Enterprise Division; Kevin Turner, the company’s chief operating officer, who was CIO at Walmart and CEO of Sam’s Club; and Stephen Elop, the former Nokia CEO and former division president at Microsoft who is due to return to Redmond when Microsoft’s acquisition of Nokia’s smartphone business is complete.
“You could say they’re taking their time, being very careful, or you could say that they hadn’t been grooming someone for this position. Is that good or bad? It’s hard to say,” said Greg Urban, CTO and deputy CIO of the state of Maryland, which uses Office and Windows software but also Google Apps. “I’d say it’s good for them to take a really long, hard look because there are some definitive changes they need to make.”
Picking the right person
The months-long process and the media speculation don’t bother Peter Rothman, CIO at Alcott HR, a human resources outsourcing company in New York that is heavily invested in Microsoft’s desktop and server products. In fact, he’s happy to see Microsoft’s board and search committee taking their time. “I see it as a positive,” he said.
Taking up to a year to choose Ballmer’s replacement increases Microsoft’s chances of picking the right person and gives the process transparency, Rothman said. It shows Microsoft learned from other companies’ mistakes, he said, citing as an example Apple, which in his view struggled with disclosures about Steve Jobs’ illness and with the eventual transition to Tim Cook.
“The way they’re doing it gives Microsoft an image of trust that the company’s vision and direction will be maintained,” he said.
It will be important for the new CEO to retain the group of top executives who now report to Ballmer, he said. They include Nadella, Turner, Operating Systems Engineering Group leader Terry Myerson, Devices and Studios Engineering Group chief Julie Larson-Green, Applications and Services Engineering Group leader Qi Lu, marketing head Tami Reller and Tony Bates, the former Skype president who is now leader of the Business Development and Evangelism Group.
That doesn’t mean the new CEO should simply maintain the status quo, Rothman said. One of the issues he’d like Ballmer’s replacement to review is the pricing of Microsoft’s cloud computing services, which he finds generally too high for midsize companies.
Rothman also wants the new CEO to reconsider Microsoft’s efforts to accelerate the pace of its product updates. He’s not sure this approach jibes with the mindset and purchasing strategies of many of the company’s institutional customers, who he believes prefer more stable, longer product refresh cycles.
Christian McMahon, managing partner, Board and CIO Advisory, at Belgium-based Jamaza, concurs that the new CEO must maintain internal stability and continuity while also bringing a fresh approach to identify what needs fixing.
“Don’t bring in somebody who will make too much change too quickly to your corporate culture,” said McMahon, a past CIO at GoIndustry-DoveBid and at Ovum who is also a contributor to technology publications, including IDG’s The Business Value Exchange.
If the new CEO plans to shake up Microsoft internally in a significant way, the board must make sure the staff is fully engaged with the plan before rolling it out, he said via email.
At the same time, the new CEO must have an independent mindset so he or she can spot market-changing opportunities, as well as be able to go on an acquisition spree to build up Microsoft’s presence in key sectors where it’s weak, he said.
Eric Egnet, COO and CIO at Mobility Services International in New Hampshire, is also hoping the new CEO will be, as he puts it, “in touch with the times” and able to challenge the status quo, because, in his opinion, Microsoft has suffered from a lack of innovation that has put it in “catch up” mode in many instances.
“The new CEO needs to foster a culture of change, be able to foresee the future, encourage organic breakthrough thinking and execute with agility,” Egnet said via email.
Ultimately, he said, the new CEO should put Microsoft in a position where it can “deliver tomorrow’s technology today.”
So as Microsoft looks for the person who will be the third CEO in its history, stepping into a role only Ballmer and co-founder Bill Gates have held, CIOs wait to see if the search committee will strike gold—or strike out.