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The Problem With Replacing CEO’s, Boards, and Governance at Big Co’s

Posted by Bob Warfield on February 1, 2014

At some point, Silicon Valley VC’s, whom I am not always entirely complimentary of, decided it was easier to teach a Founder to be a decent CEO than it was to teach a Big Co Exec to fill in what they’d lose if a Founder left.  That doesn’t mean they don’t replace CEO/Founders, but it used to be an almost guaranteed matter-of-course.  The VC’s have it right.  We saw that unfold at Microsoft almost to the day Bill Gates handed the reigns to Steve Ballmer.  I believed then and believe now that Microsoft needed a Fighter Pilot and instead got a Moist N’ Easy Snack Cake Salesman.  Sorry Steve, you’re a good man, but you were not the right man for Microsoft.

Now the Microsoft Board is apparently on a path to making Satya Nadella, the President of their Cloud Business, Microsoft’s new CEO.  I read with interest in a WSJ article that he is asking Bill Gates to give him advice on Technology and Strategy.  That was my first red flag for this candidate.  Advice on Technology and Strategy?  Isn’t that exactly what’s been so badly lacking at Microsoft since Ballmer took the reigns?  Did he and Bill Gates just not talk?  Or is it possible that the company actually needs to find someone that knows enough about Tehnology and Strategy to chart their own course and actually dare to get Microsoft to do something different from what hasn’t been working all these years?

I read in The Telegraph the following from one of Nadella’s former computer science professors this ringing endorsement:

Former teacher and MIT director Vinod V Thomas told the Times of India he “cannot vividly recall” Mr Nadella as he “didn’t figure in either ends of the spectrum”, but added that records showed he was “a first-class student who achieved distinction.”

Any attempt to find out what Nadella has been doing for most of his career meets with a brick wall.  We know he did something for Sun Microsystems and that he has been at Microsoft for 22 years.  As the Telegraph article concludes:

Despite his enormous success in the tech industry, Mr Nadella is not the biggest user of Twitter. He has not tweeted since July 2010, and the messages he has posted are enthusiastic, but not particularly enlightening.

That seems to be basically this guys M.O.–he’s quiet, heads down, and steady.

Is this really what Microsoft needs?  Quiet, heads down, and steady?  I mean love her or hate her, at least Marissa Mayer has shaken up Yahoo to an extent.  At least Meg Whitman had done something everyone had heard about before she took over HP.

“But wait,” you say.  Hasn’t Nadella run one of Microsoft’s most important and successful divisions, the Cloud division?  Isn’t that a foward looking part of the empire?  Not really.  It didn’t take any great imagination or strategic prowess to deliver Microsoft to its present Cloud market position.  Microsoft was very late to the Cloud, played it very safe, and has yet to accomplish much there.

Herein lies the problem:  Boards want to hire the safe choice.  They don’t want to hire someone who will shake anything up until it is far too late.  They want consensus.  They want everyone to play nice.  They want to have nice informative Board meetings where they can get their two cents in and everyone in the room will nod sagely and take the advice.

There’s really only a couple of guys I’ve come up with who can make a difference for Microsoft.  Either Bill Gates can come back as CEO, or Jeff Bezos could add Microsoft to Amazon and go from there.  Neither one is apt to happen, so be ready to watch Microsoft flounder further.

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