The Mistakes Microsoft Is Making In Choosing Its Next CEO

Posted: Jan 31 2014, 8:55pm CST | by , in Technology News


This story may contain affiliate links.

The Mistakes Microsoft Is Making In Choosing Its Next CEO

According to a Bloomberg report earlier today, Microsoft is getting close to naming Satya Nadella, 46, a 21-year Microsoft veteran and head of the company’s cloud computing initiatives as its next CEO. Nadella would replace Steve Ballmer, 57, who has been in the top job since 2000 when founder Bill Gates stepped down. Most observers agree that Microsoft has stumbled under Ballmer’s leadership, its stock gaining only 74% in the last decade while the S&P 500 rose 93%. The company has also failed to capitalize on the revolution in search, tablets, mobile devices and social media.

I checked in with Sydney Finkelstein, a leadership professor at Dartmouth’s Tuck School of Business and author of 15 books including Why Smart Executives Fail, about the likely decision to move Nadella to the top job. Though Finkelstein thinks Nadella could be a strong choice—as well as his cloud experience, he’s played a role in search and business applications—he believes that Microsoft is undercutting the possibilities for success by any new CEO.

The company’s biggest error: the likely move by Ballmer to sit on the board. In fact that decision probably hurt Microsoft’s ability to attract a top outside candidate. “If you’re a world class CEO and you know the former CEO is going to be sitting on the board, you’re going to think really carefully about whether to take his job,” says Finkelstein. According to Bloomberg, Microsoft considered Ford Motor Co. CEO Alan Mulally, Qualcomm CEO-elect Steve Mollenkopf and Ericsson AB CEO Hans Vestberg. Vestberg has said he would stay at Ericsson and Mulally withdrew from consideration. Finkelstein says that outsiders would not want to be in a position where the former boss would hold sway over decisions they might make.

In order to exercise significant control, an outsider CEO would also want to replace Gates as chairman of the board, points out Finkelstein. Gates has said that he intends to devote himself to philanthropy for the rest of his life, though it’s likely that he’ll remain on Microsoft’s board part-time, though not as chairman. Microsoft already reportedly has someone in mind for that job, lead independent director John Thompson, 64, a longtime IBM executive who served as CEO of Symantec, taking the technology-security company from $600 million in sales to $6 billion in a decade. He now runs Virtual Systems, a San Jose software company. Thompson has been heading Microsoft’s CEO search.

The other problem with the Nadella choice: the fate of Microsoft’s other internal candidates for the job. According to The New York Times, Microsoft had considered Kevin Turner, a top sales executive, and Tony Bates, who joined the company through its acquisition of Skype. If those executives are interested in becoming CEO, there is a good chance they would look elsewhere for a boss’s job. That’s happened before in other companies. When Jeffrey Immelt became CEO of GE, two of the other finalists left for other companies: James McNerney, joined 3M and is now CEO of Boeing. Bob Nardelli, who was also passed over, wound up as CEO of Home Depot. “The bottom line is that usually people who miss out on the top job will leave to become CEO somewhere else,” says Finkelstein.

Finkelstein believes that Nadella, a native of Hyderabad, India, could make a strong CEO, given his experience in cloud computing, a potential growth business for Microsoft. But if the company had signaled Ballmer’s permanent exit, the new boss might have an even greater chance of success.

Source: Forbes

This story may contain affiliate links.


Find rare products online! Get the free Tracker App now.

Download the free Tracker app now to get in-stock alerts on Pomsies, Oculus Go, SNES Classic and more.

Latest News


The Author

Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.




comments powered by Disqus