Saturday, February 1, 2014

Satya Nadella: The Best of All Possible Directions for the new CEO of Microsoft

If the Wall Street Journal is right, then the agreement being hammered out this weekend for Microsoft executive Satya Nadella to take over the reins of Microsoft as CEO means that the company is making the best possible decision for succession, changing the internal culture and for its strategic direction.

This is quite a different position from the comments in the finance and tech press that this would be a 'safe decision.'  I'd take the polar opposite position.  The choice of a superstar CEO from the automobile or aviation industry would, in many ways, have been the "safe" decision.  The cult of the superstar CEO is alive and well in corporate America.  The buy and sell sides of Wall Street would have applauded a bold choice, like looking beyond technology, and at the same time they would be forced to hold off judgment until the new CEO learned more about the business and about Microsoft. Valuable time would have been wasted. The new CEO would be beset by the culture, as the heads of fiefdoms nipped at his heels trying to protect their empires, while undermining the CEOs effectiveness. If, at the end of the day, the superstar failed, a big severance would have been payed and Microsoft would have little credibility with investors or customers. Microsoft would then be in real danger of becoming irrelevant.

Instead, there's no question that Mr. Nadella not only knows technology, but he understands software for the powerful SQL server business, and he understands search from working with Bing.  He also, according to the Journal, had to apologize to an international customer for business losses arising from an outage of the cloud-based Azure service.

Two things about that last point.  Mr. Nadella has been on the line with a customer taking the heat for the failure of a product. Software glitches and loss of service are routine. Mr. Nadella understood the importance of an outage to a smaller customer.  His choice of personal accountability to a customer is something that has not a hallmark of Microsoft's customer relations, especially on the Windows side.  Don't think that the internal development and sales teams didn't notice what Mr. Nadella did either. All of this is a big deal for the future.

Also, don't underestimate the impact on international markets and on Microsoft's sprawling operations in countries like India.  A Redmond-centric culture may finally start to understand what it means to be a truly successful global technology leader, and that belief will be made manifest in its new CEO.

From his position within the company, it will be much more difficult for intransigent insiders to dig in their heels to cultural changes. Here again, the story talks about an executive whose personality is the antithesis of his predecessor; it also talks about people coming out of conversations feeling better than they went in. Again, things like this are a big deal.

When Mr. Ballmer launched Bing! it was a venture widely criticized by Wall Street, which said it should be shuttered. Mr. Nadella was part of the leadership team that made this venture, which we've supported in this blog, a necessary and successful part of Microsoft's technology portfolio.  Mr. Nadella's relationship with Mr. Ballmer provides a good foundation for the future.

Finally, whether or not this is speculation, the notion of founder Bill Gates taking the time and specific interest to mentor the new CEO, while relinquishing his board chair for another acceptable role would be another inspired decision for the future.

Ray Ozzie wrote, "Those who can envision a plausible future that’s brighter than today will earn the opportunity to lead." I expect that Mr. Nadella has earned this opportunity, and he would be leading with a lot of help from inside Microsoft. 

There's reason to put Microsoft back on the radar screen again, after this announcement has been made.

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