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How Will the Next CEO Save Microsoft?

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While the guessing game of who will replace Steve Ballmer as Microsoft's CEO is on, the bigger question is can any executive fix the troubles in Redmond?

Wall Street tech analyst Rick Sherlund this morning told CNBC perhaps no one can help Microsoft make up for the ground it has lost in the tablet and smartphone race. But he said that may not be the criteria the search committee of Microsoft's board, which includes chairman and founder Bill Gates, will be looking for. 

"You can certainly continue to try but I think this is not about fixing the company in that regard," Sherlund said, adding the bigger priority will be creating shareholder value. Does that mean breaking up the company or using Microsoft's mountain of cash to buy back shares or pay hefty dividends? Or does creating value mean making some key acquisitions that would help increase Microsoft's share value, which has held relatively steady over the past decade?

Stakeholders including enterprise IT decision makers and those who manage their infrastructures with Microsoft products -- as well as those who use them for content creation and management --  might have different views on creating value and consequently how Microsoft should evolve. And that will also be critical to creating shareholder value.

The first thing the new CEO will need to consider is whether the company can deliver on the new "One Microsoft mantra," which really is just a marketing slogan for a concept Microsoft has long aspired. Remember Ray Ozzie's "three screens and a cloud" message, which referred to Microsoft's goal to tie devices, phones and TVs together with the cloud. And over a decade ago when Microsoft first announced the .NET Framework, its goal was to create intelligent devices and services, known as Project HailStorm.

"One Microsoft" looks to break down the organizational siloes -- and in many cases fiefdoms -- with a management structure that the company hopes can better achieve that model. Make no mistake, Apple and Google have similar goals and though unstated has shown signs that it also aspires to a similar goal. Companies like Citrix and VMware have similar worldviews.

It seems unlikely Gates would sign off on a CEO who would want to dismember that anytime soon. That would be a last resort. Despite Microsoft's troubles, they're not on par with the problems that plagued Apple when it was on the brink of collapse before Steve Jobs returned or IBM in the early 1990s when it appeared Big Blue was toast (and its CEO at the time, John Akers, had the wheels in motion to break up the company). Akers was replaced by Lou Gerstner, who was CEO of Nabisco at the time and had no background running a technology company.

Gerstner revived IBM in one of the most unlikely and remarkable corporate turnarounds ever. But I can't imagine that type of executive running Microsoft. And despite Microsoft's troubles, which aren't trivial, I don't see it in the dire straits IBM was in two decades ago. Ironically Microsoft was founded as a company looking to disrupt IBM's business model and prided itself on the fact that it didn't have the corporate makeup and legacy issues that faced Big Blue. In many regards, Microsoft has become what it once rallied against.

Along came Google, VMware and a re-christened Apple, who are now trying to do to Microsoft what it did to IBM. But if companies like Apple and IBM can return from the brink, it's certainly reasonable that the right leader can revive Microsoft's tenuous, though less severe issues and put it on a path to future growth.

In the meantime no one knows how long it will take to name a new CEO or how this will play out. The search committee has a big task on its hands and whoever it chooses will have a major impact on Microsoft's future.

Have any thoughts on who you'd like to see as Microsoft's next CEO and how he or she should take the company forward? Feel free to comment or drop me a line at [email protected].



Posted by Jeffrey Schwartz on 08/23/2013 at 11:05 AM


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