Microsoft’s Puppet CEO

Last week, after a painfully long 6 month search, Microsoft made the transition from Steve Ballmer to Satya Nadella at CEO.

As of late, Ballmer had become the master of making nothing happen, very slowly. Microsoft is still cash rich, but their strategic position has been deteriorating rapidly. Microsoft dominates sales of Operating Systems sold to notebooks and desktops but this portion of the market is rapidly declining. And Microsoft is nowhere in the rapidly accelerating mobile phone and tablet markets.

Even Apple — the minority player in mobile — sold more computing units in the fourth quarter of 2012 than did Microsoft and its OEM partners.

Advice

There was certainly no shortage of advice as to what Nadella should do.

The Stoic, Thales, who when asked “What is difficult?” replied “To know oneself.” (When asked “What is easy?” he said “To give another man good advice.”)

Jean-Louis Gasse of Monday Note says that Nadella should prioritize. And he is certainly right.

Well begun is half done. ~ Aristotle

Horace Dediu, in his Critical Path podcast, suggested that what Nadella does immediately — in his first 100 days — is crucial. And he is certainly right.

The first thing you need to do when you find yourself in a hole is stop digging.

Harry Marks of Curious Rat, talked about how quickly Google had pivoted from Android vs. Blackberry to Android vs. iPhone and how Microsoft needed to act just as quickly and decisively now as Google had then. And he is certainly right.

Success is the child of audacity. ~ Benjamin Disraeli

Ben Thompson of Stratechery suggests that Microsoft’s “Devices & Services” strategy is flawed. And he is probably right.

He who wants to keep his garden tidy doesn’t reserve a plot for weeds. ~ Dag Hammarskjöld

Ben Thompsons then goes on to suggest that horizontal services should be Microsoft’s focus. And he is probably right.

When solving problems, dig at the roots instead of just hacking at the leaves. ~ Anthony J. D’Angelo

But none of that advice matters. Here’s why.

Marching Orders

No amount of advice, no matter how good, matters because Nadella already has his marching orders in hand. Just look at the sequence of events leading up to his promotion to CEO:

— Nadella is an insider.

“Microsoft has a new CEO – a safe choice, steeped in the old culture, with the Old Guard still on the Board of Directors.” ~ Jean-Louis Gasse

We find comfort among those who agree with us – growth among those who don’t. ~ Frank Howard Clark

— The Old Guard is still firmly in charge.

The Board that allowed Ballmer to drive Microsoft’s current strategy is still in place and Ballmer, the CEO who drove that strategy is still on the board.

Incumbents get disrupted because the very moats a company builds up to be successful in one era become a liability in the next.

— Bill Gates Is “In The House”

Bill Gates has “stepped down” from the board to “assist” Nadella. That is the same Bill Gates, who sat idly by while Ballmer ran Microsoft into its current dreadful strategic position and this is the same Bill Gates who didn’t recognize the strategic mistakes that Ballmer was making.

Never let your ego get so close to your position
that when your position goes, your ego goes with it. ~ Colin Powell

— The Strategy has been preordained:

Before Nadella even came close to becoming CEO, Microsoft had already locked in its strategy by:

1) Shifting to a Device & Service Model;

2) Changing from a divisional to a functional organizational structure; and

3) Purchasing Nokia.

There are not things you do BEFORE you bring in a new CEO. These are the kinds of decisions the new CEO is supposed to make. Microsoft is not, in fact bringing in a CEO, they’re bringing in a puppet and the board is pulling all the strings.

I don’t want any yes-men around me. I want everyone to tell me the truth even if it costs them their jobs. ~ Samuel Goldwyn

Prisoner’s Of Company Culture

What the Microsoft Board has done to Microsoft is a disgrace. They let Ballmer’s reign go on for far too long. They ousted Ballmer without a successor and without a clue. After announcing Ballmer’s departure, they allowed and then took strategic decisions that tied the hands of his successor. They discovered, to their apparent surprise, that no competent CEO wanted to have Bill Gates and Steve Ballmer on the board looking over their shoulder. When the Microsoft board calls the roll at their next board meeting, they should not answer “present, they should all respond “guilty”.

We cannot become what we want to be by remaining what we are. ~ Max Depree

Microsoft may someday turn their ship of state around, but that day is not coming anytime soon. They have made it abundantly clear that they intend to double down on their current strategy. That means that things are going to get a lot worse before they can ever start to get better.

If you do not change direction, you may end up where you are heading. ~ Lao Tzu

If Nadella is to shake things up at Microsoft, he needs to do it now, immediately. But that’s not going to happen because the board doesn’t want it to happen and because Nadella was brought in as CEO with his marching orders already in hand. After a short while, his window of opportunity will be lost and Microsoft’s bureaucracy will fall back into their comfortable patters making change all but impossible.

There is no passion like that of a functionary for his function. ~ Georges Clemenceau

Inevitably, Nadella will try — too late — to make the changes that he should have made at the start, but by then he will be working against the bureaucracy, not with it.

The most dangerous strategy is to jump a chasm in two leaps. ~ Benjamin Disraeli

Nadella seems extremely capable, but there is no power like a bureaucracy. It must be broken early or it will, in its turn, break you.

If you are going to sin, sin against God, not the bureaucracy. God will forgive you but the bureaucracy won’t. ~ Hyman Rickover

Conclusion

At Microsoft, the old way is the problem, not the solution, but the old guard is still firmly in control.

We can’t solve problems by using the same kind of thinking we used when we created them. ~ Albert Einstein

It won’t matter how competent Nadella is because, to quote Peter Drucker, there is nothing so useless as doing efficiently that which should not be done at all. One can attempt to climb the ladder of success as fast as one wants, but:

If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster. ~ Stephen R. Covey

I predict that Nadella will fail to turn Microsoft around because to succeed he will have to fight the very board that put him in power and become the CEO they never wanted him to be. Will Nadella need intelligence, savvy, and vision? Yes, yes and yes. But most of all, he’ll need courage. The courage to do what he was not hired to do.

Clear thinking requires courage rather than intelligence. ~ Thomas Szasz

We’ll know soon enough.