Microsoft's CEO search and the art of non-denial denials

Once the practice of politicians, temporizing by the likes of reported candidate Alan Mulally is now the norm

Observers of Microsoft's three-month-and-counting CEO search have watched the art of the "non-denial denial" at its best -- or worst -- a public relations expert said today.

"A non-denial denial isn't as bad as lying or misleading, but it strikes a lot of people as too cute, aggravating and even frustrating," said Gene Grabowski, an executive vice president of Washington, D.C.-based Levick, a firm that specializes in crisis and corporate reputation messaging. "But in corporate America, a non-denial denial can also affect stock prices and create all kinds of negative news."

Grabowski was referring to the non-denial denials that purported Microsoft CEO candidate Alan Mulally, currently chief executive of Ford Motor, has been regularly issuing when asked if he is in the running.

As recently as Thursday, at Ford's annual holiday party for the automobile press, Mulally answered reporters' questions about the Microsoft CEO spot with only, "I love serving Ford. No change." Previously, he has consistently refused to directly say whether he would take the Microsoft job if it were offered, and has been called out by pundits and Wall Street analysts for the non-denial denials as proof that he is, in fact, on the list.

Microsoft is looking for its third-ever chief executive, a decision triggered by CEO Steve Ballmer's August announcement that he would step down. Ballmer's abrupt departure has revealed Microsoft's lack of a succession plan, and the scramble by the media to identify possible replacements has been unrelenting.

Mulally has been linked to the Microsoft job in large part because Ballmer went to the automotive executive for insights into a Ford reorganization managed by Mulally. In July, Ballmer announced a similar restructuring of Microsoft, designed to further collaboration.

By refusing to dash claims that he is on the company's short list, Mulally and Ford have declined to put an end to the speculation. There's a reason for that.

"When you hear a non-denial denial, you can deduce that details are being hammered out or variables are coming into place," said Grabowski, who believed that because of those statements, Mulally was being aggressively courted by Microsoft. "There's not a final conclusion yet, so the best he can do is temporize. A non-denial denial buys you time while those details are being hammered out."

The details include compensation, increasingly important in a world where CEOs make millions, tens of millions, even hundreds of millions from salary and stock grants, but in this case perhaps also because they include negotiations on the CEO's independence. Since Microsoft's co-founder and current chairman Bill Gates, as well as Ballmer, will continue to sit on the board of directors, there has been concern that the new CEO may have a hard time pushing through drastic changes he or she believes must be made in the face of resistance from the old guard.

It wasn't always like this.

"The non-denial denial developed into an art form in Washington D.C.," said Grabowski. "But it's leached over into the corporate world."

The phrase has been credited to Ben Bradlee, former editor of the Washington Post, who coined the term in the early 1970s during the newspaper's investigation of the Nixon administration's part in the Watergate break-in. But the practice, once limited to politicians, has been taken up by others, including head coaching candidates of professional and college teams, and, not surprisingly, by top-tier business executives.

The reason?

"It really wasn't that long ago when CEOs were not compensated, not courted as they are now," said Grabowski. "But now, people see these individuals as stars. Everyone is invested in the stock market or corporate America now. The rise of 401k plans heightened the interest in CEOs. In the 30s, 40s and 50s, the media covered unions and labor-management issues. Now we cover personalities."

Issuing a "no comment," said Grabowski, was even worse than a non-denial denial in the eyes of the press and the public. People expect these celebrity CEOs to say something when asked.

"We would advise a client to keep quiet, not make extra waves, if they could get away with that," said Grabowski. But increasingly, that's not possible. "That's something you could so as a CEO of a major organization maybe 15 or 20 years ago. But the media spotlight is too high now, like on major league ballplayers, to not say anything."

So rather than simply shut up -- or say, "No comment" -- executives like Mulally temporize with a non-denial denial. "When put in that situation, perhaps because you haven't made up your mind or the deal isn't done or you don't want to affect stock prices, you use a non-denial denial," said Grabowski.

According to Reuters, Mulally faced questions last week from the Ford board of directors over the Microsoft CEO distraction. Other claims have surfaced recently that Mulally has receded from his former first-place position in the Microsoft CEO race, in part because of his non-denial denials.

Ford's move is easy to understand, said Grabowski. "It's been a huge distraction for Ford," he said, referring to the news cycles occupied by Mulally's possible departure when the automobile maker would rather the media pay attention to the introduction of next-generation models.

Whether Mulally is actually out of the running is unknown. Candidate speculation, as another analyst at Levick noted recently, is only that. Last week, for example, Bloomberg reported that Qualcomm's COO, Steve Mollenkopf, was a candidate; hours later, Qualcomm promoted Mollenkopf to the CEO spot, effective in March.

Mulally's continued reliance on non-denial denials, or even more opaque statements, would hint that he is still under consideration, or as Grabowski believed, even now in negotiations for the job.

"He's in a tough spot," sympathized Grabowski, who added that Levick had advised Mulally in the past, but not during this stretch of CEO conjecture. "He's in a tight spot without any real options but to use non-denial denials."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

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