Microsoft's new CEO and his first-100-days plan
- 05 February, 2014 12:17
Microsoft's new CEO, Satya Nadella, had better hit the ground running with a plan for his first three months on the job, corporate strategy and branding experts said today.
New Microsoft CEO Satya Nadella needs to create a 100-day plan. (Photo: Microsoft)
"Nadella would be very smart to organize a 100-day plan. That would be brilliant," said Randy Ottinger, an executive vice president with Kotter International, a Cambridge Mass. consultancy that specializes in leadership change and setting corporate strategy. "No question that there's a first 100 days for a new CEO."
Dallying won't do.
Ottinger said it's crucial for a new CEO, even one who has, like Nadella, spent decades inside a company, to strike hard, strike fast, with a pre-planned and fast-moving program akin to those that U.S. presidents have relied on to set their administrations' political tone and agenda.
Franklin D. Roosevelt's first 100 days, when he pushed major pieces of his New Deal through Congress, have become a benchmark by which later presidents have been measured. It's the same in the corporate equivalent of the Oval Office, said Ottinger. While the early agenda may not be visible from the outside, as would a politician's, it should exist.
"Who's on my leadership team, who is my cabinet? Who am I betting on to shape the future of the company?" asked Ottinger, citing an example of what should occupy the chief executive's time.
Nadella, 46, was named Tuesday to replace Steve Ballmer, who abruptly announced last August that he would retire. At the same time, Microsoft said co-founder Bill Gates would quit the chairmanship of the board to advise Nadella on product selection and corporate strategy.
Although Nadella is a 22-year Microsoft veteran and the head of its cloud-computing and server software division -- which generated more than $19 billion in revenue last year -- he has been portrayed as green because he lacks CEO experience, much less at a firm of Microsoft's size. That makes it even more important that he have a 100-day program.
Speed plays a part, one of the reasons why 100-day programs, whether in politics or corporate leadership, continue to be used. "A new CEO must create a sense of urgency," said Ottinger.
Nadella's to-do list should look something like this.
"First, what is the big opportunity in the market? Where is Microsoft going to play? What are you going to bet on and what are you going to cut?" said Ottinger. "Two, the leadership team, who is on it? Three, the board. Who is adding value? Are they aligned with the vision we're going for now? Four, the alignment on that opportunity and creating urgency. That leads to engagement with all employees, which leads to financial results."
A new CEO, even one from inside a company, typically purges at least part of the current leadership team, the senior executives who report directly to the chief executive, said Ottinger, who expects Nadella to do the same at Microsoft. A move like that would make the team his rather than accept a group that were, after all, beholden to Ballmer for their jobs.
Sticking with the people now in the top spots -- like COO Kevin Turner or Terry Myerson, who leads operating system development -- would be akin to a new president keeping his predecessor's cabinet intact. That's been done, but only in extreme cases, such as when FDR and JFK died in office and Harry Truman and Lyndon Johnson stepped in.
Likewise, Nadella should push for changes in the board. "I'd expect the board would change," said Ottinger, echoing others who have pointed to the age of the board members, some who have served very long terms, as reasons for bringing in fresh blood. Half of the 10 members have served for 10 years or more, while their average age -- discounting Nadella -- is 61.
Nadella gave no hint Tuesday that he would push some of the current top executives or any board members out. Ballmer, however, made a point to emphasize that the senior leadership team (or SLT as he called it) was valuable, not a surprise since they were his choices. "I have absolutely no doubt that Microsoft is in good hands, with Satya and the rest of the SLT that is in place (emphasis in original)," Ballmer said in a short video posted to the company's website Tuesday.
Jim Gregory, CEO of CoreBrand, had somewhat similar advice for Nadella. CoreBrand is a brand reputation consultancy that tracks more than 1,000 global brands, and advises businesses on how to protect and enhance their name brands.
"We have a tremendous amount of insight into best practices and worst practices, how companies do things the right way and wrong way," said Gregory. "Microsoft suffers from a lack of vision, one of the most important things a new CEO can do, and what a company is all about. Ballmer struggled with that for a number of years. It's Nadella's job to project a vision and articulate that vision."
Easier said than done. What Gregory and Ottinger recommended was laudable, but how does Nadella do that?
"Talk to the major stakeholders, clearly Gates and Ballmer, ask them to articulate the vision they have of the company, what worked, what didn't work, and how he might be able to achieve goals where they fell short," said Gregory. "Talk to the line managers, ask them to identify the strengths of the company, where they think there are potential growth areas. Then craft your vision from that."
Ottinger pointed Nadella to a more top-down approach, suggesting that he collect information -- necessary because while he ran a major unit, he was not in charge of others -- then formulate his strategy and choose his priorities. "Nadella needs to get some real clarity of their big opportunities and then prioritize those opportunities," said Ottinger. "And those should be driven by a strategic view of the future, not a financial imperative."
Both stressed that speed was important, as was prioritizing initiatives, two characteristics missing from Microsoft for years.
"The reason why Ballmer is out is because the board wanted him to drive the ship faster than he was willing to do," said Ted Schadler, an industry analyst at Forrester Research, in a Tuesday interview. "He was not willing to push [workers] to go the extra mile."
And Microsoft seems to be, if not rudderless, then aiming at so many targets -- Amazon and Apple, Google and Samsung, consumers and enterprise, from Xbox and its video games to SQL Server in data centers -- that it ends up spreading its energies and resources so thinly it cannot make much headway anywhere.
"Microsoft's shift to devices and services is a good one, what has been disappointing is the pace," said Schadler.
Gregory chimed in, too. "Microsoft is an incredible company that sits on a huge pile of cash," he said. "It's very profitable, but it can be a little bit lazy. They're certainly not as fleet of foot as they should be."
Once priorities are set, said Ottinger, Nadella and other executives must drum up support -- that's what Ottinger meant by "creating urgency" -- with the 100,000 that Microsoft employs. By engaging workers in discussions about the new opportunities, upper management can get them behind the new regime and its strategy.
"What you're asking for is more engagement than input," Ottinger acknowledged. "But Nadella and others must get them on both a head and hearts level, not just data and numbers. If you can engage people in the 'heart' of Microsoft, that's like the 12th Man," he added, referring to the term used for sports fans, particularly those of the NFL's Seattle Seahawks, Ottinger's local team.
"As soon as you're clear about the opportunities, this is where you can get a lot of people engaged with the transformation," Ottinger argued.
Ottinger and Gregory both stressed that Nadella will have to outline how his strategy, how the opportunities he spotlights, drive innovation at Microsoft. Critics have lambasted the firm for lacking innovation, and Nadella must demolish that reputation.
All this advice, however, assumes that Nadella will decide that Microsoft is not on the right path, does not have the right strategy, is not executing on the best opportunities. He gave no hint Tuesday that he thought any of those things.
From everything he said Tuesday, whether in an email to employees or a short interview, Nadella is behind Ballmer's "devices and services" strategy, believes that the company can be a major player not only in the enterprise -- its historic and still biggest strength -- but also in the consumer market, and looked forward to the addition of Nokia's handset business. All those moves by Ballmer, the last after he had announced his retirement, have been criticized by Wall Street, industry analysts and other pundits.
There was no hint yesterday that Nadella will rock the boat, will produce a dramatically different strategy, or even a new execution of that strategy.
His biggest contribution Tuesday was to the discussion about innovation, and then simply because he used the word so frequently. He called on it or a derivative three times in his email, four times in a short video the company posted on its website, seven times in a 16-minute staged interview.
What goes on behind the scenes over the next 99 days will be more important than what Nadella said yesterday. "The corporate brand is more than just the communicating, it's also baked into the company, and its business practices and operations," said Gregory. "If [Nadella's] vision can take hold and have long-lasting effects, the culture and business process and communications all work hand-in-hand to grow the brand."
But Nadella will be graded by everyone on his first few months, Ottinger contended, whether its employees looking for clarity on their priorities or investors trying to decode Nadella's progress.
Ottinger was upbeat about the new CEO's chances. "I'd be a bettor on Microsoft," he said. "I'm a total believer that Microsoft has got the capability, the skills, the partners, everything to really take it to the next level."
Time will tell. But that time is short.
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 firstname.lastname@example.org..
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