So You Wanna Be Microsoft’s Next CEO?
Here’s some free advice
Tech and business circles are aflutter with speculation around who will replace Steve Balmer as the next Chief Beast of Redmond. Whether the company elects a loyalist like Satya Nadella, a starlit outsider like Alan Mulally or spices things up with an outside-the-box pick, the challenge before them, to put it mildly, is daunting.
They’ll face eroding sales of core-sustaining PCs, a vanilla flavored corporate ethos, discombobulated efforts of across hundreds of product lines, a toxic and uninspired company culture and unprecedented competitive pressure from start-ups and mega-rivals alike.
But alarmist, I am not. With $20 billion of yearly free cash flow generation the company has more than enough ammunition to make their shot. The question then, is where to aim.
So, to the would-be head honcho of the house that Bill built, I offer you my humble advice.
Much hang-wringing has been made over the size and complexity of Microsoft. Many argue the company is simply too big to be run effectively and should be split up and sold off. With Bing losing over $1 billion last year and Xbox estimated to lose another billion in 2014, the company could make The Street awfully happy and shore up some serious short term gain.
But that’s exactly what it would be — short term and short sighted.
The company absolutely needs to architect a structure that allows its disparate businesses to operate more nimbly, but splitting up precludes Microsoft from doing just what its arch-competitors are trying to do — build an ecosystem. Amazon is expanding into content creation and delivery, Apple indulged in its most active year of acquisitions ever and Google is getting serious about everything from over the top streaming to wearables. Microsoft doesn't need to get slim, it needs to get fit.
In one sense, Microsoft’s position is rather enviable. It controls one of the most popular set top boxes in the world, a technically impeccable smartphone, a promising tablet, a huge breadth of multiplatform integrated consumer software, the best known operating system of all time, and a suite of still-beloved productivity software. This is to say nothing of its iron clad retail and OEM relationships. I would argue none of its competitors enjoy a span of hardware and software quite the same.
Of course, the rub is in how this all interacts and how the company can jump start lagging adoption and market performance (we’re looking at you, Surface). And that’s where my next piece of advice comes in.
Build The New Avengers
Those disparate businesses need superheros at the helm. Anyone who read The Avengers comics or saw the new movie must have fallen in love with the diverse but united powers of a superhero team comprised of a supersoilder, a demigod, a playboy genius and a big green leviathan.
But what stands out to me is not the super SWAT team, but the man who brought them together. In the Marvel universe The Avengers are brought together by Nick Fury, uncharitably described as just-some-guy in charge of a paramilitary organization tasked with saving humanity from destruction. Nick never worried his super recruits would overshaddow him or made demands on just how they needed to save the world. He simply focused on getting the best people for the job and getting them to work together to accomplish incredible things.
And that may be the biggest fault of Microsoft’s outgoing CEO. He was infamous for creating an uncooperative, combative culture while driving super talents out the door. Microsoft’s new Chief Executive needs the confidence to hire people smarter than he is, point them in a unified direction and give them space to get the job done.
Microsoft doesn't need one superhero; it needs a dozen.
To boot, that kind of attitude bubbles down from the top. Microsoft used to be an enviable spot for promising grads and young talent to land. Now, not so much. A new, supportive Microsoft doing amazing things will reinvigorate its employees and reverse the brain drain the company has watched spiral out over the last ten years.
But as big as the company is, Microsoft can’t do it alone.
Get Open, Get Partnered
This is the riskiest bet to place and unquestionably in the easier-said-than-done category, but Microsoft needs to take a sledgehammer to its walled gardens.
The world is moving too fast and in too many directions for a mega-corp to fully capitalize on the opportunity. Microsoft isn’t winning the battles of today — mobile and tablet — and without help it’s unlikely to win the battles of tomorrow. The internet of things, robotics, 3D printing — all things Microsoft may not be prepared to dive into, but all things that could benefit from a seamlessly connected, personal technology ecosystem.
This is not a new idea. Everyone is trying to do it. And thus, nobody is achieving it. I pay for Spotify on my PC but it won’t work on my Xbox One. My Jawbone Up won’t talk to my girlfriend’s Fitbit. I rent on iTunes but can’t stream to the big screen without an Apple TV.
Some of this may be unchangeable. Some may be inadvisable to change. But no company will own that ecosystem unless some of it changes. The more access to a user’s personal technology choices a platform offers, the more attractive that platform becomes. Its a classic network effects lesson but a difficult one to put into practice.
Get active with small and mid cap partners. Turn the industry on its head through coopertition. Force your own products to compete on your own platforms. And don’t do this on one platform, do it on all of them. Make it easy and compelling to switch to the Microsoft ecosystem. Make it feel myopic to leave.
There is very real short term pain in this strategy, but a potential to grow like the company hasn't in two decades and lucrative long term prospects.
So take it or leave it he who has yet to be named.
You've got a hell of a job to do.