Microsoft's next CEO: Is an insider Redmond's best bet?

Summary:Steve Ballmer's successor will have to steer Microsoft through some rough seas ahead.

Robin Harris

Robin Harris

Yes

or

No

Ken Hess

Ken Hess

Best Argument: Yes

45%
55%

Audience Favored: No (55%)

The moderator has delivered a final verdict.

Opening Statements

Speed and wisdom needed

Robin Harris: Microsoft's almost 100,000 employees are a big ship that will take time to turn around. While Balmer's missed opportunities made Microsoft look dumb, they have a deep bench.

What Microsoft needs is an executive who knows who the most effective players are. Who understands where the company is strong - they design some pretty good hardware - and where they've gotten flabby, if they are to win in a mobile world.

No outsider would know this - and it would take them at least 18 months to find out. This insider has to to be willing to break many eggs and buck Ballmer's recent "everything to everybody" non-strategy. But the world's most profitable company can't afford a year or two of on-the-job training - and only a capable insider can move fast enough and wisely enough to ensure that Microsoft's best years are ahead. 

It's time for a Microsoft 2.0

Ken Hess: It's time for some new blood and a new perspective in Microsoft's lead position. This is a rare opportunity to bring someone in from the outside who has seen Microsoft, its successes and its failures, from an outside-in viewpoint. Because of Microsoft's unique position in the technology software market, this transition takes place at a  major crossroad in its history  and in its future.

Cloud computing, tablet computing, mobile computing, and SaaS offerings have been key areas where Microsoft has been perceived as lagging or slow to embrace. Windows 8 and Windows Server 2012 haven't seen the kind of adoption rates predicted, its Surface Tablet sales were disappointing compared to those of Apple and the ever-growing Android-based market.

For Microsoft to continue down its current path means doom for the company. To make the kinds of changes it needs to make, Microsoft will have to, in essence, reboot itself. It's time for a Microsoft Reformation , a Microsoft 2.0, if you will. 

Corporate cultures often become too inbred, too complacent, and too happy with past successes. Microsoft has awoken in a brave new world and wonders what has changed. What has changed most is how consumers and businesses want to use software and how they want to pay for it. A Microsoft insider, I'm afraid, will not adequately (pardon the pun) fill the bill.

The Rebuttal

  • Great Debate Moderator

    Life after Steve

    Welcome back for our weekly Great Debate. Today Robin Harris and Ken Hess argue over the tech world's biggest contest going on now - who will replace Steve Ballmer as Microsoft's third CEO?

    Posted by Larry Dignan

    Insider

    Redmond needs someone who already knows the players.

    Robin Harris

    I am for Yes

    Outsider

    Microsoft needs new blood.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Qualities

    What are the unique characteristics a CEO of Microsoft would need relative to other companies and industries?

    Posted by Larry Dignan

    Experience counts

    There are several:

    • She has to be experienced working in a very large company. Microsoft has almost 100,000 employees, multiple multibillion-dollar businesses and a productline that spans the range from phones to massive clustered cloud services. Not the place for on-the-job training.
    • She has to have a keen appreciation for what customers like and don't like about Microsoft products and how it does business. The default behavior at Microsoft is to try to tie everything to Windows and Office. But that isn't working now and it won't work better in the future. Even if the Department of Justice did like it.
    • Finally, she has to be able to identify and empower the real visionaries in Microsoft. Too often Microsoft's vision has been limited to one operating system to rule them all. That is not the future and the next CEO has to take a much more nuanced view of the technology and market landscape.
    • The new CEO has to recognize that Microsoft has been much more successful in the enterprise then it has with consumer products. IBM left the consumer space 10 years ago and has been more successful than ever. Microsoft can do the same.

    Robin Harris

    I am for Yes

    Cloud cover

    Microsoft's new CEO needs to have a sense of partnership and a vision to move Microsoft's applications, games, and operating systems to the cloud.

    He or she needs to be "partner minded" because it is only through strategic partnerships with successful cloud companies that Microsoft will be able to make headway in the cloud space. Although it's not necessarily true, Microsoft is seen as a cloud late-comer. It's only been in the past couple of years that Microsoft has made any real visible effort in cloud with offerings such as Office 365, Outlook.com, Skydrive, and Windows Server 2012. Through these partnerships, Microsoft can say that it has a solid cloud strategy and it's moving forward with it. There are very few 100 percent Microsoft shops out there and a Microsoft-only cloud will be seen as vendor lock-in and not business friendly. Microsoft's new CEO needs to take a kinder, gentler approach to licensing and compliance.

    Sure, businesses need to purchase licenses and to be compliant with copyright and trademark laws but the old "iron fist" approach isn't going to work anymore.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Future needs

    What do you think Microsoft needs going forward?

    Posted by Larry Dignan

    Humility

    A healthy dose of humility. Microsoft's executive team needs to acknowledge that they have consistently blown consumer facing technologies for the last 20 years. There needs to be a deep soul-searching determine if their future includes consumer products. If they do decide to continue with consumer facing technologies they will need a level of focus, innovation and investment that they have never done before.

    Its expensive failures in search, music players, mobile devices, in fact just about everything other than game consoles, Microsoft needs to ask itself if the finicky world of consumer devices makes sense for a company whose core strengths are in ecosystems and software rather than hardware and design.

    They will also need to have the support of the board to make what will undoubtedly be some difficult decisions. The strategy that Ballmer endorsed is not a strategy, but only a wish list that given the competition – Apple and Google, two of the most powerful brands in the world who already own the space that Microsoft seeks to enter - will require some difficult decisions and significant retrenchment.

    Robin Harris

    I am for Yes

    Cloud and mobile vision

    Microsoft needs a clear cloud vision. It needs a clear mobile vision. It needs to uncomplicate its licensing labyrinth. It need to tone down the "we're coming after you" point-of-view. It also needs a new, play nice attitude with Linux, Mac OS X, and other virtualization players. The excusionary, elitist attitude of days gone by is outmoded and unattractive.

    Ken Hess

    I am for No

  • Great Debate Moderator

    An insider's take

    Can an insider deliver on those needs? Why or why not?

    Posted by Larry Dignan

    Insiders know the culture

    The ideal inside candidate will likely be someone who is been at Microsoft no more than 3 to 5 years and who comes from a strong technology and marketing background. They need to have been at Microsoft long enough to understand the internal dynamics and have a good sense of who the most valuable players are.

    They will also need to have the support of the board to make what will undoubtedly be some difficult decisions. The strategy that Ballmer endorsed is not a strategy, but only a wish list that given the competition – Apple and Google, two of the most powerful brands in the world who already own the space that Microsoft seeks to enter - will require some difficult decisions and significant retrenchment.

    Robin Harris

    I am for Yes

    Stuck in the mud

    I think it would be a rare person inside Microsoft currently who could deliver on those needs. Maybe I'm wrong but corporate cultures are closed and self-sustaining--meaning that insiders begin to create and believe their own press. They believe their own corporate taglines to a fault. It's unfortunate but only an outsider can see the flaws of corporate dysfunction so clearly. It makes sense, if you consider that when a couple or family has relationship problems, you don't see them seeking the help of another family member. If someone truly wants help and wants things to become better, they seek outside help. You also often see intelligently run companies hire outside consultants to evaluate policies, procedures, and workflow. The results always yield interesting data. Microsoft needs an outsider. I don't think an outsider is the right answer for every company situation but it certainly is for Microsoft at this point in time.

    Ken Hess

    I am for No

  • Great Debate Moderator

    The weather outside

    What would an outsider bring to Microsoft?

    Posted by Larry Dignan

    Too many ifs

    An outsider would have some definite advantages if they had strong board support. But with Ballmer and Gates still on the board and the rest of the board members being capable executives and non-visionaries, an outsider would bring 12-18 months of uncertainty that Microsoft can't afford.

    Robin Harris

    I am for Yes

    Brings clarity

    An outsider would bring clarity to Microsoft. He or she would bring Microsoft back into focus. Microsoft is mostly a software company. They do it very well. An outsider would have Microsoft focus on its strengths rather than trying to shore up its weaknesses. An outsider would bring a new, enthusiastic viewpoint to Microsoft. Microsoft needs to be excited about itself again.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Time factor

    Does Microsoft have the time to hire an outside CEO and then get him or her up to speed?

    Posted by Larry Dignan

    Can't wait for action

    No. The mobile market is maturing rapidly. The Android and iOS ecosystems are sucking up development cycles and generating revenues that Microsoft needs to succeed. The next major open opportunity is wearable computing, but Moore's Law needs a few more years before a must-have device is possible.

    In the meantime, the cloud infrastructure market is getting sewn up by Amazon and Google. Gartner estimates that Amazon has over 80 percent of the cloud IaaS market. That's a much bigger threat to Microsoft's longterm viability than smartphones and tablets.

    Robin Harris

    I am for Yes

    Plenty of support

    Certainly it does. We have to remember that the CEO doesn't stand alone but has the entire company to shoulder him or her. It is not a lone wolf position. The CEO has the Board of Directors, other C-level executives, mid-level managers, employees in the trenches, and millions of customers. And let's not forget Bill Gates himself as an advisor. No doubt, in my mind at least, that the new CEO should schedule an extended visit with Bill Gates to gain some of his insight and some of his enthusiasm for the company.

    In the meantime, the cloud infrastructure market is getting sewn up by Amazon and Google. Gartner estimates that Amazon has over 80% of the cloud IaaS market. That's a much bigger threat to Microsoft's longterm viability than smartphones and tablets.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Ford CEO Alan Mulally?

    Ford CEO Alan Mulally has been mentioned as a possible CEO. What would be the positives and negatives if he were hired?

    Posted by Larry Dignan

    Age factor

    Mr. Mulally would bring the stature and gravitas of a successful executive - not to mention adult supervision - that Ballmer never  achieved. As he did at Ford he would sweep out a hidebound bureaucracy and kick some of the money-losing and focus-sapping businesses to the curb.

    If he did join Microsoft - and given his age he might well be ready to retire - he would certainly negotiate a very broad mandate. He could sweep out the deadwood, but restarting growth requires a clear and realistic vision of the future of computing. Building better cars is a simpler problem than defining new markets. That is where Mr. Mulally would stumble.

    Robin Harris

    I am for Yes

    Not in the long term

    I think he's a fine CEO of Ford but he's not the right person for Microsoft. But, to answer the question, his positives are his ability to turn companies around in the aerospace and transportation industries, so he has some idea of how to restructure a failing system. That comes from being an outsider at Ford. Could he be a great CEO at Microsoft? Yes, but not in the long-term. He, for Microsoft, would be an agent of change, and then would need to bail after three years. Microsoft needs to be led by someone who is more "in the know" of technology companies. Assembly line work and engineering are different than software and the tech industry is different than being a government contractor or a mass production company. He's obviously a smart guy but Microsoft needs more than just smarts, it needs a long term vision.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Outside success?

    Can a CEO from another industry succeed in technology? Or is it a unique market?

    Posted by Larry Dignan

    Risky business

    Lou Gerstner did well at IBM, basically by performing radical surgery on a dysfunctional organization using his consulting skills. The jury is still out on Meg Whitman. John Scully was a disaster for Apple. All in all, technology is not an easy industry to move into because the technology and the markets move so quickly.

    Bottom line: possible, but very risky.

    Robin Harris

    I am for Yes

    Herding cats

    Funny you should ask that considering my answer about Alan Mulally. I think that any business has the same basic principles to apply to its business side (buying, selling, supply chain, profit, loss, marketing) but technology companies are different. The primary difference is that the tech consumer is fickle--very fickle. If you try to  run a tech company like you run a car company, for example, you'd simply change out the taillights and front grilles of your products every fall and announce them as new versions. Tech buyers are looking for more than simple cosmetic changes to the products. Tech companies are also different because of the technology employee. We're a different breed. Remember the old EDS commercial about herding cats? That's what it's like to manage tech employees. If a leader doesn't see that difference and understand it, he or she will fail because of the frustration level associated with herding those cats. Herding cats isn't easy but if you do it correctly, it can be extremely rewarding. Think Steve Jobs and Apple here.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Splitting up?

    Do you think Microsoft should split up into its various parts?

    Posted by Larry Dignan

    Feeding the vultures

    Microsoft shareholders would be much happier if Judge Jackson's remedy - splitting the company in two - had gone through. Tying Office to Windows - and giving Apple and Google free rein to grow the share of their alternatives - is beyond stupid.

    A rational applications company would look at the mobile market shares and say, "Do we want Office to own this market?" Duh, of course!

    But because Ballmer thinks - wishes - that Office will drag Windows 8 into the mobile market, they've kept their flagship application suite on PCs when, realistically, much simpler products are more than adequate for mobile use. Google and Apple thank them every day.

    Robin Harris

    I am for Yes

    Unification not fractionation

    I think Microsoft should cut its losses and focus on its strengths. I don't think splitting it into parts is a good idea. I believe in unification, not fractionation. Fractionation only leads to one thing: selling off of some of the parts that it finds less desirable or less profitable. Microsoft can dump its dead weight without splitting into parts. I don't see any advantage to splitting it.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Microsoft's needs

    In what areas does Microsoft have to innovate the most?

    Posted by Larry Dignan

    Reality check

    Humility is job one. They need to admit that they can't always come into a market years late and take it over. Apple, Google, Amazon, Red Hat and VMware aren't a Netscape that can be strangled in its crib.

    Number two is they need to put the incredible intellectual and visionary firepower of Microsoft Research to work in product creation and design. That is a resource that none of the competitors has, and they waste it.

    Third, they need to focus on back-end infrastructure rather than sexier but ephemeral mobile devices.

    Robin Harris

    I am for Yes

    Focus on what it does best

    Cloud (SaaS), mobile, operating systems, applications. It needs to focus on what it does best (software) and to focus on the future of computing (Cloud and mobile) and forget about hardware. Microsoft should just be software. Let someone else worry about hardware. Its application and operating system business has been great for a very long time and it didn't need to create Microsoft hardware for them to operate on. There's no reason for Microsoft to be in the hardware business. It takes focus away from software.

    And, yes, I'm even referring to the Xbox. Create great games that hardware people can install on consoles, PCs, Macs, Linux, and mobile devices.

    Sometimes innovation means knowing what you do best and doing your best at it. Ford doesn't make gasoline or oil but they make cars that use them both.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Too big?

    Is Microsoft too large and mature to innovate?

    Posted by Larry Dignan

    Adult supervision

    No. They just need adult supervision and a willingness to abandon a rich and delusional fantasy life. "Everything to everyone" is not a strategy.

    A retailer like Amazon is innovating faster in back-end infrastructure than Microsoft. Does anyone see what's wrong with that picture? No one on the Microsoft board, evidently.

    Robin Harris

    I am for Yes

    The need to generate excitement

    Absolutely not. But to innovate, you need someone to lead the company who is excited about Microsoft, its products, and its future. You need a corporate culture that values and rewards innovation. Innovation comes from people who feel like they can make a difference and will get rewarded for it. Companies are made up of individuals--people like you and me. If I know that by innovating, I not only move the company and its profits forward but also my career, my financial standing, and my recognition, I'm more likely to innovate. I think the mistake is that people see a company as this giant, non-living thing and it isn't. It's people.

    Microsoft is a company. It's people are its lifeblood, so to say that Microsoft is too mature or too large to innovate means that its blood has drained out and has drones for employees. Microsoft needs leadership.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Stephen Elop?

    Would you hire Stephen Elop as CEO? Why or why not?

    Posted by Larry Dignan

    He's an opportunist

    No. The guy is an opportunist. Running Nokia into the ground doesn't qualify him for anything important. Microsoft needs to get OUT of a ditch, not into another one.

    Robin Harris

    I am for Yes

    Poor track record

    Absolutely not. Unfortunately, restructuring and refitting a company means one thing for uncreative CEOs: layoffs. Sometimes layoffs should happen but generally speaking that is a short-sighted and uncreative way to revive a company. If you want to kill morale, start a bunch of layoffs. In my opinion, it destroys a brand. His reign at Nokia hasn't been a good one. Layoffs, plummeting stock prices, and a general lack of taking responsibility for Nokia's problems are reasons enough not to hire him.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Bill Gates: The big comeback?

    Do you think Bill Gates would do well if he came back as CEO?

    Posted by Larry Dignan

    He's got other things to do

    No, and to his credit, he seems to know that. His philanthropy is much more important to the world and his legacy than anything he might do at Microsoft. And let's be real, Bill isn't much of a visionary. Ruthless competitor with a keen eye for weakness - yes! Able to spot a market niche and then drive development of the breakthrough product to exploit it - no! He never cracked the tablet market after years of tinkering.

    Robin Harris

    I am for Yes

    He's no Steve Jobs

    That's a very good question. I think that Bill Gates would inspire people to do better but I think the enthusiasm would be short-lived. Bill is better in an advisory capacity these days. I hate to say it like this but Bill Gates is no Steve Jobs. Bill knows that. Gates is a very intelligent person who changed the way we work and will always be remembered for doing that and creating Microsoft. But he's the guy you want on your team but not running the team.

    Ken Hess

    I am for No

  • Great Debate Moderator

    Thanks...

    ...for joining us again. I'd like to congratulate Robin and Ken for a job well done. Next up are the final arguments which will be posted on Wednesday, and my choice for the winner will be revealed on Thursday. Take this time to check out the talkback section and add your comments. Let everyone know who you would like to see take over from Steve Ballmer. And don't forget to vote.

    Posted by Larry Dignan

Closing Statements

Next CEO has to know core B2B businesses

Robin Harris

Ken and I agree on much. No long-timers. Elop is bad news. And more.

But our disagreements point to the fundamental decision a new CEO faces: Can Microsoft be a successful B2C and B2B company? I say no.

Look at Microsoft's key products: an OS; business apps; backend infrastructure; cloud services; oh, and a game console. They aren't a consumer company.

Ballmer wants some Apple cool. But their consumer goods aren't much more successful than Intel's. The new CEO needs to focus on the real threat that
Microsoft's B2B business faces: Amazon web services and Google Docs.

Amazon dominates in cloud. Chromebooks are undercutting iPads, let alone PCs. Red Hat is a billion dollar company. PCs are in free fall.

Microsoft is a company in crisis, but too rich to know it. The next CEO has to know its core B2B businesses - and that means an insider.

Needs a multifold vision

Ken Hess

An insider looks good on paper but history proves that, when a company needs a breath of fresh air, an outsider can be the resuscitation required to move the company forward.

Microsoft isn't in trouble but it has some catching up to do. Microsoft is a great company that produces great products but there's been something lackluster about its performance and its vision. Leaders of the company need to know where the company is going in bite-size increments (quarter-by-quarter) and in the longer term (five years, ten years, and more).

The vision that Microsoft needs is multifold:

  • A clear cut cloud perspective - desktops, servers, applications, and games in the cloud by subscription.
  • An enhanced mobile operating system - forget hardware, supply your best software to the mobile market.
  • Licensing restructuring - Move to a subscription model, simplify, simplify, simplify and tone down the "we're out to get you" messages.
  • Interoperability - Be open and cooperative with third-party developers giving them what they need to enhance and extend your products.
  • Hardware dump - Don't do hardware. Let other companies focus on hardware. You focus on providing the best software and support to third-parties.

There's no shame in admitting that you went down the wrong path by messing with hardware. You're a software company. Do that and do it better than anyone else. Be Microsoft but hire an outsider for your next CEO.

 

Insider outsider

Larry Dignan

As much as I agree with Ken that an outsider would be the best prescription for Microsoft, the better argument was made by Robin. Perhaps Microsoft threads the needle with an "outsider," who used to be an exec in Redmond and knows the company well. Robin's B2B and enterprise argument sealed the deal for me. Robin gets the win. 

Topics: Great Debate

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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