Microsoft CEO candidate Nadella: Here's what Ballmer taught me

Microsoft CEO candidate Nadella: Here's what Ballmer taught me

Summary: Microsoft Cloud and Enterprise chief -- and alleged internal candidate for the Microsoft CEO job -- Satya Nadella reflects on lessons learned from current CEO Steve Ballmer.

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Satya Nadella -- one of a small handful of alleged internal candidates for the Microsoft CEO job -- has been at the company for 21 years. Since 2011, he's been running Microsoft's lucrative server and tools businesses (His official title, as of the July 2013 reorg, is Executive Vice President of Cloud and Enterprise.)

nadellaballmer

For the last three years, Nadella, who is a member of Microsoft's senior leadership team, has reported directly to Ballmer.

While there are plenty of critics who've lambasted Ballmer for being slow to respond to changing industry dynamics -- of being a follower instead of a leader -- Nadella said he felt Ballmer struck a better balance than for what he's credited, in terms of cadence and priorities.

Ballmer "is perhaps one of the most grounded people I run across in this place around what our current realities are," Nadella told me during a sit-down interview in Building 34 in Redmond at the end of November, when I talked with him about outgoing Steve Ballmer's legacy.

Nadella recalled a performance review he had with Ballmer two or three years ago.

"I went to him and sort of said, 'Hey, you know, how am I doing?" The first thing he said is,'Dude, you're going to know it, I'm going to know it, so don't keep asking me. You know, we're all going to know what is happening because it's going to be in the air.'

"The second thing I asked him, 'Hey, what about all these past grades and how did they do? And how am I doing relative?'" Nadella said. "He said, 'Why does that matter? Look, this business is not about longevity of any idea. It's all about inventing new formulas. So the thing that I would want to really evaluate you on and I want you super focused on is not how I did or anyone else did with any opportunity we had, because that's not going to tell you anything about the future opportunity.'"

While Ballmer is extremely detail-focused, Nadella said there's never been a meeting in which Ballmer asked something like "have you optimized this CAL (client-access license) with this thing or what have you." Instead, it's "mostly all about what is the next play," Nadella said.

The notion is "there's nothing in this industry -- and definitely in this particular segment -- that's built to last," Nadella continued. "It's all about being able to reinvent yourself.

"And that, I think, is his lasting legacy," said Nadella of Ballmer. "As he would say, it's about batting averages. You're not going to take everything and be a hit. It's not like, oh, we have a great enterprise business. In fact, we have had many enterprise business births and deaths in his tenure."

In the enterprise specifically, Microsoft has evolved from a client-enterprise, to a client-server-enterprise, to a server-workload business. The current phase is cloud. But even that business-model and architectural shift has roots in the so-called Energizer project -- via which Microsoft's IT department provided customers directly with services starting back in 2005.

Nadella said Ballmer told him "all formulas have a timeline or a half-life. And if you don't sort of get focused on inventing the new formula at the right time, you're dead in this business."

At the same time, because everything about Ballmer's approach has been about the long-term, he hasn't been a leader who makes changes haphazardly.

Nadella cited device management as an example.

"There is a very important (management and security) construct called domain join we invented. You could say the IT folks may have misused it to screw up some of the experiences in some cases. But you don't throw the baby out with the bath water.

"You have to reimagine and build new constructs, which we have done with this workplace join," Nadella continued. But we also have to grandfather in other devices into this concept. That doesn't mean we somehow go away from speaking about the virtues. In fact, the fascinating thing that we're seeing now is customers are all realizing, in fact, even our competitors are realizing that this information assurance is probably what enterprises need. They can't willy-nilly let any device come into the enterprise, install any application with no data protection and no ability to test to the device state."

Nadella said Ballmer's often is the first to question new ideas. He cited Microsoft's Windows Intune device security and management service as an example. When Nadella first pitched Ballmer about the evolving bring-your-own-device (BYOD) dynamic and the need to repivot to become more of a cloud service for managing Windows and non-Windows, he got a lot of pushback from Ballmer about the branding, to the concept, to the business model. Why not just continue to rely on System Center, Ballmer wanted to know.

"You come up with an idea, he'll say, 'That's the dumbest thing.' Or, 'I don't buy that,'" Nadella said. "But with him, you've got to just keep going back. You keep going back."

This is a trait Ballmer shared with Chairman Bill Gates, Nadella said. (I can confirm it from an outsider perspective, having been on the receiving end of more than one "That's the stupidest question I ever heard" rants from Gates back when he was CEO.)

"They (Gates and Ballmer) yell at you, they'll scream at you, they'll sort of say you're crazy and you're destroying this place," Nadella said. "And all the melodrama aside, you come back at it with the data, with the -- with your own conviction, because a lot of that stuff is all to test whether you know what you're talking about."

The result: Ballmer may change his position. Sometimes in very big ways.

"I keep my score on that. And whenever he does, and he'll sort of say, 'Yeah, you were right.' And he'll move on," Nadella said.

Ballmer may be the first to acknowledge he isn't a tech guy, but he really does understand tech-product detail, Nadella maintained.

"He's one of our best and most critical users of all our stuff, as we find out the hard way," Nadella (who, himself, has a bachelor's degree in electrical engineering and master's degrees in computer science and business administration) admitted.

Ballmer did a lot of the heavy lifting that helped turn Microsoft into an business powerhouse, with between 55 and 58 percent of the company's revenues coming from enterprise sales. But his full set of contributions, especially in reframing the company and getting new cloud and device capabilities built, has not come to fruition yet, Nadella said.

"Steve's contribution to broadly computing as well as to this company I think will be better told, quite frankly, in five, ten years when there's more distance," Nadella said. "It'll be shaped by, in fact, what we do next."

(As far as what's next for Nadella, regarding Microsoft's ongoing CEO search, there were no comments, hints or winks, sad to say....)

Topics: Steve Ballmer: The Exit Interview, IT Priorities, Microsoft, IT Policies, Leadership

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • poof - he's done

    Speaking publicly ends the mystery and terminates his chances.
    greywolf7
    • Has a good hair line got something to do with MS's success?

      I am balding myself, but MS was soaring when a person with a good hair line was heading it.
      GoForTheBest
      • predatory practices, corporate welfare, and threats made them "successful"

        http://www.zdnet.co.uk/news/desktop-os/2004/07/13/the-legacy-of-microsofts-1994-consent-decree-39160392/
        (since forcing sales of software that won't be used was finally decided to be no better than thievery...)

        http://www.ctj.org/html/corp0402.htm


        http://www.businessinsider.com/ballmer-threatens-obama-says-hell-move-jobs-overseas-2009-6
        HypnoToad72
  • Ballmer may be the first to acknowledge he isn't a tech guy

    That's a good trait. Steve Jobs wasn't a techy guy either, but he understood what Technology can do. When you have too many techies, it becomes a Geeks only thing. Ballmer sees the value of technology from the business side of things, from the perspective the CEO and General Manager of a company who don't understand technology in all its facets, but appreciates what it can do to optimize a business. I hope the next CEO is not a Steve Urkle who only cares about their fellow geek and if you the end user don't understand it and can't get with the program, sorry for you mentality.
    adacosta38
    • Jobs WAS a tech guy...

      Wozniak did not do it all by himself, and remember that Next was done without Wozniak. Ballmer is a salesman, period - and one that never understood what the technology did beyond bringing in millions of dollars.

      It's really far too early to try to rewrite history with Ballmer playing the part of the grossly misunderstood genius.
      chrome_slinky@...
      • Nope. Jobs was definetly NOT a tech guy.

        Jobs was definitely not a tech guy. You could tell from the way he spoke, and avoided talking about things in technical detail. Jobs was more of a design visionary. As for Ballmer, you do not run a company as large and complex as MS, where market dynamics continually shift, and crank out greater and greater profits, without being very intelligent.

        Ballmer reinvented MS so many times it is not funny. Remember the time when everyone said MS had no design acumen? Now it seems that everyone, including Apple, is incorporating many of MS' design concepts into his own products. MS' modern UI is now the best looking UI on smartphones, tablets, and game consoles. That is quite an achievement. And how about the company's Surface PCs? These devices are absolutely gorgeous, and blow the iPad out of the water in terms of utility.
        P. Douglas
        • One word for you...

          delusional
          Arm A. Geddon
        • Jobs worked for Atari

          Jobs was in tech early on, he was no Woz but he did know his tech. Ballmer was a pure salesman who barely understood tech.
          new gawker
          • That's delusional

            Ballmer was no Gates, but to say that he didn't understand tech at all is a complete mistake.
            Michael Alan Goff
      • no Jobs was not technical

        He had the vision thing of how something should be but had no tech skills and dropped out of college after one semester. He was by intuition: sales, marketing, visionary, perfectionist, & asshole. Yes, Wozniak did all the work on the original Apple I and II and didn't have a clue how to sell them or care.
        greywolf7
        • Revisionists

          Too F'N funny!!
          Arm A. Geddon
          • If you don't like being a revisionist, Arm A. Geddon

            then stop trying to re-invent history, and deal with reality for a change.

            You may learn something...
            William.Farrel
        • One more thing...

          http://www.biography.com/people/steve-jobs-9354805
          Arm A. Geddon
      • Steve Jobs carried his broken Macs to the Apple Store

        That is just how much he was not a technical guy. He also didn't mind, in fact neither is Jony Ive and I think that non-tech behaviour compliments IT and software engineering well, it is what makes computing easy and approachable for those who feel intimidated by it. At the same time, you need that balance of engineering that intellect to make a robust and powerful product.
        adacosta38
      • Ballmer was a crook so is Microsoft

        For 100% proof:

        Google "Microsoft crimes and fines"
        Over 100 billion in fines for committing crimes all over the World.

        The only thing Ballmer knows how to do is criminally lock down Windows so he can force people to use it.
        The Windows 8 UEFI BIOS lockdown with a 200 nanosecond forced BIOS boot option timer restriction is the most recent crime Mafiasoft has committed.
        Luke-IT
        • Lut the Immature Troll is back

          Did you say something, as nobody was listening...
          William.Farrel
          • yo

            What about arguing against Luke, finding facts which oppose his statements or say why his statements don't matter, instead of just attacking him?
            mort96
    • Example of a Steve Urkle - Steve Sinofsky

      Steve Sinofsky epitomized the geek only culture, my way or the highway approach to technology with Windows 8. Steven didn't look at things from the users perspective how difficult this transition would be, because he thought it was easy to him and his fellow geeks.
      adacosta38
    • Satya versus Ballmer

      The main Satya virtue is the one de having great intuition to see in advance new business opportunities, topic that it missed Ballmer
      luis river
    • Gates, Jobs, et al, are marketers. Not techies.

      End of story.
      HypnoToad72