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BLOG: Why can't Microsoft find a CEO?

Andy Patrizio | Jan. 9, 2014
The Journal suggests it's because Ballmer and Gates cast too long a shadow.

It's been more than four months since Steve Ballmer announced his plans to retire and we still don't have any white smoke coming from the chimney, figuratively speaking.

Now, we weren't promised a fast fix. Microsoft doesn't suffer from the urgency of a company in serious trouble, or a case where there is no CEO. The board has said it will pick a successor to Steve Ballmer by the summer of 2014, but it shouldn't be this hard to find candidates.

The board is obviously looking outside of the company, or it would have just picked Satya Nadella and been done with it. Clearly, Nadella is the CEO in waiting who will come after this next CEO. But they can't seem to get that next CEO.

Paul Martiz, the ex-Microsoft executive and former CEO of VMware, was a sentimental favorite of many inside the company, but he has said no. Microsoft had eyed Qualcomm COO Steve Mollenkopf, but he was promoted to CEO of his company, taking him out of the game. Alan Mulally, the Ford CEO and former Boeing executive, has faded as a contender.

The Wall Street Journal says the problem comes from the fact that potential CEOs are leery of having the two biggest shareholders, Bill Gates and Steve Ballmer, on the board of directors and a continuing presence at the company. The possibility of boardroom clashes at Microsoft is a turnoff to potential CEOs.

CEOs value their independence to do what is necessary. Imagine trying to fix what ails Microsoft when you have the company's iconic founder and it noisy ex-CEO on the board. Even if they question your moves with honest sincerity, it will feel like you are being second-guessed.

The Journal reports that at least "some external executives" who discussed the position with Microsoft's directors have expressed concerns about being hamstrung if Gates and Ballmer remain on the board. Gates and Ballmer were re-elected to the board for a one-year board term in November, although they have the option of stepping down any time.

The Journal notes that this can be a positive for the successor. Former Pfizer Inc. CEO Henry "Hank" McKinnell sat on the board alongside his predecessor for more than five years until his retirement in 2006. And Alan Mulally has Bill Ford Jr., former CEO and a descendent of the company's founder, sitting alongside him on the board.

But in the case of Microsoft, there is reason for concern. Bill Gates may be off trying to save the world but he still gets involved in his baby when he has to. It's been reported that he was the one who leaned on Ballmer to leave, and in the early days of Ballmer's tenure, Gates and Ballmer had clashes that slowed the company down.


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