The search for a new Microsoft CEO is almost over and it seems highly likely the board will announce this week that Steve Ballmer will be succeeded in the top job by Satya Nadella.
Who? Most of the businesses world will never have heard of Satya Nadella, unlike the two other rumoured shortlisted candidates: Alan Mulally of Ford and Steven Elop of Nokia. As an ex-Ford CEO, Alan Mulally would have brought a fresh perspective on some of the strategic choices Microsoft needs to make soon, but as Microsoft has a strong track record of outsiders having short tenures, it would have been a risky approach. The appointment of Steven Elop would also have had some risk, given the politicisation of his short period at Nokia, as an ex-Microsoft employee.
So it’s possible that a degree of risk-aversion has crept into the thinking of the Microsoft appointments committee in appearing to settle on Satya Nadella. He’s a Microsoft insider, serving the company for twenty two years in a number of roles. Most recently and significantly, Mr Nadella has been the head of Microsoft’s cloud computing, and the server and tools divisions. Those divisions are the most important aspects of the long term future for Microsoft, as use of desktop computing declines, and the cash cow which is Microsoft Office on the desktop begins to look a little old fashioned. Mr Nadella has been central in establishing Microsoft’s growing advantage in the key developer and business customer sectors.
But is this choice a little too safe? For the thirty eight years of its history, Microsoft has always been a fast-following innovator rather than breaking much new ground. That approach served the company well in the boom years of regular PC replacements with accompanying new versions of Windows. More recently, sluggish adoption of new versions of Windows such as Windows 8, and the fragmentation of use of computing devices have made the future for Microsoft not quite as predictable as it once was. Perhaps now is the time for bigger, bolder steps rather than more polished versions of the same.
Sixty six percent of Microsoft’s profits are earned from the business divisions. Focussing on the rapidly changing needs of business customers is the most important target for the new CEO. Anything else is a distraction. So please, Mr. Nadella, get rid of Xbox, Bing and the other consumer divisions. Your competitors are better at them, and they will distract you from what your company is best at: business software.