Microsoft Board Chair: Company Culture Must Change

microsoft icon 2012Tech journalism tends to focus on “who’s winning,” who’s buying whom and new company products. Rarely is there much discussion of organizational culture. But that’s often the hidden “X variable” behind success or failure.

In a candid statement to Fortune, Microsoft Board Chairman John Thompson likened Microsoft to IBM 25 years ago and acknowledged that the company culture must change now that the “Windows monopoly has run out”:

I think one of the things IBM learned was when their monopoly ran out and they had to compete with a bunch of smaller, more agile companies, they needed to have a different rate and pace of change. And Lou Gerstner coming into IBM certainly brought about a sense of urgency that some would argue the company didn’t really have at that time. And clearly the monopoly was gone, and clearly the market was loaded with a host of new competitors in almost every segment they were in. It required a leader who was willing to say, “Here’s what we’re going to do, and here’s what we’re not going to do. And here are the behaviors that will be rewarded, and here are the ones that will be punished.” Over time, that changed IBM’s culture.

He’s right. The question is whether new Microsoft CEO Satya Nadella has the vision, clarity and “cojones” (as they say) to execute against it.

In one of his first public moves as CEO, Nadella and Microsoft announced several leadership changes. Here they are in a nutshell:

  • Former Skype CEO, Microsoft EVP and one-time CEO candidate Tony Bates is leaving
  • Tami Reller, Microsoft’s EVP of Marketing is out; Chris Capossela will be the new CMO. Reller had been opposite Mark Penn
  • Mark Penn, alleged source of the largely unsuccessful “Scroogled” anti-Google campaign, will now be EVP, Chief Strategy Officer

Penn had been Microsoft “Corporate Vice President for Strategic and Special Projects” and EVP of advertising and strategy. Originally a pollster and PR executive, Penn later ran Hillary Clinton’s unsuccessful 2008 presidential campaign.

Reportedly, Penn is a polarizing figure. Fairly or unfairly, he was blamed by some for the Clinton campaign’s demise in 2008. A piece in BusinessWeek describes Nadella’s challenge in managing Penn:

The trick for Nadella will be finding a way to extract Penn’s best advice while keeping his worst impulses in check. In other words, to avoid the mistakes Clinton made. 

If “Scroogled” is representative of Penn’s thinking, it doesn’t augur well for his longevity in Redmond. That, combined with the coming 2016 presidential cycle, suggests that Penn will not remain at Microsoft beyond 2015.

Related Topics: Channel: Industry | Microsoft | Microsoft: Business Issues | Microsoft: Scroogled | Top News


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • Takeshi Young

    Yeah, don’t see these leadership changes leading to the change in culture that Microsoft needs.

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