There's soon to be a new era at Microsoft as Redmond hunts for its third-ever CEO in the company's history. Sitting chief Steve Ballmer on Friday announced plans to retire in 12 months.
As a member of the succession planning committee, Microsoft Chairman and co-founder Bill Gates made it clear that he'll work closely with other board members to identify a "great new CEO." But what does that CEO look like? And what are the challenges of making this shift?
We caught up with Rob Enderle, principal analyst at The Enderle Group, to get his HR-minded take on the transition. He told us, first of all, that Ballmer was probably just as surprised he was stepping down as many others were, especially considering he just announced a reorganization of the company aimed at making it leaner and more innovative.
"I think Ballmer expected to stay on board another three years to settle the reorg. It is unusual to allow a CEO to do a massive reorg and then boot them out. That's just doubly disruptive," Enderle said. "If you want to do a reorg and you have a new CEO coming in, you let the new CEO do the reorg so the company is organized around the new leader. But Microsoft's recent write down on hardware could have triggered the move."
Worse Off Without Ballmer?
But that was the (recent) past, what about the distant future? Who will Gates and the board choose to fill Ballmer's shoes? Who's qualified? There are plenty of names being bandied about, including Qi Lu, an executive vice president at Microsoft who is leading the company's work on Office, Skype and Bing. Some have mentioned Nokia's Stephen Elop or Google Developer Advocate Don Dodge.
"Qi Lu is probably the most likely internal CEO candidate," Enderle said. "The most qualified external would probably be either Bill Veghte over at HP or Pat Gelsinger running VMware. I'd favor Pat only because he's been down that path. He also has the breadth to handle the enterprise and could repair the Intel relationship."
For all the mixed emotions over Ballmer's departure -- some say it was about time and others are declaring he deserves more credit -- Microsoft is still one of the most profitable companies in the world. That could spell trouble with a transition.
"It is more likely that someone new coming in would damage the company's profitability than it is they would fix the mobile problem, which is the high-profile problem Microsoft's got," Enderle said. "Recognize that Microsoft is really the only company in the market that spreads from consumer to corporate. No other company has been able to do that successfully."
How About Co-CEOs?
While it remains unclear who will take the reigns from Ballmer, one thing is certain: Whoever is the next Microsoft CEO will have to find a way to split up the consumer and corporate parts of the business, Enderle said. With that task in mind, co-CEOs could be the way to go. But even a flexible model brings challenges.
"With common resources in the middle co-CEOs introduces a lot of bureaucracy that otherwise wouldn't exist. Plus, the kind of person you'd want to run the consumer side might actually want to be the CEO of the entire company. Typically you'd make the corporate guy the CEO. Either way, it's going to be problematic from a leadership perspective," Enderle said.
"Microsoft could do what EMC did and actually form a separate company, have it wholly owned and let it operate as its own entity. Xbox used to work that way. It was a contained company within a company and that was during some of its more successful years," he added.