Succession planning is an issue that has plagued many organizations, especially when the standing Chief Executive Officer has been with the firm a long time and is a trusted, known entity. But, change is inevitable, and for software giant Microsoft (NASD: MSFT), a new CEO seems to be in the cards in the relatively near future.
Microsoft has generally done a good job at growing from within and retaining employees – this has produced a stable of senior executives who could be contenders to succeed Chief Executive Steve Ballmer, although as is typical, outsiders have sparked the most discussion so far.
After Ballmer’s surprise announcement on Friday that he would retire within a year, the board’s lead independent director John Thompson, who heads the search for the new CEO, said the planned transformation of the software giant into a fast-moving ‘devices and services’ company is still on track. “It does seem like if they are going to continue down the path of this devices and services strategy that they probably get somebody who was part of formulating this strategy or who can stand fully behind it. I don’t know if most outside candidates would be willing to do that,” said Sid Parakh, an analyst at fund firm McAdams Wright Ragen.
Today, Microsoft is very much structured as a holding company, with many silos inside it that are largely run as their own businesses. As such, each of these silos has a leader who could in theory be the next leader of the Washington based firm – though that would of course risk alienating or potentially even losing some of those division leaders not tapped for promotion. Take Satya Nadella who is in charge of cloud and enterprise for the firm – he has been with the firm for over twenty years and while cloud is potentially an important part of the future, he has not had a senior leadership role in the Windows and Office factions. Terry Myerson on the other hand, in charge of Operating Systems, is a young entrepreneur whose web software company was bought by Microsoft – if he took the reins, he might take a startup mentality to the CEO suite.
Microsoft has grown up – they are a mature firm, facing an important fork in the road. The next CEO will have to lead the firm in the new century, and their future business model might need to look very different from their past.
