How Microsoft’s Board nullified Gates, boosted Nadella, and set a positive tone for the next 10 years


After reading Barb Darrow’s post earlier today asking the question “What about Bill?” in the Microsoft transition, I immediately recognized what happened and quickly commented on Google+. But I wanted to take those notes and expand a little further here, because I have always had a keen interest in organizational strategy and culture, and especially how corporate cultures are set through executive action.

First off, I don’t know if Satya Nadella is the best possible pick as Microsoft’s new CEO, so I’ll leave that to the “analysts” out there (although he looks like a pretty darn good choice to me). But one thing struck me about announcement: it’s brilliant in its almost Machiavellian construction.

Here’s how this delicate-yet-strong power transition works:

  • As everyone expected, Ballmer is now 100% out of the picture, which is good because he was rocking the boat too much with his overly-emotional and disruptive monkey-dance style. There was never going to be a role for him going forward because he has only one volume setting (11) and he can be a loose cannon in interviews.
  • Meanwhile Gates is removed from the Board Chairman seat and he’ll now “help” Nadella with the transition and participate in product innovations. This is undoubtedly the joint work of the Board and Nadella, who expertly crafted a way to both keep Gates around long enough but also politely escort him out of the executive suite. Gates’ power is now deeply neutered so the Board can discuss matters without him second-guessing them. Whether the Board can really guide the company effectively from here is debatable, but at least they don’t have to play second fiddle to a legendary founder with whom they just can’t compete.
  • Nadella has neatly cloaked himself in the Gates shadow by pulling Gates into his own orbit and putting Gates into an active — but not too active — and temporary role as “advisor” to Nadella and selected product teams. This is a way to dazzle the long-time Microsofties with the sparkly goodness of Gates and show that Nadella is the true chosen successor — all while Nadella consolidates power and starts to turn the ship.
  • The icing on the cake for Nadella, the Board, and hopefully customers? Gates’ temporary participation is focused on fostering a new culture the Board knows they desperately need: a culture of innovation. Microsoft has blown it on multiple tech revolutions for years, and they need to find the next wave or just drown. Bringing in a legend to work for the new CEO sends a clear message to everyone in the company: help us innovate or hit the bricks, no matter how much money you’ve got.

Going forward, it doesn’t much matter whether Gates actually does anything of technical or product value for Microsoft. His primary value now is being the poster boy for innovation. If he doesn’t deliver much, no big deal — he can fade nicely into Microsoft history and guide the amazing work the Bill & Melinda Gates Foundation is doing. He just can’t sit on the Microsoft Board anymore, telling everyone how he did it in 1995.

This CEO transition strategy really is remarkable. It’s done two seemingly impossible things at the same time: It’s gotten Gates out of the way without setting up a series of narratives that compare Gates and Nadella ad infinitum. And I’ll bet you a tiny fraction of Gates’ fortune that he’s actually cool with it. It relieves him of a lot of pressure to deliver results in a company that he’s not really been running for a very long time. He can spend a year or so hanging out at Microsoft part-time, and slip away.

The Microsoft Board has really set the tone for the next 10 years with three simple messages:

  1. We love the company Gates built and the legacy he’s leaving us.
  2. But Nadella is our guy now, so listen to him.
  3. And you all better get to innovating right away. There’s no time to lose.

Update on NPR / Ken Stern

Current published an in-depth article on the NPR / Ken Stern story this week. I’ve updated my list of articles to include it, and it’s a great read on its own. It summarizes a large swath of the Stern history at NPR and points to several core reasons why things just didn’t work out.

I actually came away from this profile liking Ken Stern quite a bit. Did he fit well into the CEO slot? Perhaps not. But he did some great work for NPR. And to everyone’s credit — except a sour-grapes Bob Edwards — the comments from board members and others were incredibly even-handed.

Haarsager on NewsGang podcast

Dennis Haarsager, new interim CEO at National Public Radio (NPR), appeared on the NewsGang podcast this past Friday. He spoke fairly openly about the unusual CEO transition and about how NPR may change as it deals with an audience that’s moving to new media distribution channels and interaction platforms.

In addition to Haarsager, the guest list included Stephen Hill from Hearts of Space, Steve Gillmor (the host), and Doc Searls, who also appeared on a panel at the recent Integrated Media Association conference along with Haarsager and others.

UPDATE: Highly Recommended Listening. Haarsager and friends go into depth talking about new media economics and public media’s entanglements — or lack thereof — with new platforms. Money quote from Stephen Hill: “Show the stations how you’re gonna keep them in business and they’ll be very happy to cooperate with [NPR].”

Running time of the MP3 file is about 1 hour, 25 minutes.


The link to the NewsGang podcast has also been added to my (still growing) list of Ken Stern articles.

Haarsager on NPR changes

Dennis Haarsager posted his response to the speculation about CEO Ken Stern’s departure from NPR this past week. It doesn’t present a “smoking gun” version of events. However, in the comments to his post, Haarsager lets loose three priceless notes that illuminate these events more than any other account to date:

  • “…Mr Stern chose the time and day when he left the building.”
  • “…no malfeasance or misfeasance should be imputed.”
  • “…transparency is an important ideal; [Stern’s] privacy is a right.”

These quotes are very important to understanding the events.

First, he blows the malfeasance idea out of the water. When the news hit about Stern’s departure, I know folks around my shop assumed there was something sinister about the change. Had there been embezzlement? Sexual harassment? Physical confrontation? Why else would the termination be so abrupt? Well, it wasn’t something like that. (And those with personal experience of Ken Stern couldn’t imagine such a scenario anyway.)

Second, Haarsager notes the mutually exclusive issues of transparency and privacy. We observers want transparency in these affairs, but the departed — Stern — has a right to privacy. Personal privacy trumps corporate transparency in this case, and rightly so.

If you’ve ever been in a managerial position, you know there are things you can and can’t talk about when it comes to hiring candidates and terminating employees. Indeed, mostly you can’t say anything. Even if you’re mad at the employee, even if you’d like to give them a swift kick on the way out the door, you say nothing. To say anything negative is an abuse of your power and opens the company up to lawsuits. Besides, the employee is gone now — it’s time to look ahead.

Third, and most importantly, the departure was abrupt, but the timing was Stern’s choice. In other words, Stern could have played this game entirely differently — even leading to a multi-month golden parachute process, I suspect — but he chose to go out this way and at this time. This tells us a tremendous amount without giving details (an excellent balance of transparency and privacy, I think).

Consider how most CEO departures play out: there’s usually a transition period, often a significant one. The Bill Gates departure from Microsoft has been in the works for more than 2 years and he even left the CEO role several years prior to that. Many nonprofits have written succession plans, allowing for smooth transitions either over time or in emergency situations. And even when a CEO departs to “spend more time with his/her family,” there’s at least some degree of hand-off, like a consulting gig with the company until the new CEO is seated. But not here.

So the fact that there’s no transition, that the change was so abrupt and surprising, and the fact that Stern more or less set the timetable speaks volumes. And not to Stern’s credit. In my experience, even if you’re disgruntled, you don’t walk out and cut all ties with the company instantly.

So Haarsager’s statement that the reasons for Stern’s departure were “multivariate” is probably the most accurate, albeit the least satisfying. And from what I’ve gathered privately, it really isn’t all about the new media angle (though that’s one of the variants to which Haarsager is likely referring). But the way this went down — the suddenness of it — suggests much of the problem existed inside the CEO’s office. It didn’t have to end this way.

Personally, I’m ready to move on — we’ve got so much to do in public media. But I’ll continue to update the articles list as needed.

Paterson on leadership (at NPR)

While I do appreciate Robert Paterson’s take on the leadership issue that’s likely below the surface of the NPR / Stern debate, I’m struggling to believe that that’s the core of this week’s story — that Ken Stern just ruffled too many feathers and it was time for a different leader. Sure, hard-charging generals are not the best leaders in all situations, and after 10 years of whip-cracking you might need a smooth operator. That makes eminent sense.

But in the shifting media environment about which so many of us write and ruminate, isn’t a hard-charging general needed at the top? Someone that has both the vision and the drive to push through to a new way of thinking and doing. The media environment changes in play today are not just operational in nature, where a COO might fix this, improve that — they’re strategic shifts. Seismic shifts. World-upside-down shifts. Only a CEO and her or his board of directors can handle those issues and realign the company. And given the time-to-market pressures of new media on old media, NPR probably didn’t (and doesn’t) have the time for all the required dinners and socials and private meetings, nor could it afford compromise after political compromise on the way to a new strategy.

NPR — like all media companies, for-profit or nonprofit, operating in any or all media formats — must grapple with the fundamental changes in progress. The relationship between producers, distributors and consumers is completely inverting.

Of course, this entire discussion could be moot. Public media’s future may have to be created outside the voluminous corpus of NPR (or APM or PRI or APT or PBS or …). Developing a new model with fundamentally different DNA may not be possible inside the system, either with a hard-charging general or a sweet-talking politician.

Jarvis on NPR

Well he’s not “on” NPR, but he comments on the NPR / Ken Stern thing, as you might expect. He even gives a shout-out to yours truly (blush!). I returned the favor by commenting on his post.

  • Trouble for NPR — BuzzMachine / 7 Mar 2008 (Update: Note Dennis Haarsager’s comment to this post at Jarvis’ blog)

In that post he also refers to a great year-old post about public radio, following a meeting he had at NPR along with other new media folks. This is the post that introduces the great new word “converstation”:

NPR / Ken Stern article links (updated)

Here’s a collection of Ken Stern / NPR article links for those interested in a curated list.
Updated 24 Mar 2008.

Older Articles (for context)

Feel free to share more links in the comments.

NPR stations vs. The Future

I commented on Robert Paterson’s blog this morning, and wanted to reproduce the full comment here for the record. And because it was kind of a long comment — it’s better suited to being a post, really.

I’m not sure if I’ll comment any further on the Ken Stern developments directly. Perhaps — it’s definitely disturbing to see this turn of events. But I’d rather wait to see what else comes out in the next day or so. NPR’s reporters have already lifted the veil further today than they did yesterday.

In any case, here’s the full comment left over at Paterson’s site…

Continue reading “NPR stations vs. The Future”