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.

More on the Revolution

Upon arriving in Washington, DC this week conversation with my public media colleagues immediately turned to the new Revolution PBS blog. Two questions came up: “Are you behind it?” and “Then who is?”

I still don’t know.

We didn’t get much time to talk about the new blog while at CPB, as those proceedings moved very fast (thanks to awesomely energetic facilitator Allen Gunn) and we were focused elsewhere.

Nevertheless, the conversation continues as Revolution PBS posts more material and at least one freelance journalist has picked up on it for a proposed article in “Public Broadcasting Report,” a print-only publication (what’s that?) from the for-profit trade magazine publisher Warren Communications News. (NOTE: If the story appears, it will only be in print, so I’ll be unable to link to it and they don’t provide copies for digital distribution.)

Laura Norton, the freelancer writing for the Report, sent me some questions to answer, and I thought I’d share my complete responses here, since I took some time prepping the answers.

And here’s what you can do: How would you answer some or all of these questions?

Q1: Can an anonymous blog critiquing PBS have any traction? The intended audience appears to be PBS brass, but is the more-likely audience station managers, directors, etc? Does it make a difference?

Who knows? Odds are this blog won’t make a big difference. It’s easy for pubmedia leaders to dismiss it because it’s unsigned and — so far anyway — it’s not specific enough to allow for meaningful action.

However, if the blog continues to offers new ideas or points to consider, it might push more conversation. Public media folks *love* to talk, and maybe some of these ideas could be drawn into the conversations of the powerful and drive changes. It’s possible.

As for audience, I don’t know who will really pay attention over time. I suspect it might make it to executive suites at PBS occasionally. And a few GMs around the country might make note of it.  Probably the best audience, as with any blog, will be anyone that wants to see positive changes that preserve the core goals of public service media in an age when old broadcast media business models are under siege.

Q2: How curious are you about who is writing it?

Very curious.

The author (authors?) have already demonstrated an understanding of the construction of the public media world that far outstrips that of the average citizen or donor. Even major donors often don’t understand the relationship between the stations, the network, producers, CPB, Congress and so on.  That suggests — though by no means proves — the author(s) are from inside the system, either currently or formerly.

Knowing the identity of this new voice could lend the ideas more weight. Or the reverse.

Personally, I want to know more about the writer because I’m not a fan of anonymous commentary. I understand the need for anonymity in some circumstances, but I still don’t like it. Plus, if they remain anonymous, how can we put them on a panel at the next pubmedia conference? 😉

By the way, in talking with colleagues in the system, everyone that’s aware of the blog is curious to know who it is. And speculation to date is that it’s an insider.

Q3: Are the ideas proposed too far off target from where PBS is heading?

The ideas proposed so far are nowhere near where stations or PBS are heading — if in fact they’re headed anywhere in particular. It’s a radical rethinking of how the service is organized at pretty much every level. That kind of change is incredibly scary and would definitely result in job losses (and some new jobs, too). Corner-office types everywhere, in CPB, PBS and in stations, would be at risk.

Ideas like these could only come from people that either stand to gain from the changes or from people deeply committed to an ideal. Or both.

Q4: With lots of pubmedia groups out there talking, critiquing, etc, what makes this different?

It’s different because the changes proposed are more radical than anything in recent memory (at least publicly). Mostly those of us yakking in the pubmedia sphere talk either about smaller matters or more evolutionary changes. We may talk about new things (like expanding digital media efforts), but almost no one comes out and says “this system is messed up and should be destroyed to be saved.”

It’s also different because of the anonymity. To my knowledge, everyone else signs their work in the pubmedia commentary world.

Q5: How (if at all) do the critiques ring true?

DO the critiques ring true? That depends upon who you ask.

Some of them ring true from me, and, if asked privately, I suspect most people working in public television with a view of the whole system would agree there are points here that are spot-on.  On more than one occasion I’ve heard people in the system ask, “If you were going to build a public television system today, would you duplicate what we have now?” The answer is always “No way!”

There are so many things that are “wrong” with the public TV system you could write a book (and some have). But to me the inefficiency argument is the easiest target of them all. When each of the 300+ stations create virtually identical program streams (some of it dictated by PBS common-carriage rules), the argument that “we need a local station because our community has unique needs” just doesn’t hold up.

And local control of the broadcast schedule is pretty much the only defense left for the majority of stations out there. Most pubTV stations no longer produce meaningful local content because:

  1. it’s incredibly expensive to live up to national quality standards and make a program people want to watch in sufficient numbers to pay the bills
  2. funding of all types has been dwindling for years (membership, sponsorship, foundations, government)
  3. viewership is declining as new channels and platforms proliferate.

So if you’re not generating local value, why, exactly, do you need a local full-service station? Why not just run a “repeater” in your area, offering a national “feed” of PBS content?

That’s the apparent “Revolution PBS” critique (or at least much of it), and I think it’s a discussion worth having. Who knows — what if we found a solution that solved the problem just by talking it through?  What IF we had a “C-SPAN style” PBS with tiny local offices doing intensely local (and cheaper) work? What would that look like? Would it serve the public good better than what we’re doing today?

Q6: You say PBS should engage on these issues, how? to what extent?

It would be very easy for PBS to dismiss the blog, and I suspect they will, at least officially. PBS is a huge corporation and this is some anonymous blog with not-entirely-coherent (or at least incomplete) arguments, especially from the PBS perspective.

But this is a series of critiques that are new and nuanced. This isn’t some right-wing screed about how PBS isn’t relevant anymore in a world of 200 cable channels or Big Bird is a millionaire and doesn’t need public money or PBS is a liberal indoctrination system infecting our children. No, this is a critique about the construction and efficiency of the system and the split roles of local and national. If PBS dismisses this blog, and if the ideas gain traction (which can happen on the web very fast), this could be a new critique that maybe — just maybe — brings down the house because you can’t dismiss it as political invective.

How to engage?  I’d say at first you meet the blogger(s) on their turf — their blog, in the comments, and sign your name. Participate in the dialog where it makes sense. Correct statements or assessments that are wrong or miss the point or don’t address real concerns from stations, producers, the public, etc. Push the bloggers to be more specific, to back up their points.

Who would do this? It doesn’t have to be PBS CEO Paula Kerger, but mid-level and upper-level leaders in PBS would be great. Other bloggers in the pubmedia space should chime in occasionally.  Make it a robust — but honest and realistic — conversation.  That would show PBS is serious about doing the “right” things and the “best” things for the public as a public service organization. And it would show respect for the public in ways that would actually pay PR dividends for PBS leadership.

The blog so far has not been a screed, it’s not been a rant. It’s respectful. They’re saying they care about the future of public media. This is someone we can talk to, someone we might be able to learn from. So let’s do it.

On a side note… When I entered the public media world several years ago, I had picked up a book on the industry, one that was somewhat critical of the system, especially in terms of its insular nature, its unwillingness to collaborate with other nonprofit media organizations and its drift toward commercialism and away from the core notions of the 1967 Public Broadcasting Act.

One day my GM at the time saw the book and asked why I was reading it. I said I was trying to learn more about the industry. I was promptly told the ideas in that book were irrelevant because they were written by “outsiders.” I’ve never forgotten that.

I agree that “insiders” have a more insightful view on current practice and operational challenges. But insiders lacking outside views develop huge blind spots — how do you know if you’re serving the public’s needs if you never ask?

I’m hoping when thoughtful and respectful people come along with criticisms and suggested solutions, maybe now we can listen, think and offer conversation in return.

21st century leaders foster talent, not scale

I’m starting to (finally) get back into reading great stuff from around the web, fueling some new thinking. I stumbled across this nugget from consultants with frequently insightful writing:

…the rate of learning, innovation, and performance improvement within the institution must match (or exceed) that of the surrounding environment if the institution is to survive (or thrive). Given that innovation is inherently a human activity–one performed by talented individuals–it follows that talent will pull institutions into the 21st century.

That’s because a rapid rate of innovation cannot be programmed from above. At best what institutional leaders can do is to create the environments–the “creation spaces”–that foster innovation and faster learning. But here’s the rub: many of these institutional leaders are caught in the mindsets of the previous generation of infrastructures and the related assumption that scalable efficiency is the key to success. Talent, on the other hand, is under increasing pressure to get better faster and will either leave institutions that cannot help them or become catalysts for change within those institutions.

[full article]

Let’s just say I can vouch for the above quote 100%.

Questions for public media firms, leaders and talent:

  • Does your corporate culture, as led from the top, regularly share, explain and praise positive examples of media innovation both inside and outside the firm?
  • Do stakeholders in your firm’s success understand the risks of stasis in a rapidly-changing media and business environment?
  • Do you have a plan, a process or even just a notion of how to ensure everyone in your firm is learning substantial new things every year, every quarter?
  • Which activity absorbs more of your time: protecting sacred cows or fulfilling a mission in a presently-relevant way?
  • Is your firm innovating in media creation and delivery at a rate that matches or exceeds the media changes in your service area? (note that media changes occur at variable rates based on where you are)
  • Is your solution to a changing media environment becoming “too big to fail” (AIG) or becoming “too vital to ignore” (NPR)?
  • Are you leading a tribe or building an audience?

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.