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Microsoft CEO Search: 3 Things Satya Nadella Brings

Microsoft is set to name Nadella as its next CEO. Take a closer look at who he is and what he brings to the table.

7 Mistakes Microsoft Made In 2013
7 Mistakes Microsoft Made In 2013
(Click image for larger view and slideshow.)

Microsoft is preparing to introduce Satya Nadella, the company's executive VP for cloud and enterprise, as its new CEO, according to numerous reports. An official announcement reportedly could arrive within the next several days.

Since Microsoft CEO Steve Ballmer announced last year that he would be retiring, many would-be candidates have taken turns at the center of speculation. But even as possible Ballmer successors, such as Ford CEO Alan Mulally and Ericcson CEO Hans Vestberg, entered and exited the conversation, reports have consistently listed Satya Nadella among those under the most serious consideration.

Citing multiple unidentified sources, news website Recode reported Wednesday that Microsoft was close to choosing Nadella. Bloomberg followed up the next day, stating that a source with knowledge of the process had corroborated Nadella's status as CEO-in-waiting, and adding that the Microsoft board might replace Bill Gates as chair. Bloomberg noted that plans are not final, though reports have suggested for months that some prominent investors are wary of Gates's and Ballmer's continued presence on Microsoft's board. Reuters subsequently cited its own unnamed source who stated Nadella is likely to be named CEO in coming days.

[If learning from your mistakes is key to success, Microsoft should have a great 2014. See Microsoft In 2013: 7 Lessons Learned.]

Who is Satya Nadella and why might he become Microsoft's next leader? Here are three major strengths Nadella brings to the table.

1. Nadella blends leadership skills with technical expertise. Commentators have debated for months whether Microsoft's next CEO should be a tech visionary, à la Gates, or an expert manager and businessperson, like Ballmer. In Nadella, an accomplished engineer who also holds an MBA from the University of Chicago, Microsoft might have found both.

"He is an incredibly smart guy who really understands the cloud business and knows how to run it effectively," said IDC analyst Al Gillen in a phone interview. "He is very, very impressive as an individual and a tech manager."

2. Nadella has led Microsoft's most promising efforts. Nadella has spent most of his career at Microsoft, joining the company in 1992 after a stint at Sun Microsystems. Nadella has led Microsoft's cloud and enterprise efforts, building the foundation for successful products such as Windows Azure and Office 365. These efforts encompass many of the Microsoft projects that have grown most rapidly in recent years, and which analysts consider most important to the company's future. Some commentators had questioned whether alleged CEO front-runners such as Mulally would have the tech chops to lead Microsoft, but Recode's report said company insiders consider Nadella an uncontroversial choice due to his diverse skills and strong track record.

Microsoft executive VP Satya Nadella.(Source: Microsoft)
Microsoft executive VP Satya Nadella.
(Source: Microsoft)

3. Nadella is an energetic leader. Microsoft's next CEO will have to negotiate a course filled with a range of critics and collaborators. He or she will have to keep investors, many of whom were never supportive of Ballmer, both satisfied with quarterly progress and invested in long-term goals -- a potentially conflicting mandate, given Microsoft's much-debated and slow progress making its own devices.

The next CEO will also have to inspire developers to support Microsoft's flagship platforms, such as Windows 8.1's Modern UI. He or she will also have to reconnect with a user base that has rejected Windows 8 and 8.1. If that's not enough, Microsoft's next leader will have to oversee extended implementation of the companywide reorganization Ballmer unveiled before announcing he would retire.

Last year, Forrester analyst David Johnson told InformationWeek that Nadella could be right person to tackle these challenges. He said Microsoft needs a leader who can energize employees and partners, and that Nadella has the charisma and intelligence to do the job.

Gillen expressed similar sentiments. He said Nadella is well-liked and respected, though he countered that the CEO role is bigger than anything Nadella has conquered to date, which might give some board members pause.

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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Laurianne
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Laurianne,
User Rank: Author
1/31/2014 | 11:00:10 AM
MS Insider Vs. Outsider
Nadella is a Microsoft insider, which is causing some debate on Twitter -- but an insider can be a benefit with regard to speed. His Azure history knowledge matters too. Feel free to disagree with me.
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
1/31/2014 | 1:36:30 PM
Re: MS Insider Vs. Outsider
I think the consensus is that Nadella is a solid but conservative choice. I don't think Microsoft has the gumption to tap an outsider. Nadella has been with Microsoft since the early '90s so he's the last thing from an outsider. If Nadella gets the call that signals to me it will be business as usual: hard-charging on enterprise tools and cloud, but still directionless on consumer because he has no consumer leadership experience. Then again, I've heard about Nadella's charm and likeability so maybe he'll have better relationships with the consumer side of the business and be the uniter that Ballmer never was.

 
ChrisMurphy
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ChrisMurphy,
User Rank: Author
1/31/2014 | 4:07:23 PM
Re: MS Insider Vs. Outsider
Why is choosing an insider a sign of weakness? If a CEO is a decade in the job and hasn't groomed any successor candidates, that's a failure. 
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
1/31/2014 | 4:21:37 PM
Re: MS Insider Vs. Outsider
That's a criticism I used to hear about Ballmer: That he would actually repress efforts to groom his successor.  Probably paranoid.
RobPreston
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RobPreston,
User Rank: Author
1/31/2014 | 5:09:45 PM
Re: MS Insider Vs. Outsider
I agree with Chris Murphy here. Why is an outsider necessarily better than an insider? My father used to make fun of people who blindly hold to the notion that "far is better"--the notion that that "special" bakery 15 miles away is superior to the local one...mostly because it's far away. In the Microsoft case, insider knowledge is extremely valuable. I like the sound of Nadella. Don't underestimate him because he's an insider. 
melgross
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melgross,
User Rank: Ninja
1/31/2014 | 8:30:55 PM
Re: MS Insider Vs. Outsider
It's not that an outsider is necessarally better. But Microsoft was looking for an outsider, and most pundits, who by the way, are now saying what a wonderful choice this is, were saying that Microsoft needed someone from the outside because they wouldn't have been part of the corrosive politics that's been the biggest problem there. A lot of the somewhat opaque reorganization of the company can't stand, but can he see that? There are other concerns, but that could be enough.
melgross
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melgross,
User Rank: Ninja
1/31/2014 | 8:22:28 PM
Re: MS Insider Vs. Outsider
It wouldn't be a sign if weakness if they hadn't made such a big deal of looking everywhere else. But being rebuffed by all of the known leading candidates leaves one to think that this is a desperate move on their part, because no one else will be willing to take the job. How embarrassing!
melgross
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melgross,
User Rank: Ninja
1/31/2014 | 12:17:44 PM
Secondary choice, or tertiary choice?
The problem is that no major candidate wanted the position. Well, who then? I don't think anyone at Microsoft will be a good choice. I don' t agree that their CEO needs technical chops. That's what they thought at IBM too, but Gerstner proved that false.
Michael Endler
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Michael Endler,
User Rank: Author
1/31/2014 | 12:50:33 PM
Re: Secondary choice, or tertiary choice?
Given that Mulally and other perceived candidates became such spectacles during the search process, I think Nadella (or whoever) will face this question, at least at first. He'll already have a tough job, and it'll only be tougher if there's a chorus of "What if it had been Mulally?" or "If Nadella was a back-up choice, does he have the backing of the board?" commentaries. Still, Nadella's teams have executed well, and they've been quicker than others at Microsoft to embrace new revenue models and strategies. And investors seem pleased so far with the rumor (not that their approval is evidence of a good decision). I obviously lack the perspective of a Microsoft board member, but among the internal candidates whose names have been mentioned in reports, Nadella strikes me as the best choice.
melgross
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melgross,
User Rank: Ninja
1/31/2014 | 8:08:00 PM
Re: Secondary choice, or tertiary choice?
He may be the best choice of who can realistically be expected to take the position. But that doesn't mean he's a great, or even good, choice. I think the idea that Microsoft needs someone who excels technically, is incorrect, just as it was with IBM, a substantially more technically complex company than Microsoft ever was. Microsoft needs someone who can project a feeling about Microsoft that says that they are there for people, not just for themselves. I don't think that anyone within Microsoft can do that, they are all part of the problem. They also need someone who isn't too close to any particular product lines. That can't be said about anyone in Microsoft either. Will he favor his old areas? And it's a big difference between running a division, and running the entire shebang. A CEO has to make decisions that a division chief never need consider.
Laurianne
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Laurianne,
User Rank: Author
1/31/2014 | 3:24:36 PM
Re: Secondary choice, or tertiary choice?
No disrespect to Gerstner, but he also benefitted from great timing, getting in on the services wave. Will Nadella have that same kind of chance? He faces a harder road than Gerstner did, IMHO.
melgross
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melgross,
User Rank: Ninja
1/31/2014 | 8:19:33 PM
Re: Secondary choice, or tertiary choice?
Gerstner helped to create that services wave. He surprised, and dismayed people by letting go of the PC business, and concentrating on enterprise use more than ever. He was also a good salesman for the company, as opposed as a salesman for products. He had a vision, and had the skills to pull the company through it to the other side of where they were. Microsoft needs a similar type of leader. If it's true that Gates may also go, that would be great. It's about time!
cbabcock
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cbabcock,
User Rank: Strategist
1/31/2014 | 12:54:06 PM
Nadella represents Microsoft's strengths
Nadella is an insider, yes, but he also represents the strenghts of Microsoft beneath its flailing pursuit- of-consumers surface. Microsoft is a very strong systems company in both the enterprise data center  and the cloud. Nadella doesn't flinch from that. And he's fearless.
Lorna Garey
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Lorna Garey,
User Rank: Author
1/31/2014 | 2:32:31 PM
Re: Nadella represents Microsoft's strengths
Exactly - Bezos should worry. Expect Azure to go after AWS with guns blazing this year. MS has the cash and enterprise cred to do it.
melgross
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melgross,
User Rank: Ninja
1/31/2014 | 8:13:06 PM
Re: Nadella represents Microsoft's strengths
But that exactly one of the things I'm worried about. He specializes. The CEO shouldn't have ties to one area. (S)he should be able to look at the company in its entirety and decide what needs to be cut, and what needs to be enhanced. He also needs to be able to tell Microsoft's story to customers. I'm not sure he can do that.
JayMan1
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JayMan1,
User Rank: Apprentice
4/12/2014 | 11:01:13 AM
Re: Nadella represents Microsoft's strengths
Every CEO at any company was once a specialist too. Nobody is born as a CEO. This isn't a throne. Nadella's ascension to CEO over the past 22 years highlights the roles of increasing importance he's taken. In his last position, he led Microsoft's $22B server division (which is bigger than entire companies like eBay) and took it to new heights. The outsiders that didn't take the job at MSFT were either contracted to stay at their jobs, or didn't want to attract negative press. And Mullaly would be completely foreign to the tech world. He probably doesn't even know what a server is.

 

"He also needs to be able to tell Microsoft's story to customers. I'm not sure he can do that."

You can go watch MS's build conference from last week, everyone loved his story and passion. In the time that he's been CEO, MSFT stock has risen 15% as well. Your comments fly in the face of reality and logic. It's a good thing your comment will live on forever on the net. 5 years from now, we will all be re-reading your comments for a hearty laugh. :)
Canamjay
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Canamjay,
User Rank: Apprentice
1/31/2014 | 1:01:09 PM
new CEO for MSFT?
Well, he's certainly a snappy dresser!! I do remember him vaguely from Sun I think.. he worked on the emerging big server products when the net was starting to build out. Not very chatty.
jgherbert
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jgherbert,
User Rank: Ninja
1/31/2014 | 10:51:36 PM
Re: new CEO for MSFT?
@Canamjay:

>"Well, he's certainly a snappy dresser!!"

Hah! My first though was "Well, he has a look. (Dead) Steve Jobs, look out!" Who knew the world of the CEO was so fashion-based?

MS would have been stupid not to look outside the company for fresh blood. It's embarrassing in some ways that nobody was suitable (or, presumably, wanted to do it). There's nothing wrong with going inside the company as such, so long as you can find somebody who has enough global perspective to think outside the box they grew up in at MS, so to speak.
melgross
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melgross,
User Rank: Ninja
2/2/2014 | 10:08:47 AM
Re: new CEO for MSFT?
And, of course, with someone down in the organization, as a department head is, no matter how important that department might be, there's no way to know if they have that perspective, because they've never needed it in their position.
Li Tan
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Li Tan,
User Rank: Ninja
2/3/2014 | 1:42:36 AM
Re: new CEO for MSFT?
Sir, I cannot agree you more - as a VP he must be a good talent but nobody can really predict how he will perform as a CEO. As a CEO you must be a visionist and strategist. Such kind of skill is not strongly demanded by other senior management positions. Maybe the person has the potential but it will take quite sometime to foster it in a suitable position. I would sit with my finger crossed to see if MS will get something amazing from him. 
cbabcock
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cbabcock,
User Rank: Strategist
2/3/2014 | 1:51:48 PM
Nadella "specializes" or is a generalist?
Melgross: "But that exactly one of the things I'm worried about. He specializes. The CEO shouldn't have ties to one area." Ah, I didn't say he specializes. He effectively represents the strengths of the cloud and server business unit. But his speech patterns and way of addressing large groups suggests he's more of a generalist. He'll weigh pros and cons in front of a crowd and then come down on where he wants to put a stake in the ground. He does this in a credible way. And I get the impression he's unafraid of doing this over and over again. I can't say that about every Microsoft exec. I've listened to.  
melgross
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melgross,
User Rank: Ninja
2/3/2014 | 9:26:17 PM
Re: Nadella "specializes" or is a generalist?
You're going by speech patterns to determine how well he would do as a Microsoft CEO? I never would have thought about that. I'll say one thing though, most CEOs, and upper management in general, are just competent. When the economy is doing well, and everything is growing, their defects don't show. But when things become tough, those companies do poorly. There really are very few outstanding CEOs. And Microsoft needs one more than many other companies. Particularly now that they've gotten themselves in the hole they have. This is due because of the just barely competent CEO (and chairman) that they do have. Microsoft's growth is less due to extraordinary leadership, then it is due to tying themselves to IBM's ship originally, and then to dubious business deals and suppression of competitors. Now, they've gotten themselves into a lot of trouble, and need someone amazing to pull themselves out of it. I just don't think this is the guy. I believe that someone who isn't a software expert would be more what they need. This company needs to be torn up, and glued back together in a different way, while throwing away the blank pages.
cbabcock
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cbabcock,
User Rank: Strategist
2/4/2014 | 12:14:43 AM
Re: Nadella "specializes" or is a generalist?
And another thing, Melgross. You advise not to pick a CEO on perceived speech patterns. What Microsoft really needs is to be "torn up" and reassembled, preferably by someone not too blinded by knowledge of software. I would admit I haven't conducted much of a CEO search and I don't even know that much about Nadella, which hasn't prevented me from jumping in here. But Microsoft is primarily a software systems company. I think I'll vote for him until you can advise us all who the "amazing" candidate is that we should be thinking about.
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