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Nadella, Gates: Right Team For Microsoft?

Does the pairing of Nadella and Gates foretell Microsoft's return to glory or a new era of dysfunction? Take a closer look.

Microsoft In 2013: 7 Lessons Learned
Microsoft In 2013: 7 Lessons Learned
(Click image for larger view and for slideshow.)

What will the dynamic be like between new Microsoft CEO Satya Nadella and company founder Bill Gates? Among the myriad unknowns circling Microsoft and its new CEO, Gates's new role as Nadella's adviser is arguably the most important. It speaks to virtually every point of controversy raised as the selection process wore on, from Nadella's autonomy to slay sacred cows, to Gates's influence on company strategy, to the role of consumers in Microsoft's future.

A Wall Street Journal report Wednesday reiterated many of these concerns, citing numerous anonymous sources who said the Microsoft board grew exhausted as months dragged by and eventually chose Nadella after acknowledging that all candidates presented some degree of compromise. Gates's role, which involved his resignation as board chair, was evidently seen as an antidote to Nadella's inexperience with Microsoft's flagship consumer technologies.

[Nadella's priorities should also be your priorities. See Microsoft's Satya Nadella: Marching Orders For Digital Business.]

"Bill is still a legend and he's going to have something to say," said Gartner analyst David Mitchell Smith in an interview. "It's probably a good thing that [Gates] is out of position to call all the shots [as chairman], but it's also good to have him more involved than he was over the last five years."

When Gates said last month that he would offer Microsoft only part-time help, he seemed to downplay reports that he would take a more active role at the company -- only to pledge Tuesday that he would spend at least a third of his time advising Nadella. Since then, most reactions have run been positive, but they've still run the gamut.

Some have heralded the move as Gates's triumphant, Steve Jobs-like return to the company he founded. David Levin, chief of consulting firm Silicon Valley Ventures and a past Gates associate, told The Telegraph that Gates's new role is tantamount to reclaiming the CEO chair. "You cannot underestimate the importance of this," he said.

Others see Nadella's insider status as a sign that Microsoft wants to pursue the path Ballmer and, to a lesser extent, Gates have already established. Dan Fletcher, an analyst at Neuberger Berman, told The Wall Street Journal shortly before Microsoft's announcement that Nadella was a "safe" pick who would disappoint those hoping for a major disruption, and in the Washington Post, Richard Metheny, a management coach for the Chicago-based executive search firm Witt/Kieffer, likened working at Microsoft to working in the Dark Ages

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella

"You could read [Gates's role] as the new guy coming in as a weak leader," Forrester analyst James Staten told InformationWeek in an interview -- but he doesn't see it that way. Rather, Staten praised Nadella for building a culture of agility within Microsoft's enterprise and cloud teams.

Staten said Nadella challenged colleagues who were conditioned to 18-month product cycles to deliver constant iterations as often as every week. "It was unheard of in the enterprise server business," Staten remarked. "Nadella had to push people out, overrule people with big businesses."

Indeed, Nadella's fingerprints are in many ways all over the "One Microsoft" reorganization strategy. A November report in the Wall Street Journal claimed Ford CEO Alan Mulally helped Ballmer architect the reorg, but "One Microsoft's" focus on constant update cycles and cloud-first delivery have been part of Nadella's repertoire for years. Under his stewardship, Microsoft's enterprise and cloud products embraced cross-platform strategies and openness, even while critics lambasted Ballmer's Windows strategy as excessively proprietary and protectionist. 

Tuesday, Nadella parroted statements Ballmer made last year, when the longtime CEO said the company's machine learning and cloud technologies would produce Windows experiences that anticipate user needs and span devices, services, and applications. In the context of Nadella's past projects, the rhetoric he shared with Ballmer can be read partly as an attempt at cohesion during the transition and partly as the fruit of seeds Nadella's cloud teams have been planting for years.

"Satya has made significant innovations around agility," said Gartner analyst Marv Adrian, who characterized Gates's increased role as a positive.

Apple founder Steve Jobs famously recruited new employees by challenging them to change the world. In his limited remarks so far as CEO, Nadella has channeled a similar tone, with numerous references to the meaning he wants Microsoft employees to find in their work.

Nadella has also sounded like a man eager to demonstrate he knows the challenges before him. Though his statements have eschewed specifics, he's repeatedly said Microsoft will follow a mobile-first, cloud-first strategy, and that the industry demands innovation.

But you'd expect him to say things like that during his first day on the job. Crucially for Microsoft, Nadella, who will start this year with a base salary of

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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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Charlie Babcock
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Charlie Babcock,
User Rank: Author
2/10/2014 | 7:58:03 PM
Nadella's push is for change
I think what Michael is getting at in this piece is that Gate and Nadella may be the right combination of founder legitimacy and a disrupter's ability to move the organization. It may not meet Wall Sttreet's definitiopn of what's needed, but if those people actually knew, they'd be as rich as Bill Gates. Nadella does represent change inside an organization that's reluctant to. He may be able to effect more of it in CEO's chair. 
DDURBIN1
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DDURBIN1,
User Rank: Apprentice
2/6/2014 | 4:08:06 PM
Re: Dell-javue?
@Somedude8, The "soft dollar" stuff is usually found in principle by the founding entrepreneur or owner only to be displaced once the founder or private owner sells or leaves.  BTW, I'm a good Monday morning QB.
DDURBIN1
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DDURBIN1,
User Rank: Apprentice
2/6/2014 | 1:10:55 PM
Dell-javue?

This kind of reminds me of Michel Dell's history.  He started the company built it up then turned it over to a money management type that proceeded to run the company into the ground pinching every penny possible.  Dell returned, briefly restoring business only to end up making the same poor penny pinching mistakes.  This looks like the same is happening at Microsoft however Nadella is the wild card.  My guess is that penny pinching will still win out over customer satisfaction with competitive products and prices.

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