Friday, February 7, 2014

What makes Microsoft CEO Satya Nadella different from Steve Ballmer

Right from the start, new Microsoft Chief Executive Officer Satya Nadella is showing that he will operate differently from predecessor Steve Ballmer. On his first day leading the world's largest software maker, Nadella exuded an understated calm during a less than 20-minute webcast for customers and employees.

Rather than the customary press conference, the 46-year-old used the event to introduce himself and take questions from Microsoft Vice President Susan Hauser. The first line in his memo to employees started with "today is a very humbling day for me." That contrasts with Ballmer, who for 14 years as Microsoft CEO was famous for his oversized personality. Ballmer, 57, once jumped out of a cake at Microsoft's 25th anniversary party at Seattle's Safeco Field and ran through the crowd giving highfives as if he'd won the Super Bowl.

In a memo to employees Tuesday, Ballmer said he was "pumped." If jarring, the change in style will be one of the advantages of choosing Nadella as Microsoft's third CEO, said David Yoffie, a professor at Harvard Business School. Ballmer's aggressive salesmanship during the boom days of the personal-computer industry exemplified how Microsoft became the world's most valuable company.

Now the software maker needs a new approach as it plays catch-up in areas including tablets, smartphones and cloud services. "Nadella's obviously a deep technologist, and he's going to bring that back to a Microsoft that hasn't had it in the CEO office for years," Yoffie said.

Product-focused CEO
Nadella's low-key manner is also a sign of a changing of the guard in technology, as larger-than-life founders and near-founders such as Ballmer leave the scene. Microsoft isn't the only technology company that has hired a product-focused CEO in recent years. Yahoo recruited engineer Marissa Mayer from Google in 2012 to be CEO, while networking-equipment maker Juniper Networks recently appointed Shaygan Kheradpir, who had built networks for Verizon Communications and others, as CEO.

"This industry goes through cycles, and we're in a cycle where customers are looking for new products," Kheradpir said. "It's not a sales or a marketing thing right now." Microsoft's decision to forego a press conference on Nadella's ascension may also be an effort to show that "the business isn't about one person or personality," said Carol Blymire, a communications consultant . "Maybe we've come to the end of the era of the rock star technology CEO."

Basketball, Cricket
The differences between Ballmer and Nadella begin with their backgrounds. Nadella is an engineer with degrees in electrical engineering and computer science , as well as an MBA that he earned by taking weekend classes after he had started at Microsoft. Ballmer is an Ivy League educated businessman who specialised in sales and marketing.

The dissimilarities extend into the their interests. Ballmer is known as a ferocious defender and rebounder on the basketball court. Nadella lists poetry as an interest and one of his favourite sports is cricket. "He's a thoughtful, quiet leader who rallies people around him," former Microsoft Chief Financial Officer John Connors said of Nadella. "He works harder than anybody . He'll make the tough calls but he's very urbane and civil."

Ballmer's changes
Ballmer has made some changes in the past year that will help Nadella, said Will Poole, a former Microsoft vice president. Last year, Ballmer discontinued a review system he had implemented that ranked each person in every work group on a bell curve, an approach that forced some employees to behave more politically.

Ballmer also pushed through a major reorganisation in July to break down walls at Microsoft. Rather than run their own discrete businesses, top executives now oversee functional areas, such as software and hardware engineering. Ballmer's strained relationship with Wall Street also leaves Nadella plenty of room for improvement, said Daniel Ives, an analyst with FBR Capital Markets.

Nadella will still work with Ballmer in the boardroom, where both are directors. Having Ballmer there may make it complicated for Nadella to undo major initiatives from his predecessor, Yoffie said. "Communicating with his board will be as challenging in some ways as all the other challenges he'll face with the external world," Yoffie said of Nadella.

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