Microsoft CEO search proves again it's still Gates' company

Microsoft's lack of progress suggests a board still deeply divided in terms of what it wants in a CEO.

Charles Cooper Former Executive Editor / News
Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.
Charles Cooper
3 min read
Microsoft Chairman Bill Gates. CBS
Wanted: Highly motivated, seasoned executive with CEO background to motivate and manage large, multinational software company. Technology background a plus, though not a requirement. Must have ability to execute on large strategic vision and navigate in fast-moving industry.

Still no takers out there?

By my back-of-the-envelope guesstimate, there's no dearth of talented executives qualified to answer the above want ad. But six months after Steve Ballmer announced his plans to step down, Microsoft's board still isn't ready with a replacement candidate.

Amazing. After all, we're not talking about a scenario where the incoming boss needs to revive a company from a zombie-like trance. For all its missteps and mind-numbing screwups over the years, this remains a great technology business, one flush with money and loaded with smart, hard chargers. Sure, there's no shortage of big challenges, but it's not mission impossible. And a side bonus would be the promise of glory for some ambitious C-level type to secure a place in the annals doing for Microsoft what Lou Gerstner did for IBM.

Or so I once thought. Silly me. The process has turned out to be a lot more complicated. In his last communication from the corporate bunker, John Thompson, the director leading the board's search, had nothing to say other than that Microsoft would name its new boss sometime during the current quarter.

Executive recruiters say that when they see CEO searches drag on, it's symptomatic of a succession process gone wrong. Either the company failed to develop the right internal candidates, or it was unprepared for the news and had to start its conversations from scratch.

"There is no rule of thumb, but most CEO searches take three to four months," said Mike Myatt, CEO of executive recruiting firm N2growth. "You start getting beyond six months and everyone wonders whether there's a problem."

There's an argument to be made that Microsoft is simply being prudent and thoughtful in this process. No sense in rushing to make a bad decision and wind up with CEOs that don't work out. Remember the debacles at Hewlett-Packard and Yahoo, where boards made big errors bringing in the wrong people by moving too quickly.

Yet the longer this continues, the greater the risk of organizational dysfunction setting in. Remember that Ballmer announced a companywide reorganization last July which centralized enormous decision-making. One month later, he announced he was leaving. If you don't like what's going on, why not wait it out until the new boss comes onboard?

"My guess is that there is a great deal of interest in the job," said Neil Sims, a partner at executive recruiting firm Boyden. "Whether or not those are the right people is the more difficult decision."

Following in the footsteps
That's the rub. People familiar with the company say Microsoft's lack of progress suggests a board still deeply divided in terms of what it wants in a CEO. A Fortune 500 type like Ford's Alan Mulally would have brought in a high-profile caretaker who would make a few organization changes -- perhaps even selling off the consumer business -- before turning the keys over to a groomed successor a couple of years later. Some of Microsoft's outside board members would love nothing more than for Microsoft to slash costs and become an enterprise company -- the idea being to double the stock price within a year.

But nothing is going to happen which doesn't have Gates' full support. Microsoft's still-very engaged chairman prefers bringing in another brainy nerd and technology visionary, someone more like Paul Maritz, a former Microserf who used to run VMware and now is CEO of Pivota. Also, Gates, already the second-richest person in the world, didn't go to war with the US government in the late 1990s just to split up the company voluntarily.

Whoever gets selected, it's going to take a special kind of CEO to follow the company's founding generation. Microsoft remains a large and successful company, but it hasn't been an innovator for quite some time. And while the company needs to change, the presence of Microsoft's two previous chief executives on the board -- especially its legendary co-founder -- could make for a weird dynamic.

"Not every CEO candidate wants to saddle up on that horse," Myatt noted. "To their credit, Microsoft's taking time to find the right person. That's the right move, but taking too long can create a lack of confidence."

Meanwhile, the tech world isn't waiting around to see who Microsoft selects. The clock is ticking.