Microsoft

Satya Nadella's to-do list: Here are the first 10 battles Microsoft's new CEO will have to fight

Satya Nadella, Microsoft's new CEO, has a big to-do list in front of him; here's the first set of issues he needs to tackle fast.
Way back in August last year Microsoft's CEO Steve Ballmer revealed plans to retire within the next 12 months. A committee - including Microsoft chairman Bill Gates - was set up to search for his successor, looking at both external and internal candidates for the job.

Over a period of months - far, far longer than most industry watchers thought it would take - a list of over 40 executives was gradually whittled down to just a few front runners, some of whom then publicly ruled themselves out. And now finally Microsoft has finally ended the wait by confirming that Satya Nadella is to be its new CEO. Nadella needs to get moving as soon as possible; after months of Microsoft's staff effectively treading water while waiting for a new chief to be appointed, he'll have an overflowing inbox and many decisions to make about the future direction of the company and its products.

Here are some of the knotty interrelated issues Microsoft's new chief executive will have to struggle with sooner rather than later.

1. Finding a way to step out of the shadow of Gates and Ballmer

Microsoft's new CEO will be only the third CEO Microsoft has ever had. But rather unusually, the other two guys are still hanging around the place.

"I love Microsoft. I love everything about Microsoft. I own a lot of Microsoft stock. I'm going to continue to own a lot of Microsoft stock," said Ballmer, who will continue to sit on the board after stepping down as CEO. Bill Gates is also going to be spending more time on the company in his new role of technology advisor.

With the outgoing CEO putting such emphasis on the continuation of the 'devices and services' strategy it's going to be enormously difficult for a new CEO to make the company over again in their image. That's especially the case as Ballmer gave the company a huge shove in one particular strategic direction with the acquisition of Nokia. Finding a way to build on his predecessors work but also set his own direction is Nadella's absolutely top priority.

2. Redefining Microsoft's personality

Ballmer has defined Microsoft for too long with that odd combination of puppy dog enthusiasm and hard-nosed business sense. Compare that to rivals like Google, or Apple, or Amazon; they're all corporate behemoths too, but they've managed to tell a different story about their motivations and inspirations.

That matters because the corporate mythology helps attract staff with smart ideas, and customers who want a brand to believe in. Microsoft's new chief has to tell as different story about the company, one that isn't defined by Microsoft's antitrust clashes; something new and fresh. Another job on the to-do list; Nadella needs to figure out transform Microsoft from a many-headed hydra into a manageable supertanker again.

3. Decide the future of Windows

Windows and Office have defined Microsoft for decades but it's entirely possible that these products won't define it forever. Microsoft is now much, much bigger than just desktop software and Word; it's an incredibly diverse software, and now, hardware company.

Windows and Office don't have the same mesmeric qualities for consumers using tablets and smartphones as they did for workers in the old desktop world. And Windows 8 hasn't been the huge hit that Microsoft really needed, either. As such, Microsoft needs to rethink the role of Windows (in particular what to do about Windows RT, Windows Phone and Windows 8). The future of Office is another big issue - how long will Microsoft dodge delivery of Office for iPad?

4. Getting the balance right between business and consumer

Microsoft's engine room is its enterprise business, no doubt about it. The problem for the new CEO is working out whether that's where the growth is going to be in future.

Shinier, more glamorous rivals like Apple and Google have captured the consumer imagination over the last decade and Microsoft has appeared dowdy by comparison and ceded ground. But with the rise of consumerisation there's a significant danger that if consumers fall out of love with a technology company, then enterprises will next. 

Microsoft needs to make consumers fall in love with it again (which it has failed to do so far with its smartphones and tablets) if only to make sure CIOs still feel comfortable having Microsoft in the datacentre. That probably means fewer products like Surface, which feel as if they were built for business and then dumbed down for consumers. Microsoft needs to feel comfortable about building (mostly phones and tablets) that are unashamedly for consumers, not workers.

5. Figuring out a way back in mobile

Mobile is vital for Microsoft in the same way consumer products are: it's where the market momentum is. Losing out to Apple and Google on smartphones would be the equivalent of giving up on the desktop of tomorrow and has huge knock-on implications for technologies from Office through to Azure.

Microsoft's acquisition of Nokia's devices business gives it a good shot at becoming a strong third place player in the mobile space, but doesn't fix everything. Nadella will now have to work out how to get more benefit out of Nokia as part of Microsoft, and to figure out how to push more sales of the high-end Windows phone models (much of the growth so far has been at the lower end). Just pandering to the business audience won't really work.

6. Deciding if Microsoft can really fight Apple and Google (and Amazon) all at the same time

Right now the strategy seems to be that Microsoft is an enterprise company, but that it can't be an enterprise company without at least paying lip service to the consumer market. It's one of four companies including Apple, Amazon and Google that are trying to create a total software and hardware ecosystem, which means fighting on a number of fronts - smartphones, tablets, cloud and more.

Can Microsoft really compete with all these rivals at once?  Can it really fight every battle, from consumer devices right through to search and cloud infrastructure, or are there some areas where it should concede defeat?

7. Decide what goes, and what stays

There have already been suggestions that Microsoft should sell off the Xbox and Bing units from those worried by the expense and uncertain about how these businesses fit with the broader strategy, and Microsoft certainly does have a lot of businesses that don't always work well together. So while an excellent case can be made for keeping both Xbox and Bing, in that they epitomise the developing devices and services strategy, it's entirely possible that some other elements of the portfolio need to be trimmed.

8. Build a reputation for making bold bets – and having fun

What Google has done so effectively is take a small piece of its enormous profit and use that to make some stupidly huge bets (Glass, self-driving cars, Chromebooks) that might just come off. These are also very public bets, which also helps to cement the perception of Google as a hotbed of innovation, rather than, say, just a very big ad company.

Microsoft needs to start making some big, fun, bets like this to shake off its reputation as a lumbering, bureaucratic ministry of tech. For example, Microsoft has a sizeable array of R&D labs around the world working on some impressive technologies – one challenge for Nadella as CEO is to develop research projects into products faster.

User interface is one area where Microsoft is behind but could shine – for example it's done some interesting work on gesture control and its Kinect technology could have plenty of uses beyond gaming. The Cortana digital assistant is another area of development that should be brought to market sooner rather than later; Apple's Siri and Google Now are developing a following and it's time for Microsoft to play here too.

9. Getting it right with that first, defining acquisition

New CEOs are often defined by a bold strategic acquisition, for better or worse; Marissa Meyer swooped on Tumblr while Leo Apotheker bought Autonomy. While Microsoft is (probably) not about to snap up Snapchat, Nadella should be aware of the importance of that first, symbolic acquisition – something bold and beautiful that redefines the company in one act, like buying Oculus Rift or Xiaomi. We can but dream...

10. How to run fast and tread carefully

While Steve Ballmer may be optimistic to say "Microsoft has all its best days ahead," the company is doing very well. At worst it's a solid company that makes a lot of money and at best it's one embarking on a shift from one wildly successful business model to another that might be even more lucrative. Microsoft needs focusing and reinvigorating, but it doesn't need major surgery; in fact, Microsoft is in pretty good shape, containing 16 different billion dollar-plus businesses.

This is not a turnaround situation, although an over-ambitious CEO who moves too fast and breaks too many things might just turn it into one.

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About

Steve Ranger is the UK editor of TechRepublic, and has been writing about the impact of technology on people, business and culture for more than a decade. Before joining TechRepublic he was the editor of silicon.com.

10 comments
Alienwilly
Alienwilly

Mr. Nadella,

  Give me what I want and I will throw money at you. Do you get it?

pradipsagdeo
pradipsagdeo

I read the article and the comments with considerable amusement.  It appears that there is no shortage of people who have better ideas and better knowledge than those of the CEO selection committee and the CEO they picked for the job.  None were part of the vetting and selection process as far as I can tell.  Mr. Nadella has proven capability and potential.  It will be highly desirable to wait for a year to see what he does before telling him what he needs to do. Thanks.

Mr. Fix
Mr. Fix

If I were to suggest a single gesture that would engender the trust and support of Microsoft's customer base, it would be to extend support for Windows XP. Quite arguably It remains to this day not only the most stable but also the most SUCCESSFUL software product that Microsoft has ever marketed. Clearly, no one at Microsoft anticipated such success or they would surely have marketed it from the beginning on a subscription basis - which could well have extended its profitability indefinitely, for all we know.

"Extend Windows XP support?!!! And FOR HOW LONG?" Mr. Nadella may well retort. To that, I would have to answer: "For as long as it may take to convince the world that you have a product that can MATCH Windows XP's record of success!" For all the stability of Windows 7 (which I do personally prefer over XP), the hype over Windows 8, and the fanciful expectations for a WIndows 9, fully 25% of Microsoft's business customer base doesn't even see that on the horizon for Microsoft and a truly savvy CEO would acknowledge and accommodate that reality - and develop a new and improved strategy for success than to simply "pull the plug" on it.

sangraal
sangraal

It should be a "second nature" to have ability to move from the Gates & Ballmer shadows, for a new CEO! The company had fallen short at key points they needed to follow through, and under their reign, they had not! 
Future of Windows:
The answer to this is "hidden" within its own history. This may never be understood, or realized, if Microsoft continues to be victim of global vulture-istic dismantling by those who want to reap rewards and expand bottom line blindly with no insight or intuitive vision or more importantly, being guided by "false visions" of the common typical modern techie climbing the corporate ladder. 
XP was the most stable operating system for the world as a whole that world has ever seen. 7's core stability is based on the trials and development XP had provided but since Windows 3.11 the power and popularity of Windows was that it put power in the users hands and provided a very relevant service in this regard. In fact this was the genesis of the platforms and frameworks that facilitated the world we sit in right now. If you develop an operating system that effectively turns the computer into a fancy DVD player copier fax machine that take pictures and plays music then handheld device will eat you for breakfast. The era of the "poweruser" may have been reorganized, but it is these folks that provide the development of everything that the consumers use!
I personally have faith in Windows® , and forever will use Windows 7 without support if they try and get cute with 9... Oh, and Server 2012, 2008, and 2003 all great OS's (exception of that old partition size limitation)

As for the rest of the bullet points here... My personal opinion is the it will never be to complicated to guess what the consumer will love or go for in the short run. And, as such they do not represent very urgent tasks to be done by CEO at a time we have seen the world's most successful software company rearrange their most successful solid solution into a consumers' toy with a toddler level functionality that failed miserably out of the "Gates".

sangraal
sangraal

It should be a "second nature" to have ability to move from the Gates & Ballmer shadows, for a new CEO! The company had fallen short at key points they needed to follow through, and under their reign, they had not! 
Future of Windows:
The answer to this is "hidden" within its own history. This may never be understood, or realized, if Microsoft continues to be victim of global vulture-istic dismantling by those who want to reap rewards and expand bottom line blindly with no insight or intuitive vision or more importantly, being guided by "false visions" of the common typical modern techie climbing the corporate ladder. 
XP was the most stable operating system for the world as a whole that world has ever seen. 7's core stability is based on the trials and development XP had provided but since Windows 3.11 the power and popularity of Windows was that it put power in the users hands and provided a very relevant service in this regard. In fact this was the genesis of the platforms and frameworks that facilitated the world we sit in right now. If you develop an operating system that effectively turns the computer into a fancy DVD player copier fax machine that take pictures and plays music then handheld device will eat you for breakfast. The era of the "poweruser" may have been reorganized, but it is these folks that provide the development of everything that the consumers use!
I personally have faith in Windows® , and forever will use Windows 7 without support if they try and get cute with 9... Oh, and Server 2012, 2008, and 2003 all great OS's (exception of that old partition size limitation)


alex
alex

The new CEO must remember that software development must be backwards compatible with previous software releases. This does not mean that there cannot be new features or parallel features. However the path of Windows and Office since XP have been convoluted and discredited. Most large organisations cannot mobilise much less fund the training and support needed to undertake this. The implementation time will be years. Withdrawal of support is fine but who wants to do the change without Microsoft providing the support measures for free or low cost to make the change-over? After all everything is stacked for Microsoft rather than its customers.

daboochmeister
daboochmeister

Did consumers ever "love" Microsoft?  My recollection of having lived through their rise to dominance is that consumers went from having no idea who they were to accepting them as a fait accompli on the desktop.  I don't remember any amorous phase in there.

wilback
wilback

Nothing was said about making Microsoft a place where the best, most creative people want to work. While Ballmer finally got rid of the stack system, it will take more than that. Getting top people to work for Yahoo! again has been one of Mayer's biggest problems; she's had to resort to buying tech companies to get the best talent. It won't be any easier for Microsoft, especially when it's much larger.

Mr. Fix
Mr. Fix

@pradipsagdeo

With all due respect for Mr. Nadella’s doubtless impeccable qualifications and your stated amusement over comments that have been posted here, it is truly tragic that our industry – and, yes, I will include myself in this – has come to regard the time-tested adage that “The customer is always right!” with total disdain. In our abject arrogance, we’ve followed a diametrically different philosophy, one more in line with an old industry pun that “the customer really doesn’t know what he wants until he sees what he gets.” Our delusion is that the customer will want whatever we deliver because we’re the ‘experts’ and our customer base is clueless, so everyone should just 'sing along with the bouncing ball.' Let’s be real, now! Time and again we’ve witnessed that market successes have borne no relationship whatsoever to our corporate prognostication that preceded it – and the unforeseen success of Windows XP (it’s been noted that Microsoft never even anticipated that it could become an industry standard) is by no means an isolated example of that! The clear message from all of this is that today’s consumer is much more in touch with his own wants and needs than industry leaders have been and, if you will excuse the suggestion, they really need to sit up and take notice!

bkfriesen
bkfriesen

@wilback   Check out #2 Redefining Microsoft's Personality "That matters because the corporate mythology helps attract staff with smart ideas, and customers who want a brand to believe in. Microsoft's new chief has to tell as different story about the company, one that isn't defined by Microsoft's antitrust clashes; something new and fresh."

Looks like he addressed that one.