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Who Should Replace Steve Ballmer?

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Back in 2007 I had a Steve Ballmer moment.   I was attending a conference where the CEO of Microsoft was keynoting.  I had arrived at the hotel late and, after checking in, found myself alone in the elevator with him.  Together we rode up 47 stories.  I raised my eyebrows at him.  He raised his back at me.  We both looked up at the floor display above the door.

This was the CEO of Microsoft.  And I was all alone with him for a precious 90 seconds!  I’m a fan of Microsoft, and (of course) a customer.  Not only that, but my company is a Microsoft partner.  Here was my chance to say something brilliant to this business icon, this famous leader, this...friend of Bill.  And so what, in the end, did I say?  Uh...nothing.  C’mon, what would you have said?  A complaint about the Office ribbon?  A warning about Windows CE?  A joke about Microsoft Bob?  Nothing seemed appropriate.  So I kept my mouth shut.  Because enough has already been said to Steve Ballmer about his time at Microsoft.  I like and respect Steve Ballmer.  But I’d have rather been in the elevator with his successor.

Microsoft is no longer a cool company.  It used to be that working for them meant that you were part of something young and fresh and different.  That’s not the case anymore.  But that’s OK.

Most of our biggest companies aren’t considered to be cool anymore either.  Proctor and Gamble.  IntelGeneral MotorsIBM.  Exxon.  No one would call these companies cool.  Even tech giants like Apple and Google are considered less cool than they were when they were first started.  Now they’re being investigated for monopolistic practices and potential human rights abuses overseas.  Welcome to the establishment guys.  You’re not cool.  And that’s OK.

And someday Steve Ballmer will no longer be CEO of Microsoft.  And that’s OK too.

Ballmer has been at the helm through some of Microsoft’s most challenging times.  In the past 12 years since he became CEO the company has lost precious market share of its browser and Office products and watched companies like Apple and Google eat into its Windows monopoly.  Microsoft hasn’t come up with an answer to the iPhone or search and is desperately trying to keep its operating system relevant as the use of Android and iOS explode.  Since 2002 the company’s market cap, which in the end is the true measure of any CEO, has fallen from about $326 billion to about $274 billion.

I’m not going to get into a discussion about Steve Ballmer.  He has many critics and just as many supporters.  Sure, I’ve been disappointed with Microsoft’s performance under his leadership.  But then again an argument could be made that he navigated the company successfully and profitably through some incredible changes.   Given all that’s happened in the past decade the outcome could’ve been a lot worse.  Steve Ballmer turns 56 next week.  That’s young.  He may, as he’s publicly said, continue on as Microsoft’s CEO until 2018.  Or he may like some rumors claim, step down after the release of Windows 8.

What concerns me most, as a Microsoft fan, customer and (most importantly) a partner is who will replace Steve Ballmer.  What kind of CEO would I like to see leading the world’s biggest software company?  What is the right kind of leader for a company of Microsoft’s size and age?  Who would most benefit my technology company and my customers?

For starters, he/she should not be someone young.  Our founding fathers had sound reasons for requiring that a President be no less than 35 years of age - this at a time when the average lifespan was 45.   Startups are run by young people who have energy, ideas and passion.  Large corporations that are responsible for thousands of employees, shareholders, customers, vendors and partners are also run by people with energy, ideas and passion...plus a lot of experience.  I would be very concerned if Microsoft’s board felt like taking a trip back to the ‘80’s and attempted to regain the company’s coolness by installing someone that would be more appealing to the youth market as its new leader.   Of course there are some notable exceptions – like Steve Jobs or Larry Page.  But the average age of a CEO running a large public company continues to hover around 54 years.  There’s a reason for that.  Experience is critical.

Microsoft’s next CEO needs to come from a technical background.  I never bought into the theory that a good CEO can run any company just like a good salesman can sell any product.  And sure there have been successful non-technical leaders (take Lou Gerstner at IBM) who came on board at a technology company and achieved great things.  But for every one Lou Gerstner there’s ten John Sculleys.  For many years I was the “technical” guy in my company – installing, implementing, training and customizing the products we sell.  Now I hire and manage people to do that.  But I would not be able to adequately supervise them or talk face to face with my customers if I didn’t have this technical history to back up my claims.

But that said, I’d prefer that that he/she have more years in sales than in the sandbox and that at least a good part of their careers were spent in a different industry altogether.  This will always be debated.  Lee Iacocca and Jack Welch are great examples of successful CEOs who spent their entire careers in their industry (or companies) before becoming CEO.  But a 2009 study found that “externally hired CEOs at companies with over $1 billion in revenue brought in a median three-year revenue growth of 99% while their internally promoted counterparts achieved only 35% growth.”  I believe this.  James Skinner, CEO of McDonalds, spent ten years with the Navy.  Carlos Brito, CEO of AmBev (who owns Annheuser-Busch), worked at Shell Oil and Daimler Benz.  Alan Mulally spent most of his career at Boeing before becoming CEO of Ford Motor. Microsoft needs a fresh perspective.  Anyone who spent their career in the technology industry will bring a truckload of baggage about the company to their job.  And this is exactly what Microsoft cannot afford.  No one’s been living in a vacuum since 1980.  We all get what Microsoft does.  A smart CEO from a different industry can learn the software business and hopefully apply his/her success from their industry to the new job.

And I would want the new CEO to be from a B2B and not a B2C background.  Microsoft’s strength is its business customer base.  I know this because I sell into this base.  And I admit that I’m biased here.  The company’s core products (Windows, Office, SQL Server) are sold to its business customers.  I cringe every time I hear the company investing its resources in consumer products like Bing, Zune, Windows CE or Xbox.  I’m not saying that there can’t be success here (Xbox does have a 20% share of the gaming market). I just prefer that Microsoft devote its energies to its business customers and cede the consumer market.  There’s more long term benefit here for the company and...yes...for my company too.

As a channel partner, I need a CEO who is extremely channel friendly too.  This is not just selfishly motivated.  Microsoft’s biggest advantage over competitors like Apple and Google is its channel.  Microsoft works with 1.3 million partner companies like mine and achieves 95% of their revenue through this channel.  We not only sell and support their products, but we are the company’s diehard evangelists as well.  Our livelihoods are dependant on Microsoft’s success.   There’s a great deal of unexploited potential in Microsoft’s channel.  Over the years I have had the misfortune of selling products from companies that under-appreciate us.  Even today some of my “partners” compete with me.  Microsoft, like any channel driven company, has its challenges.  But a new CEO must arrive with a full commitment to, and a full appreciation of its partner channel.  Anything otherwise would give me great cause for concern.

I’ve thought a lot about those 90 seconds I had with Steve Ballmer in that hotel elevator.  And I still don’t think I’d have much to say to him (OK...maybe a quick word about the Office ribbon).  But some day he will leave Microsoft.  And as much as I respect him I admit I’m looking forward to a fresh face in his office.

Besides Forbes, Gene Marks writes weekly for The New York Times and The Huffington Post.