News

Microsoft COO Kevin Turner Leaving for Citadel

• By Scott Bekker
• July 07, 2016

Kevin Turner, Microsoft's hard-charging and controversial COO whose folksy zingers at competitors were a highlight of the annual Microsoft Worldwide Partner Conference (WPC), is leaving Microsoft at the end of July to become CEO of Citadel Securities and vice chairman of Citadel LLC.

Turner has been Microsoft's chief operating officer since 2005, after a 20-year career with Walmart that spanned roles from cashier to chief information officer and, ultimately, president and CEO of the Sam's Club division.

In an open letter to Microsoft employees Thursday, Microsoft CEO Satya Nadella said he had learned a lot from Turner and wished him the best. "Kevin has made a tremendous impact at Microsoft over the past 11 years. He built the sales force into the strategic asset it is today with incredible talent while at the same time more than doubling our revenue and driving customer satisfaction scores to the highest in company history," Nadella said.

Turner was in the running for the CEO role that went to Nadella when former CEO Steve Ballmer stepped down in 2014. Despite some speculation that he would leave Microsoft if he was passed over, or that Nadella might nudge him out due to their contrasting leadership styles, Turner stayed on for two more years and retained what was effectively the No. 2 position at Microsoft. His turf included 51,000 of Microsoft's employees, which is about half the company by headcount.

Nadella will not directly replace Turner. Instead, he will divide the COO's authority and responsibility across five executives, effective immediately. According to Nadella's employee memo:

• Judson Althoff will lead the Worldwide Commercial Business, which will focus on the commercial segments, inclusive of EPG, Public Sector, SMS&P, DX and Services.
  
  
• Jean-Philippe Courtois will lead Global Sales, Marketing and Operations, which span all of Microsoft's 13 areas across our North America and international businesses as well as the global Marketing and Operations organization.
  
  
• Chris Capossela will lead the Worldwide Marketing and Consumer Business, which includes CCG, MSA and PSM, OEM, and Microsoft Retail Stores, in addition to his current worldwide marketing team.
  
  
• Kurt DelBene will now also lead IT and Operations, in addition to Corporate Strategy.
  
  
• Amy Hood will now also lead the current SMSG finance team and WWLP, in addition to the central finance team.

At Citadel, Turner joins a Chicago-based hedge fund giant known even among tech-heavy financial companies as a place for technology enthusiasts.

"Citadel is a global technology leader, recognized for its work to level the playing field for investors and make markets more fair, transparent and efficient. I look forward to leading this exemplary team as we grow this global business," Turner said in a statement. "I also want to express my sincere personal thanks to Satya Nadella for his leadership and mentorship, and to colleagues at Microsoft for their friendship, hard work and dedication."

In his own exit letter, Turner emphasized his role in helping drive Microsoft revenues from $37 billion to $93 billion over his 11 years with the company, a contribution appreciated by his bosses within Microsoft, from Bill Gates to Ballmer to Nadella.

However, Turner is also associated with a number of controversies that make his popularity mixed within the Microsoft ranks and within the partner community:

Microsoft Stores: With his retail background, Turner was the driving force behind Microsoft's aggressive effort to build out a large network of retail stores in malls across America and a few other countries. Critics argue the stores are a "me-too" effort to copy Apple's retail success, a muddying of Microsoft's mission and a direct challenge to some partners.

Scorecards: Turner is widely credited with championing the scorecarding movement that is now deeply embedded in Microsoft's culture. Metrics on the scorecards determine the bonuses of employees in the Microsoft field and therefore, by design, determine their behavior. While scorecarding has played a role in Microsoft's revenue success, partners have complained that it also has tended to make Microsoft employees less responsive to partner requests for help that don't map directly to a personal scorecard metric.

C-Sat: Related to scorecards is Customer Satisfaction scores, or C-Sat. Turner ramped up the emphasis on C-Sat both internally and for partners, who had to increase their emphasis on surveying their customers on behalf of Microsoft to determine how well the partners were doing for their joint customers. A good concept in theory, in practice, such surveys can lead to dysfunctional behavior.

Partner Margins: During Turner's tenure, Microsoft has steadily reduced the margins paid to LARs/LSPs, leading to deep dissatisfaction among those partners and driving them (intentionally, on Microsoft's part) into the business areas formerly dominated by straight-up systems integrators. Fast-moving and direction-changing decisions on cloud compensation in the channel have also buffeted potential cloud partners, who have wondered at times how serious Microsoft is about needing partners for the cloud. Given his position two corporate tiers above the Microsoft channel chief, Turner's views on such matters were always somewhat murky and open to sinister interpretation.

Talent Exodus: Turner's presence and take-no-prisoners style has often been cited as a factor in departures of mid-level executive talent at Microsoft -- sometimes directly but off-the-record, other times in speculation. For a time in the mid-2000s, the book The Wal-Mart Effect was circulated by mid-level executives within Microsoft as a way for insiders to understand what was happening to their company. That said, with the regular churn of a massive company in a dynamic industry filled with opportunities, it's difficult to pin down whether such departures represented a trend or just the normal course of business.

Competitive Throwback: In a period when Microsoft was becoming less dominant, and especially after Nadella took over and was steering the company in a more cooperative direction with competitors, Turner continued to bash the competition as if Microsoft was in its mid-'90s heyday. Despite the irony of many of Turner's lines, the partners in attendance always ate up the keynotes and left the conference energized by Turner's "can-do" attitude to go win some deals.