News

Analysis: With Turner Gone, It's Nadella's Microsoft Now

Microsoft's fiery COO moves on, leaving the company firmly in Nadella's grip.

• By Scott Bekker
• August 30, 2016

Ever since Satya Nadella became CEO at Microsoft in 2014, there's been a Yin and Yang element at work in the C-Suite at Redmond.

Nadella is widely respected throughout the industry for his technological vision, especially around cloud, his ability to work with technology competitors on win-win scenarios and his ability to inspire the troops within Microsoft to do their best engineering work.

On the other side was Kevin Turner, the hard-charging COO who had also been on several short lists of potential replacements for former CEO Steve Ballmer. Leading sales, channel and other operational areas with about 51,000 employees reporting to him, Turner was the clear No. 2 executive at Microsoft. In the role since 2005, he put his stamp on the company culture with his emphasis on winning deals, managing costs, scorecards, customer satisfaction surveys and talking trash about the competition.

A Microsoft-watcher parlor game after Nadella's promotion was speculating about how long Turner would last, or stick around, at Microsoft in the Nadella era. Turner made a show of team play in public. During Nadella's first public appearance in a canned, town-hall setting, Turner sat in the front row and the camera caught him nodding vigorously in agreement with Nadella's points. He's seemed a loyal soldier in the ensuing two years, even toning down the competitive trash talk in his annual Microsoft Worldwide Partner Conference (WPC) keynote.

But Turner finally moved on at the end of July to become CEO of Citadel Securities and vice chairman of Citadel LLC. 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.

In public, the two executives made a point of showing their mutual respect as the departure was announced. "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," Turner said.

Nadella also told employees in an open letter that he had learned a lot from Turner. "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 wrote.

Internally, Nadella will not invest all of Turner's authority in one executive. Instead, he divided the COO's responsibilities across five executives. 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 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.

(In an unrelated executive move a few weeks before the Turner announcement, Microsoft promoted its Worldwide Partner Group's No. 2 executive, Gavriella Schuster, from interim channel chief to full-fledged channel chief, formally corporate vice president of the WPG. Schuster replaces Phil Sorgen, who had moved over to lead the U.S. Enterprise and Partner Group a few months earlier.)

The fact that Nadella won't be setting up a strong No. 2 executive to replace Turner is not the only apparent sign of his growing control at Microsoft. There's something else we haven't heard about in a long time. When Nadella first took over, much ado was made about Bill Gates planning to spend 30 percent of his time working at Microsoft. The subtext was that markets and the industry weren't sold yet on Nadella for such a big job.

Gates may still be putting in the hours, but nobody talks about it anymore. With tough moves around layoffs and finalizing the Nokia writeoff under his belt, a huge LinkedIn acquisition in the works and an aggressive and innovative product release cycle, Nadella has silenced the questions about his ability to handle one of the toughest jobs in tech.