Microsoft COO Kevin Turner: The Man Who Would Not Be King5:01 PM EST Fri. Nov. 15, 2013
The annual Microsoft Global Exchange conference is an event where Microsoft executives can get instant feedback on how they're viewed by their employees. But the feedback isn't always positive, as Microsoft COO Kevin Turner has learned firsthand during his eight years at the company.
Early in Turner's Microsoft career, he took the stage for an MGX keynote dressed up as Indiana Jones, with a leather jacket and hat. Sources who witnessed the spectacle told CRN that a visibly uncomfortable Turner ripped off the costume 30 seconds in, and proceeded to give a speech that was stiff and uninspiring.
Last year at MGX, Turner tried a different approach by coming out in full Steve Ballmer mode, pacing back and forth on stage, shouting and gesticulating, all in an attempt to fire up employees. But Turner's high-energy antics were met with stony silence from the crowd of some 15,000 employees, sources told CRN.
Despite his MGX travails, Turner is well loved by Ballmer -- who often refers to him as "my guy" -- and for years has been seen as his likely successor as Microsoft CEO. But that no longer seems to be the case. Turner lost power in Microsoft's recent corporate reorganization: He previously had sole oversight of Microsoft's marketing and OEM division prior to the reshuffle but now shares those duties with other executives.
Despite Turner's relative success in a number of areas at Microsoft, his inability to win over large audiences, both inside and outside Microsoft, is one of the reasons he is now a long shot to replace the departing Ballmer, according to interviews with more than a dozen former Microsoft executives and high-level sources close to the software giant.
Nearly all of the people CRN spoke with for this story didn't want to be named. But the consensus that emerged from these talks is that as Microsoft searches for a new leader to carry out its devices and services strategy, Turner is unlikely to get the job.
"The sense I get is that Microsoft wants a fresh point of view and would prefer to look outside," one high-level source close to Microsoft told CRN after Ballmer's departure was announced. "I heard that there were 'two or three internal possibilities', but that Kevin Turner was not on the list."
Microsoft's top leadership "wants 'a software guy or gal' who can gain the respect of the engineering teams," the source told CRN. "They really do not want to accelerate the loss of talent there."
Reports surfaced earlier this month that Microsoft has a shortlist of potential Ballmer replacements that includes external candidates like Ford CEO Alan Mulally and Nokia (NYSE:NOK) CEO Stephen Elop, as well as three internal candidates.
Microsoft declined to make Turner available for an interview with CRN despite repeated requests that began after the company's Worldwide Partner Conference in mid-July.
NEXT: The Walmart Influence
THE WALMART INFLUENCE
Turner is known as an intensely appraising executive who possesses more comprehensive knowledge about Microsoft's business units than anyone except Ballmer. He gets a lot of the credit for Microsoft making the transition to a global corporation with a portfolio of massive, complex businesses.
Microsoft insiders say Turner's obsessive focus on metrics has led to big gains in both top- and bottom-line performance under his tenure. Microsoft's net income has soared 78 percent from $12.25 billion when Turner joined the company in 2005 to $21.86 billion now. During the same period, Microsoft's sales nearly doubled from $39.8 billion to $77.8 billion. At the same time Turner was driving the improved financial performance, Microsoft's headcount soared 63 percent to 99,130 employees, up from 61,000 employees when Turner joined.
Turner is all about numbers, and discipline, and metrics, and constant evaluation. At Walmart, this approach yielded results, and this helped him rapidly climb the corporate ladder. After starting out as a cashier, Turner became Walmart's youngest-ever corporate officer at age 29, and worked his way up to CIO a few years later. After that, he was CEO of Sam's Club, a $37 billion Walmart subsidiary.
During his time as CIO, Turner became acquainted with the idea of "using IT as a competitive weapon," and he has applied this to Microsoft's operations, one source who knew him at the time told CRN.
Microsoft had a spotty track record with internal infrastructure projects when Turner arrived. Despite having multiple ledger systems, the company had a tough time keeping track of assets. Before Microsoft got into the CRM market, it had a botched Siebel CRM project that ended up costing about $30 million to fix over several years, the source said.
After joining, Turner upgraded Microsoft's internal systems and standardized its procurement, and the benefits were immediately felt, the source said.
"Microsoft had never had a very run-the-business-oriented COO before Turner arrived. Microsoft was a fat, lazy bureaucracy because it grew too fast, and he helped clean that up," the source said. "They needed someone to come in with operational discipline and give them a business operating platform for a corporation their size, and Kevin did that."
However, former Microsoft employees, and some of Microsoft's top partners, told CRN that Turner's obsessive focus on metrics and cost cutting isn't helping the company keep pace with its rivals in the marketplace.
NEXT: The "Scorecard" System
One example is the "scorecard" system Turner brought with him from Walmart when he joined Microsoft. In it, sales managers are measured across 30 metrics, including profit and revenue growth and building market share for particular products. A "green" score indicates good results, "yellow" shows there's room for improvement, and "red" is a sign that the manager isn't cutting it.
While Turner's scorecard system helped make Microsoft's sales teams more efficient at first, it's no longer having the same effect. If Turner is named to succeed Ballmer, the prospect of an even bigger role for the scorecard would send many Microsoft employees heading for the exits, a well-placed source told CRN.
"You would have an exodus of salespeople if Kevin became CEO. He has his hand in everything, and if you don't get high marks across the board on his scorecards, you are not doing your job," said the source.
The way Turner sees it, metrics are a good way of determining whether employees are hitting on all cylinders. If they're not, Turner isn't afraid to replace them with ones that can do better.
"Don't ride a horse too long if it's not going to get you to where you need to get to. Change it out," was how Turner described his policy in a conference with small-business owners in 2006, as reported by the Seattle Post-Intelligencer.
Turner has a similar view toward Microsoft sales reps that aren't working well with the channel. One partner told CRN he's seen account executives that aren't partner-friendly get swapped out and replaced. Turner's team is also quick to act when they get wind of channel conflict in the field, the source said.
Turner's scorecard system is also used to rank the performance of Microsoft's Gold partners, so the channel has firsthand experience being held to Turner's high standards. "If you're not green on your scorecard, it's not good," one Microsoft partner told CRN. "Microsoft tracks us on how many deployments are out there and whether we've hit our product goal."
The cost-cutting mentality Turner brought to Microsoft is now putting pressure on employees and the channel, one partner told CRN.
"The biggest negative is that Turner has cut 'T and E' to the bone and forced all the Microsoft field reps to do things remotely instead of engaging clients face to face," the source said. There also has been a notable lack of launch activity around Microsoft's 2013 wave of products. "A lot of customers still think that Office 2010 is the most current version," said the source.
NEXT: Turner And The Channel
TURNER AND THE CHANNEL
Turner has the biggest scope of duties at Microsoft of any executive besides Ballmer. He oversees roughly half of the Redmond, Wash., company, including worldwide sales, services, support and channel partners, operations and software licensing. He also oversees Microsoft's retail stores. Turner has been Microsoft's highest-paid executive for the past three years, and in 2012 earned a total compensation packaged valued at $10.7 million.
Turner oversees Microsoft's vast partner channel, and every year, he takes the stage at Microsoft's Worldwide Partner Conference to get partners fired up about the company's latest products. Turner has been the highest-rated WPC speaker by partner attendees, besting even Ballmer, for the past five years, according to a Microsoft spokesperson.
Microsoft spokespeople claim Turner spends much of his time meeting with partners around the world, listening to their concerns and helping to solve business issues. Yet many partners believe Turner is not as "all in" with the channel as he could be. Some see him as the mastermind behind Microsoft's initial retail-only sales strategy for Surface tablets and the limited rollout through large account resellers only.
"It's critical that Microsoft hire a CEO that is channel-friendly and not someone like Kevin Turner, who is not a fan of the channel," said David Powell, vice president of TekLinks, a Birmingham, Ala.-based Microsoft partner. "The question is which side wins: the partner-centric model or the hard-nosed vendor approach of Kevin Turner who grew up at Walmart?"
"Kevin Turner speaks his mind and gives you an exact perspective of what's going on. That said, I've never thought of him as a channel guy. He gets partners, but is a little less interested in the channel than other Microsoft execs," Dave Sobel, director of partner community at Level Platforms, Ottawa, Ontario, told CRN.
The knock on Turner when he joined Microsoft was that he didn't have experience with enterprise customers, but he was a big customer of Microsoft's, not to mention a hard-nosed negotiator. He once refused to pay an $8 million invoice from Microsoft until Ballmer would give him better terms, according to a report from Bloomberg.
In 2008, when Procter & Gamble Co. -- a big Microsoft Office customer -- was mulling a switch to Google Docs, Turner hopped on a flight to the company's Cincinnati headquarters and talked CIO Filippo Passerini into staying with Microsoft, even getting him to extend his existing Office contract, according to Bloomberg.
But Turner's take-it-or-leave-it style has rubbed some enterprise customers the wrong way, former Microsoft employees told CRN. These firms generally don't like being told what to do and when to do it, and they're used to negotiating every aspect of deals. Turner's approach hasn't always played well in enterprise accounts, a source familiar with the matter told CRN.
"When managing a big client, you're always looking for gives and gets in the relationship. But Turner would walk into clients and say, 'No negotiation, take it or leave it.' This had consequences both for Microsoft's account managers and for the customer relationships," the source told CRN.
A few years ago, sources told CRN, Turner started questioning whether Microsoft was getting enough from its investment in enterprise partners. Although enterprise partners were profitable, and enterprise clients were lining up to support each new Microsoft platform release, Turner saw a chance "to get even more juice from those lemons," as one source described it to CRN.
Turner wanted more cooperation and explicit loyalty from enterprise partners, and he wanted partners to commit to the sort of hard-dollar business plans that midmarket partners already were committing to, the source said.
Simon Witts, an 18-year Microsoft veteran who was leading the enterprise partner group until he abruptly resigned in August 2011, was good at balancing the inevitable tensions that arise in enterprise channel relations, sources told CRN.
But Turner didn't see enough value in the program, and that led to friction with Witts. "Witts did a great job of building an effective partner program that the partners liked to participate in. He wanted to continue in that direction, but Turner would not commit the funding," said the source.
Eventually, Witts realized he wasn't going to get the support from Turner or Ballmer and decided to leave, sources said. Witts couldn't be reached for comment.
Microsoft's enterprise business has done well under Turner's watch, so it's not as if his influence has been a hindrance to the unit's performance. "Our published financial results say our enterprise business has never been stronger under Kevin's leadership," the Microsoft spokesperson said in an email. "Enterprise is truly the strength of our company, and our partners are a big reason for this success."
The spokesperson told CRN that Turner "meets with thousands of partners each year" for one-on-one meetings, roundtables and sales calls. He has visited partners in more than 25 countries and most major cities in the past 12 months, the spokesperson claimed.
"Kevin is personally involved in deals with partners and customers every week," the spokesperson said, adding that Microsoft is unable to talk about the specifics of these engagements because of confidentiality agreements.
Chief among the questions CRN wanted to ask Turner is how he and Microsoft believe channel partnerships should work in the scope of the company's ongoing transition to a devices and services focus. But this wasn't possible since Microsoft declined to make Turner available -- even to answer questions via email.
NEXT: Microsoft's Retail Missteps
MICROSOFT'S RETAIL MISSTEPS
When Turner was brought in, many questioned how his consumer retail background would play in an enterprise software company. Now, with Microsoft apparently poised to make more of its own hardware, and going even harder after consumers, Turner's background could be advantageous.
At WPC, Turner said Microsoft is planning to have 101 retail stores open by next July, including its first store in China. Microsoft already has 76 retail stores in the U.S, Canada and Puerto Rico, and Turner described these at WPC as "very, very strategic" to Microsoft.
In 2009, Turner vowed that Microsoft would open retail stores in close proximity to Apple stores, as a way to literally bring the fight to Apple's doorstep. Level Platforms' Sobel says Microsoft is still playing the role of feisty underdog.
"Microsoft has always been an organization that's at its best when it's being competed with. They love having their backs against the wall and feeling like an underdog. And in retail, they are the underdog to Apple," Sobel said.
Sid Parakh, senior vice president of equity research at McAdams Wright Ragen, a Seattle-based investment firm that covers Microsoft, sees this as a solid strategy. "If Microsoft is going to build their own devices, just from a distribution standpoint, and highlight the value added in a retail environment they control, it's probably a good idea to showcase products directly to the consumer," Parakh told CRN.
On the other hand, Microsoft's botched retail-only strategy for Surface led to it taking a $900 million write-down in July for Surface RT. While there's no indication that Turner is on the hot seat for sluggish Surface sales, that could change if the rumored second wave of devices sells no better than the first.
There's no denying that Turner has helped Microsoft and that the experience he's applied from his days at Walmart has turned Microsoft into a leaner, meaner business. But it's just as clear that Turner's style has changed Microsoft culture, and in some cases, trampled over some of the things that Microsoft did well but were not easy to standardize, sources said.
"Microsoft did not have a command and control culture -- they had a 'do what Bill says' culture, and you could interpret that in various ways," said one source. "But if you did the right things and served the interests of the company, you were fine. With Turner, that changed to a 'get with the program' culture and a 'do it my way' culture."