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May 13, 2008 5:22 PM

A conversation with Stephen Elop, new president of Microsoft Business Division

Posted by Benjamin J. Romano


ERIKA SCHULTZ / THE SEATTLE TIMES

Elop, the new president of the Microsoft Business Division, said one of his biggest surprises since joining the company is "the extent of innovation."

Now that Jeff Raikes' move to the Bill & Melinda Gates Foundation has been made public, the man replacing him as president of the $16.4 billion-a-year Microsoft Business Division is making the rounds.

Stephen Elop, 44, took the job in January. Here's a brief profile of Elop we ran at the time. On Tuesday, Elop sat down to talk about how he's settling in, impressions of Microsoft and the challenges facing his part of the company.

First, a bit of background: Elop came to Microsoft from Juniper Networks, the Sunnyvale, Calif., network-equipment maker, where he was chief operating officer. Prior to that, he held various roles at Macromedia, including head of worldwide sales (a title Raikes himself once held at Microsoft) before becoming CEO and orchestrating the company's acquisition by Adobe for $3.4 billion in 2005. He spent a year at Adobe before shifting to Juniper.

Elop is married with five children: A 16-year-old son, 12-year-old daughter, and 9-year-old triplet daughters. The family recently bought a house in Redmond. When he's not working or spending time with his family, Elop flies single-engine airplanes.

Here's an edited transcript of our conversation:

Q: As you take over the Business Division, do you have a first priority or list of top things you want to get done?

Elop: "The very first priority, the day I walked in the door, was I need to listen and I need to learn. It's very easy to walk in with preconceived notions, sometimes shaped by your own personal experiences, sometimes shaped by the press, the analysts and so forth. So you have to go in and say, OK, set aside all of those preconceived notions. ...

"At a certain point you do have to begin to shape the agenda. What's your agenda? What will you stand for with your team? That process has begun and it's something that will evolve over time. ... You don't want to make a bunch of hard and fast decisions early on because you don't know enough and chances are some of it's wrong."

Another top agenda item for Elop is ensuring that customers have a choice in how they consume and pay for the company's software. That fits with the broader "software plus services" strategy Microsoft has been touting for a couple of years. The Business Division, Elop said, has several examples of this, such as offering its Exchange and SharePoint server products as subscription-based, hosted services or as traditional licensed software that's hosted by the customer, on premises.

"One of the things I love is, I think you'd be hard pressed to point to any other company that has as much happening in real life in the area of software plus services, for information workers, as Microsoft does."

Another priority is to "continue to extend the business value advantage that we have" to address both customer demand and growing competition, he said. More on that in a moment.

Q: How do you approach an organization that has been led by some like Jeff Raikes, who is so identified with it and has been there for such a long time?

Elop: "I've spent a lot of time thinking about that. First of all, you can't be shy about respecting and leveraging what has come before. I'm a new guy. I don't have to reinvent everything. I don't have to do everything my way or differently. ...

"Right on Day 1, Jeff sat down as I was introduced formally to the team ... and said, 'Stephen's now in charge. He's making the decisions. It's his first day on the job. Chances are, the big decisions, he's still gonna check in with me.' And of course, that's very much the case and we've had a very planful transition."

Q: How big of a challenge do you see in online productivity applications from Google and others?

Elop: "They are attempting to take advantage of some consumer-led innovation, things they've done for someone at home or whatever, and they're trying to figure out how to get that into the business space. ... When I talked earlier about the business value that we provide to customers and that we will continue to provide, there's a few things that any provider has to do to be successful in that enterprise space, and Google's no exception. [He mentioned regulatory compliance, document retention and fidelity and security, among others.]

"We see their aspirations, but clearly they're not there yet. Now, will they continue to invest? Of course they will. Will they continue to try new and innovative things? Of course. But we have a substantial advantage."

Q: Do you think people within Microsoft have had their eyes open to the threat, as you've come in with fresh perspective?

Elop: "In my interview process, when I was contemplating joining, one of the things on my list was to test Microsoft's situational awareness. .... If a company can properly assess where they stand, strengths and weaknesses, then they can do something about it."

He asked Bill Gates and other executives some pointed questions. Gates listed positive points about the company's position and then rattled off mistakes the company had made, mistakes Gates himself had made and what needs to be done. "It was a full assessment to a very high standard of what I call intellectual integrity. Very in depth, calling it the way he saw it," Elop said, adding that that's been true of everyone he's worked with.

The bottom line on Google: "Full understanding, full assessment."

Q: What's your position on an online productivity suite from Microsoft -- an "Office as a Service" like the company has done with Exchange, CRM and SharePoint?

Elop: "We have no announcements today; however, we have said, and will continue to say that to the extent that our customers are looking for choice in terms of software plus services and the range of scenarios in which they want to take advantage of all of the utility that we provide in the broader Office suite, we'll respond to customers needs."

Q: What are some surprises and first impressions about Microsoft?

Elop: "One of the biggest surprises for me in joining Microsoft is the extent of innovation. You grow up in Silicon Valley, they tell you Microsoft's not so much an innovator, but you know what, it's mind-blowing. ...

"One of the things you lose sight of, when you're at Microsoft, is the latest and greatest [technology] comes out, and guess what, everyone in the company is using it three days later. So when I joined Microsoft, simple things, like hey, I'm going to [meet someone new] ... type in their name. I see the projects they're working on, the documents they've written, the proposals they've put forward. I see where they fit in in the organizational structure. I have incredible access to information. ...Instead of saying to my assistant, 'Who is this guy and why am I meeting him?' I've got full context ... and the quality of our conversation just went up by an order of magnitude."

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