Mulally is a bit of a shock to some people because has no connection to high-tech. Prior to running Ford, he was CEO of Boeing’s (BA) commercial airplanes division. He started at Boeing when he graduated college, and spent 37 years there.
Despite Mulally’s lack of expertise in the tech industry, he would be a good fit for Microsoft.
The Wall Street Journal called Mulally, “one of the most highly respected CEOs in any industry,” and Barclay’s (BCS) analyst Brian Johnson told the Journal, “There is no doubt that Alan has fundamentally transformed Ford both in simplifying its brand portfolio and developing a system that coherently exploits scale while generating interesting, exciting product.”
Ford, under Mulally, was the only American car company that didn’t need a bailout. Mulally recapitalized the company through private markets, and got it back on its feet.
In 2009, Bloomberg Businessweek wrote of Mulally’s first two and a half years running the company, “Under Mulally, decision-making is more transparent, once-fractious divisions are working together, and cars of better quality are moving faster from design studio to showroom … Ford’s far-flung fiefdoms are starting to collaborate, a once wasteful and balkanized vehicle development system is beginning to cohere.”
Exactly what Microsoft needs
That sounds like exactly what Microsoft needs. Investors may agree. After Mulally’s name was floated the stock was up 1.5% on a day when the broader markets fell.
For years, Microsoft was known for brutal internal politics. Its groups worked in silos, and rarely collaborated. Ballmer just reorganized the company to kill those silos, and get the company working together. When Ballmer put together his reorganization plan, he consulted with Mulally.
More than a reorganization, Microsoft needs great products.
In 2007, Apple (AAPL) changed everything when it introduced the iPhone. Ballmer basically laughed at the iPhone when it was released. That was a huge mistake.
The iPhone sparked a revolution that resulted in Google (GOOG) dominating the smartphone market and tablet computing eroding the personal computer market.
In 2009, Microsoft controlled ~70% of all Internet-connected computing devices. Today, it’s down to 24%. As Android, and Apple’s iOS (the software powering iPhones and iPads) take over more Internet connected devices, Microsoft gets less and less relevant.
Microsoft’s Windows operating income was down 55% thanks largely to the rise of Apple’s iPad, which is decimating the personal computer market.
Would Mulally, a 68-year-old non-tech executive, have done things differently? We don’t know.
A fresh set of eyes
At Ford, he hasn’t rolled out mind melting cars. The Ford Focus is an excellent automobile, but it’s not exactly the iPhone of cars. Ford’s market share in North America has stabilized under Mulally, but it’s about even with where it was when he came in, according to data on a Bloomberg terminal.
Making comparisons between the auto industry and the tech industry on a product basis are tough, and imperfect.
Importantly for Microsoft though, the damage is done with the iPhone. There’s not much to be gained by looking backwards.
Microsoft has a decent plan on how it’s going to rebound. It has Windows Phone, Windows 8, and the Surface tablet. All of those products are still rough around the edges, but they’re pointed in the right direction.
Mulally, with a fresh set of eyes, could help focus Microsoft’s strategy and get the company back on top of the tech world.