Microsoft (MSFT) CEO Satya Nadella was just named the top tech leader according to Juniper Research, based on the firm’s assessment of “vision, innovation and personal capital.” It’s yet another feather in the cap for Satya Nadella, who’s been praised left and right since taking the helm of the stodgy tech giant.
Especially considering we live in a world where tech leaders are celebrities, the list raises an important question: How much do the personalities of the head honchos leading these huge tech companies actually matter?
The answer is far from simple, as there are different breeds of tech CEO (or C-suite) celebrities. As Juniper Research nods to, vision is one key aspect. An Elon Musk or a Steve Jobs, for instance, is a true thought leader at a time when that term is more common than hipsters in San Francisco.
But whether you’re on Wall Street or Main Street, vision in and of itself is not enough. Success means you also have to have business sense, and not all revolutionary ideas are good business models.
A perhaps unexpected case study to that end: the Drizzy keyboard. For folks not well-versed in the various keyboards that can be added to your smartphone, the Drizzy keyboard is an app that lets you select and text categorized Drake song lyrics as you would an emoji. (Cue all the real adults rolling their eyes and all the amateur adults downloading the app immediately or nodding along because they’ve had it for weeks.)
After a marathon texting exchange of nothing but gifs, Drake lyrics and emojis recently, my friend said, “Whoever made these apps must be hella rich,” because that’s how we talk in California.
But if you think about it, most keyboard apps are free downloads, without any kind of ads or upsell opportunity. So, while they might add value (or not) or change communication forever (or not), that hardly translates to anyone ever becoming hella rich or even a little rich.
A perhaps bit more mainstream example comes from the shift to open-source technology. As information-technology spending moves from a proprietary-focused model to an open-source one, vendors like Hortonworks (HDP) are trying their best to squeeze lemonade out of free, community-driven Hadoop lemons … and it’s anything but easy. Exhibit A: The most recent Hortonworks earnings report, which featured a GAAP operating loss of $40.5 million
Which brings us back to someone like Elon Musk. Fortune writer Barb Darrow points out that Elon Musk “has taken on such minor problems as energy-efficient cars as well as space travel at his other startup SpaceX” … but was ranked ninth according to Juniper Research. And that’s because, innovation and business prowess aren’t the same thing, and true tech leadership requires both.
While innovation has translated to a solid growth investment so far in case of Tesla (TSLA), every growth stock eventually must grow up itself. When that day comes for Tesla stock, Elon Musk will have to prove he can also take on the minor problem of maintaining a healthy balance sheet in order to ensure continued upside. Just ask Facebook (FB) creator and CEO Mark Zuckerberg, who had to grow up as his company did.
Of course, there’s the flipside to consider as well: Marissa Mayer, bless her heart and bless her impressive resume and pedigree, came to Yahoo (YHOO) with business experience ranging from Stanford to successful tech titan Google (GOOG, GOOGL). But that business prowess doesn’t cut it either, unless it comes alongside a radical vision for fighting the deterioration of the company’s core business (spoiler: the latter is still lacking).
Which bring us back to Satya Nadella. As the report argues, he is king of the tech celebrities because he’s a swing player; he has vision and foresight to know that Microsoft simply must hitch its wagon to the cloud mega-trend … but he also has a regard for how that vision ties to the bottom line. The Juniper Research report indeed applauded Satya Nadella’s implementation of “Windows-as-a-Service” model — a big shift from Microsoft’s traditional operating-system focus.
And Microsoft stock investors have been applauding as well, as MSFT shares have posted a solid 15% climb over the last year … an impressive run for a stock that also shells out a reliable and delightful 2.61% dividend.
But even that performance brings us back to the original question of whether investors are betting on Microsoft because of Nadella’s vision or because Nadella’s vision is actually paying off.
Given the fact that Microsoft is such an established tech name, the answer is probably somewhere in the middle. If investors want the big-time growth, they can snatch up a visionary play like Tesla. But Microsoft stock is unique in that it’s more established — offering both a solid track record and that steady monthly payout — but still has a hand in cutting-edge tech trend cookie jar.
Put another way, Microsoft offers the best of both worlds — just like its boss.
As of this writing, Alyssa Oursler was long FB.
