Commentary

Penn Leaving Microsoft To Shake Up Marketing As Nadella Reorganizes Anew

Mark Penn — the former market research entrepreneur, Burson Marsteller CEO and advisor to Bill and Hillary Clinton — is leaving his EVP role at Microsoft by September to form an investment advisory company that will invest in advertising, research, data analytics, public relations, and digital marketing services. 

“I think now is the time to bring together new kinds of marketing companies into a more dynamic environment — one where entrepreneurs can really thrive,” Penn said in announcing the formation of The Stagwell Group LLC, which has closed on $250 million in investment capital and may borrow enough to make up to $750 million in acquisitions.

One of Penn’s investors is former Microsoft CEO Steve Ballmer, who said, “I believe in the ability to invest, grow and even shake up firms in the marketing industries,” Joel Connelly reports on SeattlePI.com. Ballmer last year purchased the Los Angeles Clippers and “can usually be seen dancing or screaming from the sidelines,” as a video on Bleacher Report attests, but the season is over.

“Every client is looking for how to combine good advertising creative with good data analytics,” Penn tells the Wall Street Journal’s Nathalie Tadena. “I don’t think they’re getting those answers from the companies they’ve got, even if they’ve got some of the biggest companies in the world.”

Microsoft CEO Satya Nadella also announced a sweeping reorganization yesterday in a three-pronged effort to “reinvent productivity and business processes,” “build the intelligent cloud platform” and “create more personal computing.” 

Among the changes, “Microsoft is merging both its hardware and operating systems divisions into a single group, overseen by Terry Myerson, former head of the Operating Systems division,” writes Owen Williams on The Next Web. “That means that the group responsible for developing hardware including the Surface tablet, Xbox and other products will also be building the Windows operating system.” 

Additionally, “Scott Guthrie will lead the Cloud and Enterprise team, focused on Microsoft’s server-side offerings, while Qi Lu will continue to oversee the Applications and Services Group that encompasses Office and related productivity products,” reportsPCWorld’s Mark Hachman. “But, chances are, it’s [Myerson’s new Windows and Devices Group] that you’ll be thinking of when you think of Microsoft.”

As a result of the changes, Stephen Elop — who was seen as a potential successor to Ballmer back in the day — has “agreed that now is the right time for him to retire,” according to an email Nadella sent to employees Wednesday morning. Kirill Tatarinov, who led the Dynamics customer engagement business, “is going to explore what’s next for him.” And Eric Rudder, who most recently has led the company’s advanced technology and education efforts, “has decided to try something new” after 25 years at the company.

Okay, so everything is hunky-dory and ready to rock, right? 

Well, “in fact, Microsoft has tried this kind of thing many times before,” David Goldman observes on CNN Money, bullet-pointing nine such attempts dating back only to 2002. 

Alex Wilhelm puts it thusly on TechCrunch (where he also posts a two-minute video explanation of what he thinks really went down): “It’s the, ahem, new new new new new new new new Microsoft, or something close.” 

Nadella’s reorg rips asunder some of the moves “to break down internal fiefs” made two years ago by Ballmer to boost product development. 

“By far, the most significant of the changes is the merging of devices, which includes Xbox, Surface tablets, smartphones and other hardware products, with the Windows organization under Mr. Myerson,” writes Nick Wingfield for the New York Times. “By grouping hardware and operating systems under one leader, the move undoes part of the reorganization by Mr. Ballmer.”

The Wall Street Journal’s Shira Ovide and Chelsey Dulaney point out that the departure of Elop, who previously was CEO of Nokia and came with its purchase in 2013, “along with one of his closest deputies, Jo Harlow, is the latest sign Microsoft is hitting the reset button on its struggling smartphone hardware business.”

Wired’s Issie Lapowsky writes that Elop’s “exit from the company seems to be as strong a sign as any that Microsoft is — at least in spirit — seceding from a crowded smartphone market that has become increasingly difficult to penetrate.” Stepping it up yet another notch, the hed over Vlad Savov’s piece for The Verge reads: “Microsoft puts the final nail in Nokia’s coffin.”

Those who take umbrage at Penn’s bluster about the current lack of solutions in the marketing industry might recall that he was also the brains behind the brains behind the “Scroogled” attack campaign of 2012. It was “a one-stop shop for all of Microsoft's vitriol against Google's policies, a catchphrase which stands for the way Google allegedly snoops on consumers and sells their private data,” Sean Hollister wrote on The Verge.

The campaign died and, as of this morning, Google is still standing. 

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