Is Microsoft About to Make a Huge Mistake?

When Steve Ballmer announced that he would be stepping down as Microsoft’s (NASDAQ:MSFT) chief executive officer, that surprise event triggered five long months of speculation about who would replace him. Finally, the software giant’s board has reportedly settled on its choice: enterprise and cloud chief Satya Nadella.

The only thing surprising about that selection is, well, nothing. Nadella was the safe choice. But that doesn’t mean he was the right choice.

If Microsoft’s convoluted culture has to change – and that was the premise behind the well-received “One Microsoft” restructuring led by Ballmer – then Nadella, a devout insider who has been with the company for 21 years, probably wasn’t the way to go.

And since my original choice – Ford (NYSE:F) CEO Alan Mulally – took himself out of the running some weeks ago, I thought former Skype CEO and current head of strategy, Tony Bates, was the best candidate for quite a few reasons.

To me, Bates had that perfect balance of vision, strategy, tech chops, and business acumen. By effortlessly integrating Skype into Microsoft’s culture without missing a beat, he seemed to be the ultimate combination of outsider and insider.

And Bates has all sorts of intangible qualities we often see in great CEOs. He possesses real charisma, a leadership presence, a way of genuinely connecting with people – but in a geeky sort of way that works in the high-tech world.

Granted, the London-born executive ran Skype for less than a year, but in a very short time he began to monetize the mostly-free service while continuing to grow the user base. And, after selling the company to Microsoft for $8.5 billion, he masterfully integrated the service into most of Microsoft’s key products, including Internet Explorer, Bing, Windows 8, Windows Phone, and Outlook.

And prior to Skype, Bates had a stellar 14-year career at Cisco (NASDAQ:CSCO), where he ultimately became senior vice president in charge of the network company’s enterprise, commercial, and small business divisions.

With all that going for him, the question remains, why didn’t Bates land the top job at Microsoft? It seems apparent that, instead of making a bold choice, a choice that would demonstrate their resolve to change the culture and reinvent the company, the board went with the safe choice, Nadella.

Now, don’t get me wrong. I have nothing against Nadella. He’s had quite a career at Microsoft, including the development of the Bing search engine and successfully leading the company and its enormous enterprise business into the cloud.

But in my experience, when a company as complex as Microsoft professes the need for cultural change, the need to reinvent itself, a transformational leader is needed.

And while Nadella has demonstrated that he can lead major platform transitions, I’m not sure if he has the wherewithal to unite the company behind a bold new vision and transform its culture, as I believe Bates could have.

While Microsoft is one of the greatest and most powerful technology companies on earth, it competes in so many markets that it’s up against nearly every other major technology company on the planet, including the likes of Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), Oracle (NASDAQ:ORCL), Samsung and Sony (NYSE:SNE).

Microsoft has become all things to all people. Most businesses and consumers in the civilized world are, in one way or another, Microsoft customers. And therein lies the rub.

To its credit, the company recognized the need to simplify its structure and unite its far-flung businesses and products behind a single brand and a single vision. And while its latest slogan, “one experience for everything in your life,” sounds enticing, it faces powerful headwinds, both internal and external, to making that a reality.

The one thing the company must do is find a way to eliminate the internal barriers that threaten to derail its transformation. At least then its products can compete on their merits. Only time will tell if Nadella wasn’t just the safe choice, but the right choice to lead that transformation.