Inside Microsoft's Plan
To Bring In Outside Talent
Before Brian McAndrews agreed to take charge of a crucial piece of Microsoft Corp.'s online advertising business, he insisted on a key condition: that he be granted certain power over the engineering part of the operation.
The new job didn't have to include that authority, but Mr. McAndrews, new to the company, argued that to succeed in his mandate -- leading the charge against Google Inc. -- he needed it. And in Microsoft's engineering-driven culture, such a team could promise something else for Mr. McAndrews: longevity as a Microsoft executive.
That Microsoft granted his request illustrates a new approach Chief Executive Steve Ballmer is taking as he tries to expand the Redmond, Wash., company into new areas from online music to videogames to Internet advertising. Mr. Ballmer has found he must tap outsiders rather than rely so heavily on homegrown managers as in the past.
How Microsoft fares with Mr. McAndrews will be a test for Mr. Ballmer, who has tried over the years to make the company a more hospitable place for outside talent. Another test will be Don Mattrick, whom Microsoft hired this summer to head its videogame group after a long career as a top executive at game giant Electronic Arts Inc.
Mr. Ballmer has had some successes bringing in and keeping new executives, including Microsoft's current chief operating officer, Kevin Turner, plucked from Wal-Mart Stores Inc. two years ago, and finance head Chris Liddell, hired from International Paper Co. in April 2005.
Still, a combination of forces within Microsoft -- its engineers' exalted stature, its insular culture, its sheer size -- make integrating new executives a lingering problem. Often through Microsoft's history, decisive and aggressive outsiders have been worn down by the second-guessing of Microsoft veterans before stepping down to less prominent roles or leaving altogether.
Microsoft has high stakes in the success of Messrs. McAndrews and Mattrick in tackling their respective assignments. Mr. McAndrews must help reverse Microsoft's rising gap with Google in online advertising while helping the company catch up in markets like social networking. He joined the company through Microsoft's $6 billion acquisition of online-advertising specialist aQuantive Inc., where he was chief executive. Closed in August, the deal was the largest acquisition in Microsoft's 30-year history. That puts added pressure on Mr. Ballmer to make Mr. McAndrews's appointment stick. If Microsoft's talks with Facebook Inc. bear fruit and it takes a stake in that company, Mr. McAndrews's role will be even more important.
Like Mr. McAndrews, Mr. Mattrick takes over a business that is a crucial challenge for Microsoft. As senior vice president of Microsoft's entertainment and devices division, Mr. Mattrick oversees the range of Microsoft's expanding videogame business, including the Xbox 360 videogame console, an online-game service and development of videogames such as Microsoft's extremely popular Halo series. His critical task will be to expand each of those areas while meeting Microsoft's goal of turning the group profitable for the full fiscal year, which ends June 30.
Mr. Mattrick comes to Microsoft after playing a top role in the rise of Electronic Arts in the 1990s. The job brought him great riches and wide respect.
When the previous head of Microsoft's games business left for personal reasons earlier this year, Mr. Mattrick was already a paid consultant to Microsoft. So when he took the full-time job, he says, "I kind of hit the ground running from Day One."
Mr. Mattrick's boss, Robbie Bach, a Microsoft veteran of almost 20 years, says he is now building an "integration plan" for Mr. Mattrick that maps out ways to give the new executive feedback and provides mentors to the newcomer from outside the entertainment division. The goal, Mr. Bach says, is to help Mr. Mattrick quickly build ties outside his group to the rest of Microsoft.
Mr. Bach's entertainment and devices group is already something of a model for the rest of the company, with a reputation for hiring droves of outsiders from entertainment fields.
Mr. McAndrews joins Microsoft's Platforms and Services division -- the group that oversees Microsoft's Windows software and its online services -- as the group has struggled for leadership in the fast-changing Internet industry. That is one reason why Microsoft bought aQuantive. The 48-year-old Mr. McAndrews joined aQuantive in 2000 after nine years at ABC Inc., where he last served as an executive at ABC Sports. He guided aQuantive through an initial boom of online advertising and then through the bust that followed. He took the company public and expanded it, overseeing 13 acquisitions before helping orchestrate its purchase by Microsoft.
That is one reason Kevin Johnson, president of Microsoft's Platforms and Services division and Mr. McAndrews's new boss, says he is trying to be hands-off. "He's used to being CEO," Mr. Johnson says of Mr. McAndrews. "If you let him run his business and let him achieve the goals he wants to, we'll be fine."
Mr. McAndrews comes into a group that is known for clashes between the advertising and technical sides of Microsoft. He may able to avoid such disruptions thanks to his insistence that he have an engineering team. His job is to manage the relationships with ad agencies and the Web sites that run advertisements. By controlling an engineering team, he also oversees the technology for buying and selling online ads.
Mr. McAndrews says Microsoft wants him to continue building an ad business much as he did before. Still, he says he wants input in the form of technology and other resources from Microsoft that aQuantive didn't have on its own. They "don't want to mess with that formula," he says. "On the other hand, I want to mess with it some."
Write to Robert A. Guth at rob.guth@wsj.com
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