New Microsoft CEO Nadella Shaking Up Management

Among his early moves is putting a former high-ranking politico in charge of strategy.

It took a long time for Microsoft to replace former CEO Steve Ballmer. But his replacement is wasting no time in putting his own stamp on the company.

Microsoft's new CEO Satya Nadella this week will continue to reshape his leadership team with the departure of two senior leaders and the naming of Mark Penn as chief strategy officer. While it remains to be seen how much influence Penn will have, the move potentially give the controversial one-time aide to Bill and Hillary Clinton and current Microsoft marketing executive significant sway over the future direction of the company.

Departing are Marketing Chief Tami Reller and Tony Bates, executive vice president of business development and the onetime CEO of Skype, which Microsoft acquired in 2012. The reshuffling of Nadella's leadership team started last week when Julie Larson Green was named chief experience officer of the "My Life and Work." She will be reporting to Qi Lu, executive vice president of Applications and Services Engineering. This change also makes room for former Nokia CEO Stephen Elop to head the Devices and Studios Group upon the completion of Microsoft's $7.2 billion acquisition of the company's handset unit.

News of the shakeup in Microsoft's executive suite was first reported by Re/code's Kara Swisher, citing unnamed sources close to the company. According to the report, Eric Rudder will temporarily take over Bates' responsibilities and Chris Capossela will take over Reller's role as executive VP for marketing. Reller will apparently stay for a transition period while Bates is leaving immediately.

Nadella reportedly informed insiders of the changes Friday and the company is expected to announce the new executive lineup tomorrow. Swisher speculated the move will give Penn a good look at new product areas and areas where Microsoft can invest in new technologies. However the move takes out of Penn's hands Microsoft's huge advertising budget and shifts it to Capossela.

Penn was widely responsible for Microsoft's overall messaging, which as The New York Times' Nick Wingfield noted was controversial, notably the "Scroogled" campaign which raised questions about Google's approach to privacy. While some believed it was lowbrow advertising, Penn loyalists claimed to have data showing it was effective, Wingfield reported.

As the longtime strategist to the campaigns of both Clintons, Penn is no stranger to controversy. He had to step aside as Hillary Clinton's chief strategist during her 2008 presidential campaign after he lobbied a free-trade pact with Columbia on behalf of Burson-Marsteller, which then-Senator Clinton opposed. Penn was also CEO of the public relations firm at the time. It appears unlikely Clinton will bring him back if she runs for president in 2016, and it would certainly be an issue if Nadella is tapping him for a strategic role.

But how much influence Penn will have is uncertain and Nadella will certainly be adding and subtracting additional people from his inner circle. One looming question is the future of Chief Operating Officer Kevin Turner, who has made no secret of his desire to be a CEO.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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