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A Glimpse Into the Mind of Microsoft's Controversial New Strategy Chief

Mark Penn in 2009

Photograph by Nelson Ching/Bloomberg News

Mark Penn in 2009

Big news from the tech world this morning, via Bloomberg News reporter Dina Bass:

Microsoft’s (MSFT) newly appointed Chief Executive Officer Satya Nadella, in an effort to reignite growth, is shuffling management and putting former political operative Mark Penn in the new role of chief strategy officer, according to people with knowledge of the matter.”

To denizens of Washington and political junkies everywhere, this is a mind-blowing development, because Penn is famous—infamous, really—for having been Hillary Clinton’s chief strategist during the disastrous 2008 primary campaign she was overwhelmingly favored to win but ended up losing to Barack Obama. And Clinton didn’t just lose. Her campaign exploded in a giant fireball of acrimony and internecine warfare for which most Clinton loyalists blamed Penn. You can read all about it in this 2008 piece I wrote based on dozens of internal campaign strategy memos and e-mails leaked to me by bitter Clinton partisans to stab each other in the back.

Last week, as anticipation built about Nadella’s plans for Microsoft, this Kara Swisher piece in Recode made the rounds in Washington because the company culture it described—and especially the internal views of Penn—so uncannily echo the complaints about Penn from Hillaryland. Swisher reports that Penn is “someone who has a reputation for divisiveness that has become problematic to some.” One executive told her, “In a very political place, he stands out as the most political creature here,” adding, “He is very much a lightning rod.”

Let’s be fair: Corporate intrigue, backstabbing, and jockeying for position are hardly unique to Microsoft and are probably typical of any large, struggling company, just as they are of any large, struggling political campaign. Penn alone can’t be held responsible. Furthermore, a cutthroat corporate culture doesn’t automatically inhibit a company from succeeding.

But there’s something else in the Swisher piece that top Clinton strategists would seize on, even though its importance might not register with outsiders—something that could have a profound effect on Microsoft’s fortunes, just as many Clinton vets believe it did on Hillary’s fortunes: the fact that Penn not only has been devising the company’s advertising strategy but has also been responsible for measuring how well it is working. Swisher again:

“One thing that has been welcomed at Microsoft is Penn’s relentless focus on using data to determine what works, which is much lauded within, although some think he also manipulates it to his advantage.

“Along with whether data should be the key determinant of an ad, there is, in fact, something unusual in that Penn is responsible for measuring the effectiveness of an ad he created. (Hey everyone: I give myself an A+++!)

“‘There was not a real rigor to testing how advertising went over with consumers before, and Mark is very good at that,’ said another exec. ‘That said, he also is the one to tell us how [well] he is performing.’”

Two longstanding complaints about Penn in the political world are: 1) that he is a Svengali who cozies up to the principal to undercut potential rivals, and 2) that he puts his thumb on the scale when measuring the performance of his own strategy. The complaints laid out in Swisher’s piece, and Penn’s subsequent promotion to top strategist at Microsoft, suggest that the old pattern may be repeating itself, with Satya Nadella replacing Hillary Clinton. It’s not hard to imagine how this could lead to disaster.

One final thought: Having spent the better part of 2006-08 immersed in Hillaryland, documenting both her rise and her fall, I’ve always thought the conventional wisdom about her 2008 failure and Penn’s role in it was slightly off. True, Penn was prickly, divisive, and combative. But if you read the leaked campaign e-mails, so was everybody else. In the end, Penn was merely a strategist. Ultimate responsibility for the campaign’s failure lay with the principal—Hillary Clinton proved to be a poor executive.

The trick for Nadella will be finding a way to extract Penn’s best advice while keeping his worst impulses in check. In other words, to avoid the mistakes Clinton made. Whether or not he understands this challenge is anyone’s guess. Think you could pull it off? Here is the original memo Penn wrote to Hillary Clinton laying out his strategy for her presidential campaign:

Green is senior national correspondent for Bloomberg Businessweek in Washington. Follow him on Twitter @JoshuaGreen.

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