Chris Liddell is about to step into one of the most pressure-packed jobs in corporate America. On Apr. 25, Liddell, the current chief financial officer at International Paper (IP), agreed to become chief financial officer at Microsoft (MSFT) on May 9. Microsoft used to be Wall Street's darling, a hot growth company that ratcheted up eye-popping stock gains year after year. These days, the shares are stuck in the muck, trading at $24.99, roughly where they were seven years ago.
Liddell, a New Zealander, seems unlikely to change Microsoft's course of pushing accountability down to Redmond's seven business units. It's something he did as chief executive at Carter Holt Harvey, a New Zealand forest-products concern. Liddell replaces John Connors, who left the company at the end of March to work for a Seattle venture-capital firm. The soon-to-be CFO chatted with BusinessWeek Seattle Bureau Chief Jay Greene about his new job. Edited excerpts of their conversation follow:
Q: What appeals to you most about this job?
A: I really like Microsoft (MSFT), and I like the job for three simple reasons. The company clearly has a tremendous future. But in particular, I think it has got a positive, optimistic culture, and great people who work inside it. I really couldn't ask for more from a job and an opportunity. Obviously, I see myself as a positive, optimistic person. So hopefully, it's a good fit.
Q: Did you have any interaction with Microsoft prior to being hired?
A: Not other than [as] a user of its products. Obviously, I know of the company. Four or five years ago, I attended the CEO Summit [an annual meeting of top executives on Microsoft's Redmond (Wash.) campus]. And I've met some of the senior executives over the years. But it's been an ad-hoc relationship.
Q: What skills do you bring to the job?
A: They're what I consider to be the important skills to being a good CFO. I would describe those as being able to run the core finance processes inside the company, dealing with Sarbanes-Oxley and all of those legislative and regulatory issues that you have in a large company. From my perspective, International Paper and Microsoft share a very common set of high ethics and standards in that respect. That's first.
I also want to be a great partner to the business leaders inside the company and help shape their strategic agenda. And third, I want to develop the internal finance culture and develop the finance leaders of the future.
Q: You didn't mention technical knowledge. The CFOs at Microsoft have typically had some of that. Is that an area where you feel you need to develop some skills?
A: I've got a personal interest in technology. I wouldn't describe myself as a software engineer, and I won't become one. And I don't think I need it to do my job well. You need to have an affinity and a real underlying interest in the products that your company makes. But I don't think a CFO, to do his or her job really well, needs to be an expert in that area.
Q: The CFO is also the voice of Microsoft to Wall Street. And the stock has been stuck. It's trading at the same level it was at seven years ago. How can you change Wall Street's mentality about Microsoft?
A: Well, I agree with you that the CFO definitely needs to be the voice. Over the last 10 years, I've done a lot of work in that area, both as a CFO and as a CEO of a company. Communications with Wall Street, communications with the media, communications with shareholders are absolutely critical from my perspective.
Q: Are there things you look at with regard to Microsoft and think: If I just do this, that, or the other thing, the perception will change?
A: No. I'm very careful, and it's certainly my philosophy to not come in and say I've got all the answers. Exactly the opposite. John Connors and his team have done a great job in really building the finance function before my time. I would be looking to build on that and not fundamentally change things.
Q: Two CFOs from Microsoft past, Greg Maffei and John Connors, are both quite different, but both quite effective in their jobs. What are some of the distinctions you might draw between yourself and, say, John Connors?
A: I don't know John well enough to give the best answer to that. But I'd like to think that I'm an interesting mix of someone who brings a lot of good, structured-process discipline, plus a really good orientation toward shareholder-value growth and the ability to create value through, for example, acquisitions or moving into new markets. I have skills in both areas.
Q: What's structured-process discipline?
A: The ability to run internal processes -- whether it's control processes, dealing with legislative issues [surrounding] Sarbanes-Oxley, running strategic-planning processes and budgeting -- for all of those, the clarity that comes with great structure is fundamental for running a large company well.
There's a great quote from Jim Collins, the author of Good to Great, and I won't get the words exactly right. But it's something along the lines of: "When you combine a culture of discipline with an ethic of entrepreneurship, you get the magical alchemy of great performance." That sums it up to me. You have the structure and framework that allows people to be innovative and create their best.
Q: Are you a Good to Great acolyte?
A: I think it's a really good book.
Q: It's a book that [Microsoft CEO] Steve Ballmer has talked about as well.
A: I didn't know that. None of these books in their own right give you all the answers. But all of the very good books give you some perspective, and I'd include that one.
Q: What about your meetings with Steve Ballmer and Bill Gates made you think that Microsoft was the place where you wanted to work?
A: The culture of the place. The energy, enthusiasm, optimism.
Q: Was there anything in their discussions with you that really evoked that?
A: No. It was just the level of energy. I'm not sure there's a sentence that I could refer to or a topic that we talked about. But I felt very strongly talking with them and the other senior members of the team that I could really enjoy working with and be very aligned with them.
Q: Did you talk with John Connors?
A: No. I didn't talk with John Connors.
Q: Looking back at your time with International Paper, what are the big successes you've had there?
A: If I think back on the last couple of years -- and it's unfortunate that I put this as a success -- but it's tremendous that the company has come through the whole Sarbanes-Oxley era totally untarnished and with its reputation enhanced. That's a test, but it's an important test. Creating a really good discipline [at International Paper] and being able to test that against the regulations that we have now is No. 1.
I also think that I have helped shape the strategic agenda of the company for the next few years. I've been reasonably instrumental in working with the senior business leaders [at International Paper] to create that agenda.
Q: Do you expect that you'll have the opportunity to do that sort of strategy-agenda-setting at Microsoft as well?
A: I would certainly expect it to be part of the job over the medium to long term. Yes, definitely.
Q: In what sense?
A: When I talk about processes, capital allocation and capital discipline is clearly one of them. But in terms of being a partner and being an advocate, [posing as] a challenger of the acquisition and divestment program is also part of the role. If you like, I'm a guardian of the internal processes. But my ability to challenge and stimulate new ideas is also something I'd like to think I bring.