Rick Belluzzo: Microsoft's Odd Man Out

After leading a reorganization, he found that he made his own job superfluous. Probably just as well, considering the two guys above him

The turnstile at Microsoft's executives suites rarely stops spinning. Top execs have departed with increasing regularity in recent years, walking away with multimillions in stock gains as they look for new opportunities. But that doesn't make the latest departure any less surprising.

Rick Belluzzo, Microsoft's No. 3 executive, said on Apr. 3 that he plans to step down on May 1, little more than a year after getting the title of president. A new management structure at Microsoft, one that Belluzzo was instrumental in designing, made his job superfluous. So, Belluzzo chose to leave Microsoft (MSFT ) to pursue his goal of becoming a corporate CEO.

Belluzzo was always an odd fit at Microsoft. He joined in September, 1999, after a year-and-a-half as CEO of computer maker Silicon Graphics (SGI ). But the soft-spoken 48-year-old, stood apart from the hard-charging, intellectually rigorous culture that thrives at Microsoft. He often seemed awkward during his run there. "I'd love to say I was comfortable coming into this company," Belluzzo says. "There were some things that took some adjustments."


  Moreover, playing No. 3 to Chairman Bill Gates and CEO Steve Ballmer wasn't the easiest gig. It would be hard to find two more dominant personalities in Corporate America. Gates's brainpower and his competitive fire are legendary. Ballmer is a master motivator and a whiz at business detail.

The pair leads Microsoft by the force of their intellect and vision. Belluzzo's predecessor, former Chief Operating Officer Robert Herbold, an outsider hired from Proctor & Gamble, never emerged from the shadow of Gates and Ballmer. And ultimately, neither did Belluzzo. "Historically, the president and COO job has been an awkward position given the strength and vision of Gates and Ballmer," says Goldman Sachs analyst Rick Sherlund.

Both Belluzzo and Ballmer insist that the decision was mutual. "I feel very good about this," Belluzzo says. In fact, Belluzzo led the charge internally to hand more authority over to division heads. He acknowledges that it didn't dawn on him until well into the process that the changes would ultimately obviate the need for him at the company. "I frankly didn't think about it," Belluzzo says. Microsoft has no plans to replace Belluzzo.


  The new structure gives more autonomy to the executives who run the company's seven core businesses -- from operating systems for PCs to its MSN Internet operations to its home-entertainment technology. In the past, those execs were responsible for developing products, which they then handed off to sales and marketing teams to sell.

Much of Belluzzo's job was coordinating product development with sales and marketing. Now, top executives are responsible for each piece of the business. "We need to get our people to think in a much more comprehensive way, to think more like CEOs," Ballmer says. That left little for Belluzzo to do.

Now, Belluzzo plans to look for his own company to run. "I definitely want to be a CEO," he says. Rumors have circulated that Belluzzo could have returned to Hewlett-Packard, where he worked for 23 years. But that would likely happen only if CEO Carly Fiorina, who engineered the contentious acquisition of Compaq Computer, decides to leave or is ousted. The outcome of a too-close-to-call shareholder vote on the merger won't be known until later this month.


  For now Belluzzo says he has no jobs lined up and that he plans to work for Microsoft through September to help with the transition to the new management structure.

Though his tenure was short-lived, his biggest contributions were largely internal at a company that cared more about developing technology than it did about organizational processes. Yet Belluzzo pushed business systems to help the company manage as it has grown to 50,000 employees. Now that system has eliminated one redundant job -- Belluzzo's.

By Jay Greene in Seattle

Edited by Beth Belton

    Before it's here, it's on the Bloomberg Terminal.