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Microsoft’s Make-or-Break Decision: Selecting the Next CEO

Microsoft CEO Steve Ballmer at the Dipoli Conference Center in Espoo, Finland, on Sept. 3.
Microsoft CEO Steve Ballmer at the Dipoli Conference Center in Espoo, Finland, on Sept. 3.Photograph by Henrik Kettunen/Bloomberg

The Microsoft board faces the enormous task of finding the right chief executive to replace Steve Ballmer—not the most charismatic, tech savvy, illustrious, or even most accomplished leader, but the one who fits the precise needs of the company in the future. Making this distinction is the board’s most important task.

Nothing can overcome a wrong CEO selection. Yet for many boards, this fit has been elusive. The average tenure of a Fortune 500 CEO is just 4.6 years. As we’ve seen at Yahoo!, J.C. Penney, and Siemens, to name a few, the CEOs were very capable leaders with fantastic performance records, but the fit was poor.