VMware: CEO Transition Concerns

July 10, 2008 at 6:40 pm Leave a comment

By Diane Krakora

It’s always emotional whenever a leader leaves. Look at Bill Gates recent tearful farewell as a recent example. Or Cal Ripkin leaving baseball. Regardless of why Diane Greene was dismissed from VMware – whether it’s because they missed their sales numbers or she doesn’t have operational experience as the media reports – there is a way to transition leadership. Ripping the CEO out of a public company is not the way. Could they not have provided a 3 or 6 month transition plan? Maybe promote a COO to help with the operational issues? I’m all for ripping the band-aid off – I tend to act quickly once I’ve made a decision. But when leadership changes, it’s a highly emotional time for the many groups touched by the leader and requires a bit of patience.  
Although we expect there to be little to no impact on the channel strategy and plans of VMware with their new CEO, Paul Maritz (ex Microsoft), I am worried about three things. First, the engineers. VMware is an engineering driven company. The technology and engineers have been the primary focus of Diane (and Mendel, her husband that developed the technology) for the past 10 years. What are the engineers feeling now that their chief and champion has been unceremoniously dismissed?

Yes, VMware has probably a two year technology advantage over the competition. However virtualization is hot right now and I’m sure the engineers are all being heavily recruited away. The VMware engineers are used to being greatly appreciated and protected by Diane. How do they feel now?

Second, I’m worried about short term sales engagements. If as stated in the press, VMware, missed their Q2 sales target, will the field sales team more aggressively pursue deals directly? When lower than expected sales are cited as a reason for ousting the CEO, there is bound to be a lot of pressure on the sales team to close deals and generate revenues. Is it “oh shit” time at VMware? Are the sales team scrambling, cutting out partners, doing whatever deal it takes to close a customer? Are the customers’ pausing?

And lastly, there are the partners. Many of their partners have built their businesses and bet their homes and their employee’s lives on the future of VMware. A radical change in leadership creates stress and uncertainty in these “partners”. I don’t expect a material change from the transition; Diane Greene wasn’t really involved or even bought-in to the partnering strategy. But will the new guy be better or worse for partners? What changes will he make? Does he understand the value the partners bring and the investment they’ve made? EMC is not known in the industry for its channel friendliness. What about those sales guys highly motivated to “pick it up” for the next quarter? What about those engineers who make the industry leading product? Will the product innovation be the same? Will the standards be as high? In talking to several of the VMware Partner Advisory Council members, these are the things they’re concerned about.

Business moves at the speed of light these days, but when people are involved, it makes good business sense to move slow and increase communications. This shake up certainly has me thinking about our own succession plan. I’m not ready yet… but I guess neither was Diane.

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Entry filed under: Industry Perspective. Tags: , .

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