Why VMware Changed Out a Highly Successful CEO

By Chris Preimesberger  |  Posted 2012-07-18

Why VMware Changed Out a Highly Successful CEO

Good chief executive officers don't simply apply online, attend a couple of interviews and start work on Monday.

Companies spend an inordinate amount of money, energy and consultant time trying to find just the right field general to lead their troops into the market wars. CEOs must have a combination of hard-to-find traits: They have to be tireless, savvy and experienced in the business, politically correct to all audiences they address, cheerleader-like in their motivational approach, as convincing as lawyers in sales situations, visionary and hard-nosed at the right times. They cannot be afraid to be the heavy and make the tough decisions, such as standing up to the board of directors when necessary, firing people and killing pet projects. Finally, they have to be exemplary leaders for whom their officers and ground troops want to serve.

These are hardly easy-to-find components to find in a single person, and that's why CEOs get paid so darn much. But every company needs a No. 1, and these are the requirements.

EMC's Executive Approach

Then there is VMware and its mothership, EMC, which have a different take. Their approach? When your CEO fits all of the above criteria and the company is expanding, setting sales records, dominating market share and earning respect around the world, then you change him out. Makes perfect sense--for VMware and EMC at this time, that is. Of course, it helps when your company is market-capped at nearly $50 billion and banks double-digit profits for a string of years. It's wondrous  how freeing a lot of black ink can be when it comes to decision-making.

Paul Maritz, 58, who made a reputation as one of the three highest-ranking corporate leaders at Microsoft in the 1980s and '90s and cemented that company's place in the enterprise and consumer software business, is leaving the CEO position at VMware, as of Sept. 1. He will be replaced by EMC Chief Operations Officer Pat Gelsinger, 53, a 35-year IT veteran and highly respected technologist, at that time.

All Maritz did was lead VMware to record income, world domination in the virtualization software industry, and innovation into new markets, such as mobilility and cloud systems. The company continues to hire people like there's no tomorrow and is in the process of doubling the size of its campus nestled in the Palo Alto foothills above the Stanford University campus.

What's not to like here? What did Maritz do wrong?

Nothing, it turns out. He did just fine. Actually, the CEO change-out, announced July 17, was Maritz's idea. He said he thought the time was right to step aside and let a new person take over. That person is Gelsinger, a highly respected technologist and executive who joined EMC in 2009 after a 30-year career as one of the top guys at Intel--which included five years as CTO. Gelsinger also will join VMware's board of directors.

Gelsinger Has the Credentials


Gelsinger Has the Credentials

Gelsinger appears to be is the right guy for VMware. He's smart, personable, visionary, experienced, well-respected and approachable. He gets to come home to the Bay Area; he's a graduate of both Santa Clara University and Stanford University. We'll see how tough he is when it comes to making hard decisions; he's never been a CEO before.

One also must take into consideration that this CEO change likely wouldn't have happened at this time had not Gelsinger been ready to take over the job.

You have to give Maritz credit. It's really hard to know when to step down from a job you're doing well. Just ask any number of pro athletes when "it's time." To cut off an activity that you know well and have been doing well for years is one of the hardest decisions any professional can make.

But there's another key consideration. Importantly, it also turns out that EMC and VMware are looking ahead to when Maritz's boss--EMC President, CEO and Chairman of the Board Joe Tucci, 65--retires in the next year or two. EMC is a company that likes to have everything just so, and it wants to have a clear line of leadership succession to assuage its shareholders and all those Wall Street observers.

Thus Maritz will remain on the VMware board and will unofficially become EMC's CEO-in-waiting. In the meantime, he will work as a "technology strategist" within the EMC corporate empire. Talk about an amorphous job description. But it fits Maritz's place in the EMC hierarchy perfectly.

"This will be a full-time position, a job that can be done from anywhere," Maritz said on the conference call for the news announcement. "This transition also frees up my time to think about some of the interesting things that can be done on top of this new foundation of cloud infrastructure. There are ways to deliver business value in ways that have not been possible before."

Looks Like a Good Deal for All Involved

In summary: Paul Maritz gets a year or two break from running a major multinational corporation, can now make his own schedule and still has an interesting job. VMware gets a fresh new corporate leader who has all the attributes mentioned at the top of this story.

Finally, EMC, the mothership, has an excellent corporate leader on deck. Looks like it won't be needing to consult with anybody to find their next field general.

Chris Preimesberger is Editor of Features and Analysis at eWEEK. Twitter: @editingwhiz

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