Why VMware Changed Out a Highly Successful CEO

NEWS ANALYSIS: VMware and its largest shareholder, EMC, have a completely different take on corporate leadership: When your company is expanding, setting sales records, dominating market share, and earning respect around the world, then you change out the CEO. Makes perfect sense -- for VMware and EMC, that is.

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

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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.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he...