Elop moves from long shot to shoo-in as next Microsoft CEO

Computerworld - Former Nokia CEO Stephen Elop has moved into a commanding position as the overwhelming favorite to win the chief executive's chair at Microsoft, according to online bookmakers.

Just over a week ago, U.K.-based Ladbrokes had Elop at 5 to 1 in its listing of potential CEO replacements for outgoing chief Steve Ballmer. As of Sunday, however, the odds had shortened dramatically: Elop, still the favorite, was at 1 to 4.

Betting $100 on Elop to get the nod would return a profit of just $25, compared to the earlier odds, which with the same $100 bet would have produced a profit of $500.

Another bookmaker, PaddyPower, had even less attractive odds for Elop. The Irish firm listed him at 1 to 12, meaning someone would have to put up $120 for the chance to earn a profit of only $10.

What changed? Microsoft's planned acquisition of Nokia, the Finnish phone maker that Elop has led since 2010.

On Tuesday, Microsoft announced it will pay €3.79 billion ($5 billion) for "substantially all" of Nokia's Devices & Services business and €1.65 billion ($2.17 billion) to license Nokia's patents. If the deal passes regulatory scrutiny in the U.S. and elsewhere, and closes in early 2014 as Microsoft expects, Elop and several other top Nokia executives will become Microsoft employees.

Elop, 49, will take the title of executive vice president for Devices, one of the groups under Microsoft's reworked corporate structure, and replace Julie Larson-Green, who held the spot for less than two months. Larson-Green will report to Elop after he joins Microsoft.

His return to Microsoft, the odds makers concluded, makes Elop the obvious front-runner.

Ladbrokes also trimmed its candidates list from the original 26 to just 11, and changed the odds for others as well.

Sheryl Sandberg, chief operating officer at Facebook, moved up from odds of 40 to 1 to 7 to 1, good enough for second place on the Ladbrokes chart. Steven Sinofsky, ousted from Microsoft last November -- reportedly after clashing with Ballmer -- dropped from 8 to 1 to 12 to 1, but remained in third.

Ladbroke and PaddyPower weren't the only ones betting on Elop. Many industry analysts and observers have also tapped him as the most likely replacement for Ballmer, perhaps assuming that Elop would not take a demotion unless there was a clear understanding that he would be appointed CEO of Microsoft.

Some experts, however, have put the spotlight on others that Ladbrokes touted, including Kevin Turner, Microsoft's COO (at 16 to 1); and Satya Nadella, the chief of the Cloud and Enterprise group (20 to 1).

In interviews, Ballmer has said nothing of Elop's chances, other than to state the obvious, that Elop would be an internal candidate rather than an external one. Ballmer has also said that the CEO search will continue.

The latest betting line on the candidates for Microsoft's new CEO has Stephen Elop, now with Nokia but destined for Microsoft, as the overwhelming front-runner. (Data: Ladbrokes.)

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

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!MEDIA ALERT: September 11, 2012 - Smith Experts Available to Comment on Latest Kodak Moves to Exit Bankruptcy

Media Alert: Sept. 10, 2012

Smith Experts Available to Comment on Latest Kodak
Moves to Exit Bankruptcy

COLLEGE PARK, Md. – Faculty experts in the University of Maryland’s Robert H. Smith School of Business are available to discuss, and give historical perspective on, the recently announced Kodak-management changes and job cuts as the company maneuvers to emerge from bankruptcy protection.

The Smith School has an in-house facility for live or taped interviews via fiber-optic line for television or multimedia content.

Kodak Misses its Moment

Hank Lucas, the Robert H. Smith Professor of Information systems, has written Searching for Survival: Lessons from Disruptive Technologies (Praeger, 2012). Contact him at 301-405-0100 or hlucas@rhsmith.umd.edu. 

Lucas’ book includes a chapter "Kodak Misses its Moment." He summarizes it here:

“Kodak is a tragic example of a company that had everything going for it, but was unable to cope when innovative digital technologies came along. Kodak’s demise was brought about not by a single event, but as with many disasters, a series of conditions and events brought the company down." These include:

Kodak’s own invention of the digital camera in 1975The firm’s inability to understand that others flooding the market with digital cameras, combined with the Internet, changed the process by which people captured and shared images The company’s rigid bureaucratic structure prevented it from responding quickly to threatsSenior management was unable to convince middle managers to move away from their analog, chemical and film mindsetManagement was distracted by foreign competition (e.g. Fuji) in film and a suit by Polaroid on instant photographyKodak exhibited a certain amount of arrogance thinking that it could control the pace at which consumers converted from film to digital photographyThe company wanted to protect its cash cow film business as long as possibleOver the years Kodak tried to diversify into unrelated fields and then pulled outOne hundred-plus years of success and a market share that at times exceeded 90 percent 'Kodak Should Have Folded Earlier'

Brent Goldfarb, associate professor of entrepreneurship and management, recently co-authored "Optimal Inertia: When Organizations Should Fail" in the journal Ecology and Strategy. He says Kodak is one such company that should have "failed," or closed down in an orderly fashion, instead of turning to bankruptcy. Contact him at 301-405-9672 or bgoldfarb@rhsmith.umd.edu.

Goldfarb's position, detailed in this Smith YouTube Channel video, is summarized here:

"Kodak was faced with a particularly difficult problem. The production of film is a very sensitive process, and for this reason Kodak was a rigid organization - small mistakes could have large consequences. This made the transition to digital costly. Ironically, Kodak was reasonably successful in their transition and quickly achieved a market leading position. The problem was that market leadership in a low-margin business is not a great prize. Kodak was not a victim of poor management, rather, the poor circumstance of being on the wrong side of creative destruction; its fate largely unavoidable.

Instead of trying to pursue the digital photography market, (Kodak) would have been better off slowly shutting down while profiting as much as possible from the dying film market. While this is a terrible outcome for Kodak stakeholders, particularly employees, history did not treat the company kindly anyway. They might have been better off trying to provide enough resources to the employees being displaced and to those managing the shrinking enterprise so as to ensure continuity and thereby extracting as much profit as possible from the market. They could then return what's left to the shareholders, whose dividends are increased further with the company not plowing money back into research and development."

About the Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, MS in business, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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