Remarks by Kevin Turner, Microsoft Chief Operating Officer
Worldwide Partner Conference 2006
July 13, 2006
ANNOUNCER: Ladies and gentlemen, please welcome Kevin Turner.
KEVIN TURNER: All right. Good morning partners. Let’s try it again, good morning.
All right. It is great to be here. What a great video that was, Allison and her team, and I love the fact that partners, we’ve got your back. That’s really the whole focus of the event, and everything that we’re doing. It’s an incredible opportunity for me to be able to come out here and talk to you all about what we’re doing, and kind of how I see things and where we are.
One of the key things, as I was titling this chance to visit with you was this business about together, making a difference together is important to me, and it’s important to you. I think that there’s five things I want to talk to you about today. The first is who I am and why I came to Microsoft. It’s been almost a year now, and this is my first time to be in front of all of you, although I visited with a couple thousand of you around the world. The second thing I want to talk to you about is what I heard from you, and then I want to put it up on the slide of what you can expect from us, some very crisp things that I want you to hold us accountable to.
Then I want to talk about execution. The fact of the matter is, there’s not very many 501(c) nonprofit organizations in here, and certainly we aren’t one of those. We’ve got to drive revenue and profitability together, and that’s where I want to talk about execution. Then I want to talk about connecting you to our mission statement, which I’ve got some real special things I want to show you. And last but not least I want to talk about five ways that we can win together. So those are the five things that I want to cover with you today.
Before I get started, I think it’s super important that we continue to let you know how important you are to Microsoft. And I want to make sure that you understand that you’re appreciated. We know you have choices. We know that you make investments in our company, and certainly we appreciate the partnership and all of the relationships we have with you around the world. And it’s so exciting to be a part of that.
We also have in the audience today about 400 perspective partners that, quite frankly, I’m very excited that they’re joining us, so welcome them, as well. And when I think about this room and the 7,000 of you, the breadth of the capacity and competency that we have as a company and together is truly amazing and unparalleled by anybody else in the technology industry.
I also want to say, again, we appreciate your time, investment and your energy, and thank you for the year that we had. Although, we haven’t released the numbers yet, and certainly that will happen in the next week or so. The hard work and dedication that went into that really made a difference and we owe you a big round of applause. So thank you, Microsoft Partners, for everything that you’re doing. (Applause.)
So the first thing I told you I wanted to talk about was why I came to Microsoft. Here’s this guy, 20 years, almost 20 years with Wal-Mart, started out as a cashier working his way through college in a Wal-Mart store, got my degree, stayed with the company, was an auditor for a couple of years. The interesting part of that, at the end of my audit rotation I got to do audits for Sam Walton, the founder of Wal-Mart. That was a real highlight.
As I was wrapping up that two-year rotation I asked our chairman and founder, Sam Walton, what should I do, what area or what department should I go into? And this was in the late ’80s, and he said, for a young man like you, you should go into that systems department. So I moved over into the information systems department, taught myself how to program. I should be up front and honest with you, because that’s a key value, but I should also tell you a couple of things about that. I was a very average programmer. So what happens to average programmers? They pretty quickly made me a manager in that process. So I led a lot of development teams, and really had a lot of love for technology and got to work on some exciting things.
I spent 14 years, and eventually became the Chief Information Officer for Wal-Mart, which at the time was the largest corporation in the world, and that was quite a ride. I got to work on some really cool projects. I got to work on the largest customer data warehouse in the world, bigger than the federal government of the United States. I got to work on the largest global computing RF network in the world. I got to work on retail link and the supply chain optimization that many of you probably know about. And all of those early projects, where Wal-Mart was an early investor, I was leading project teams to get those done for the company.
About 14 years ago, almost 15 now, one of the interesting things was, as a young manager, they had me go out to the airport and pick this guy up and make sure I took him to a store, and toured the store with him, and talked to him about technology and made sure he had a good visit, down in Bentonville, Arkansas, and that guy was Steve Ballmer. So I’ve known and had a working relationship with Steve over the last 14 years, and he was always fascinated with questions like, What are you guys doing? How does this work, and how do you move so quickly? And how are you investing in the technology and what are you doing? So he and I would meet two or three times a year every year since that time. And we would talk about technology and leadership and business.
So that gives you a little bit of a foundation. My last three years at Wal-Mart, I bounced into a business division and ran a company for them called Sam’s Club, which will do close to $40 billion this year. I ran that division at CEO and president for the last three years. And it became the most profitable warehouse club in the world today. So that was an important part.
So Steve called me up close to two years ago now. He said, have you ever thought about leaving Wal-Mart? I said, you know, I really haven’t. He said, well, I think you should come up and talk to us, and talk to the team and see what we’ve got going on. And as I mentioned to you, I had moved away from technology and into a business for the last three years. And so I felt that pull, that constant tug to say, get back into technology. That’s where I made the biggest difference in my career, and certainly had the most fun.
So I went to Redmond. I flew up there, Steve had me interview with 14 people, which I think is pretty customary in the Microsoft hiring process, even though I had known him for 14 years. And I went through that process and that was very interesting. And I took a look at the company and I took a look at the company’s values, and my parents were both working parents, who had instilled in I have a brother and a sister all three of us kids, the importance of integrity and honesty. And you’ll see that those values are reflected in our values as a corporation. My dad was also a big believer in hard work, that hard work doesn’t guarantee success, but the absence of it guarantees failure. So working hard has just been a way of life for me.
The last interview that I had in that two days – the 14th interview – was with Bill Gates. I spent an hour and 45 minutes with Bill Gates, fielding a lot of questions, very thoughtful, tough questions. At the end of the interview, and I was pretty much leaning towards, you know, if I’m ever going to make a career change, this is it for me. The last thing that Bill Gates said to me, and he stood up in the interview, and this is something I’ve never really told people publicly, but he stood up in the interview, he stuck out his hand and said, we really hope you want to come change the world with us. You know, I’m a sales guy at heart, and in sales terminology, that closed me right there. So I decided to come to Microsoft to help change the world, and that ability to learn and grow.
So this is a slide that I created. I’ve been with the company, like I said, 11 months, almost a year. This is a slide that I created to talk to our customers and to our partners about who we are as a company. This is something we don’t do a lot about. What is Microsoft? Certainly we’re a software company. We are a software company, and we have the belief in software that it can and does change the world.
If you look at our realignment in our software divisions that we did last fall, we aligned our software and product development into three core divisions, where we can then connect the digital workstyle and the digital lifestyle, and then provide that connection in-between. I really believe that makes us unique in the technology space. I believe Microsoft is the only company that can connect the digital lifestyle and the digital workstyle, and we have a lot of dots to connect. And then our partner ecosystem is certainly a critical point to that.
We have six values as a company. I talked about integrity and honesty, open and respectful. Those are all things that we have to do, but there’s a couple on here that I think are very unique for business. One of the values of the company is big challenges; not being afraid to do what other people say can’t be done. I subscribe to that. And that’s something that certainly I wanted to be part of.
And the last one is self-critical, self-critical without being de-motivated. Sam Walton had a similar attribute, he called it having a divine discontent – that you get up every day of your life telling yourself that you want to improve something. And that’s that being self-critical is, and why it’s an important part of our value.
The last thing is our mission statement as a company, enabling people and businesses throughout the world to realize their full potential. And I’m going to talk to you in a little bit about how that connects to you, our very, very important partner channel, and what it means to you, and how you’re a big part of our living up to that mission statement, and aspiring to have that, but this is who we are as a company.
In the last 10-1/2, 11 months I’ve traveled around the world three times. I’ve been to Europe twice, China twice, Australia, Santiago, Chile – I’ve been all over the world. I still have a long list, and a lot of countries to visit, and a lot of places to go see, But I’ve done these listening sessions, these roundtables, these partner roundtables, these open discussions, partner visits – went on sales calls with partners, and visited with over 2,000 partners. And one of the things that I think is really cool is that the messages are very consistent. And the first thing I heard was that partners are critical for Microsoft.
Certainly, I heard that from you all as a channel. But let me tell you my second day in the job, Steve called me in his office and said, there are a couple of things that I didn’t tell you that I need to tell you I didn’t tell you in the interview process that I need to tell you know, this is after I had accepted. I was like, great, great, what is it? The first one he told me was you need to understand we’re specialists, and this company was built with having great partners. And you need to understand that 95 plus percent of our revenue comes with and through our partners. And you need to understand how critical they are, and you need to go out and listen to them, because that’s the one group that you’re always going to get the truth from.
So I got my suitcase, I’ve been on the road the better part of this tenure, and I’ve talked and listened with so many of you around the world, and I have so many more to see, and I look forward to meeting all of you.
But I learned at day two in the job that partners are critical to Microsoft, and I wanted you to know I’m not confused about that.
Second, we can be hard to do business with. Our licensing is complicated, our legal process is complicated. We have a lot of different divisions. We have a lot of different products. We have a lot of different offerings. How do we simplify that?
And I don’t ever believe — that one bullet right there is a journey. We have to keep making improvements, and you’re going to see improvement, and I’m going to talk about some of that. But I don’t believe that’s a destination, because we’re going to keep innovating, we’re going to keep adding, we’re going to keep having products, and we’ve got to keep finding ways to make it simpler and easier to do business with us.
You want to make money. I heard that loud and clear from our partners. The fact of the matter is that you want the ability to have profitable opportunities that you can attack. You want to figure out how to increase your profitability, and we’re going to talk about some of that as well.
You need to know where we’re going, and this is one that we’ve got some exciting things to be able to talk about. And we’ve spent the better part of this conference talking to you about all the stuff that we have. But you want to be able to have a conversation with a customer. You want to be able to lay out the software roadmap, which approximate timeframes will these releases hit, where are they, what’s the predictability in that, how do we tell the story. This is part of our maturation process as a company we have to become great at that, and I’m going to talk to you about what we’re doing with that.
And then lastly, sometimes our objectives aren’t always aligned, and generally that happens through communication or lack of communication.
So these are some things we’re going to address, and those are some things that you all shared with me.
Now I want to put up on the slide what I want you to hold us accountable for. Now, there are a couple of things that are important. I’m super excited, OK, one of the things that we did a couple of weeks ago was we elevated Allison Watson to a corporate vice president in Microsoft. That’s a big deal. That is a very big deal for the partners specifically. (Applause.) That’s a real credit to her team and everything that they’ve done the last four years. But that just says again I want you to know how committed we are to it, and by adding Eduardo Rosini over there, following the great work that Orlando Ayala did, that I get to work with now on emerging markets, is very exciting. Eduardo is a heck of a talent, and Orlando endorsed him outwardly and inwardly.
And I want you to know that we are committed at the top to making sure that we continue to push our Partner Programs to the next level. We are not going to get complacent, we are committed to partners, we are committed to continuing to elevate and improve them.
You continue to be our top priority, and we are going to create profitable business opportunities for you. That’s part of all of the sessions and rotations that we’ve worked for. That’s a core principle that I want you to expect from us.
Now, that doesn’t mean you won’t have to change and dial your model appropriately. That’s what we all have to do, we have to continue to change inside our company and your company faster than the world is changing outside or we become obsolete.
So it’s important for you to know that, yes, we’re going to create profitable business opportunities, but you have to keep wanting to change, You have to keep wanting to reinvent yourself. You have to have the courage sometimes to dis-invent what was successful in the past. If you think about us adopting that as a company, that’s what the Live strategy is to Microsoft. We have to dis-invent some things to create what we’re going to do in Live, and that’s exciting for all of us.
You can count on this company for innovation. I’m going to show you a slide in a second that puts our money where our mouth is, as it relates to delivering innovation. Because you have choice, you get to pick sometimes where you partner, where you don’t partner. The fact of the matter is when you make a Microsoft decision, you’re investing in innovation. You’re making a decision for innovation.
We’re going to provide a clear product roadmap, and I’m going to show you where I’m going to put that together to drive execution. But all of our field sellers are goaled on their performance review this next year, this year that we just entered by understanding how clearly can they articulate our product and software roadmap with our customers and with our partners, and we’re going to become great at that skill. Because part of it is the greatest story never told.
I’ve been on these sales calls with partners and I said, OK, let’s get up on a whiteboard and let’s walk them through our product strategy here, where are we headed and what year are we going to be there. And everybody looks around kind of more or less feeling wise and looking otherwise, and then somebody gets the courage to take a shot, and we kind of fumble through that. We’re formalizing that. We are going to become great at that. That’s an important part of us becoming a world class selling company, and you will hear more about that.
And we’re going to work hard to become one Microsoft. The fact of the matter is this is a unique business that we both share together, very unique, unduplicative. And the key that I thought a lot about this particular point, and I came back to something that an old coach told me when I was playing basketball, and that was two are more powerful than one when two act as one. Think about that: Two are more powerful than one when two act as one. And we together in our partner channel have to operate as one, and we have a lot of work to do at Microsoft to make that easier for you to understand and easier to streamline and show you that unity.
And I think it’s also important for you to know kind of how are we going to go the field, what’s the execution framework. You’ve got all the field sellers and marketers and support and specialists; what are their goal sheets that we’re going to share with them next week, our big sales conference is next week, what are we going to share with them. We’re going to share this framework right here. We’re going to share win, drive, grow, innovate, and people.
And I thought a lot about this, too, I thought, hey, this would be important for you to know what are they goaling their field folks on, their specialists, what is their agenda. This is their agenda. And then I thought about it, it needs to be our agenda also.
So I call this the Joint Execution Framework that both our field will be goaled on and that we’ll work with you, and we hope that you adopt to run your business and our strategy with you on.
And it’s a simple framework, OK, this is a simple framework. I’m all about to get execution people have to understand what you want. To get execution people have to know what’s expected of them. And I’ve aligned our field sellers so that we have one scorecard, we have one scorecard for the first time in the history of the field organization at Microsoft next year. On this scorecard, every country manager, every general manager will have the same 27 metrics that they’re goaled on that will be a part of their compensation, that will be a part of their performance review, will be a part of their commitments, and part of their reward system. So we are all looking with the same definition of success, and that’s why I think it’s important that you know that.
And I think it’s important as we talk about these that you put it in context. When we talk about win customers, I’m talking about exactly going right after IBM, I’m talking about going right after Oracle, I’m talking about Google; yes, I’m talking about Google. We are not going to let Google win in the enterprise search business. That’s our space, that’s our house. (Applause.) And those people are not going to be allowed to take food off of our plate, which is what they’re attempting to get.
And we’ve got Novell, we’ve got Linux, Red Hat, others. We’re going to win because we have a better solution, we’re going to win because we have a better total cost of ownership, and we’re going to get after the competition and compete.
This is a revenue focused company. You’re going to see the focus of revenue elevating in Microsoft. We’re going to go drive it, and I’ll tell you why in just a second.
And then we’re talking about driving satisfaction. You should know one of the 27 metrics that every country manager and every general manager in Microsoft is going to be goaled on is how is your partner satisfaction. Every single one of them will have it as a part of their compensation. And that’s important for all of us.
The second personal mission that I have is this time next year that Eduardo and Allison and I can stand up here and tell you what I really want to do. What I really want to do is be able to measure satisfaction for the customers that you help so that we invest and learn from the best of the best in our partner channel about how to take care of customers, and that we help those that aren’t taking care of them in a way that they need to. Our brand is your brand when we go to market together.
And so I have a personal mission over the next 12 months that we’ll figure out how to measure customer satisfaction for the customers that you work with, and we’re going to get better at that, and I’m very excited about that opportunity.
And then I want to talk about growth. I want to talk about the fact that we have so many opportunities to grow together, we have so many opportunities, existing opportunities. Let’s go upgrade existing customers, let’s get rid of all of the NT, all of the Netware, let’s go get that stuff. Let’s make sure that we’re growing together. Let’s go get all the Notes, let’s go get all the Novell. Let’s go grow together.
We talked a lot about these premium SKUs we have coming out where we’re escalating the price point and you get functions and security and compliance and other things with our Office Enterprise Edition, and I’m going to talk about that in a second. But being able to upsell to the premium offerings and do you know the value proposition that those create is a big opportunity for us to grow.
And another way for us to grow is for you to be the first mover, convert to Office, convert to Vista. We need you to be there. We need your company to be the first movers. That way you can get behind it and sell it and get after it, and I think that’s important.
Next is innovate. Now, I added this to the framework for a simple reason: We are a company that wants to be known for innovation. And you’ll see our investment in a second. That is the purpose, that is our air supply, and that’s important.
We are going to get great at software roadmaps. Every general manager and country manager is going to be goaled on how well we’re able to articulate our software roadmap with our customers and our partners this next year.
We’ve got new business opportunities like Live that are super exciting that you’re going to be a part of the solution and helping us figure that out. And the one thing I would tell you, you’ve seen a ton of demos over the last couple of days. We’ve got to get back to our roots. One of the things we’re going to tell our field sellers next weeks is demo, demo, demo, demo. This company was built on great demos, you’ve seen great demos; show it off, show off the work. We need you all as excited about demos as we are, and get after the demos this next year, and let’s take it to the next level.
And last but certainly not least is keeping people at the center. We need your feedback, we appreciate your feedback. The best feedback mechanism we have is our partner channel. Keep it coming. Don’t give up on good ideas. It’s OK if you mentioned it once and don’t get your way; mention it again. If it’s still right, keep mentioning it. Don’t give up on good ideas. It takes all of us to make this thing work, and you’re an important part of that feedback loop that makes us a better company. And I want to appreciate and thank you for the feedback that you’ve given us so far, and I’ll share with you my e-mail and phone number at the end because I want to know, I’m open for business.
We’ve got something in Microsoft called the Open Door policy; we also have the Open Ear policy. And that’s important that you know that we want to know the feedback on how we can get better and win together.
But that’s the joint execution framework, the third thing I told you I’d tell you about.
Now, if you look at this innovation investment, I thought this was an amazing statistic – number one in all of the world in technology at what we put in an annual basis into innovation. This is a company committed to innovation. This is a company that spends $6.2 billion on innovation.
Now, we’re continuing to file patents, 3,000 patents filed last year. We’re continuing to license patents. This is a company committed to IP, this is a company committed to innovation.
And when I look at the breadth of the products, there’s a couple of things that I think are important here. Yeah, it’s huge, and, I mean, I’m excited about all of these, and I’m not going to go into detail on any of them, because that’s what you had in the other sessions, but, yes, we’re excited about those. Yes, some of them are late, but the fact of the matter is they’re coming this year, they’re coming. This is our arsenal, this is what we go to battle with, this is how we’re going to go after it, these are the things we’re going to pick up and go drive as a company. And these are the things we’re going to measure and execute ourselves on.
And I would tell you a couple of things about that, that what I tell our field sellers and what I’m going to tell them next week is, look, we spend money, we invest money to make stuff. The way we make money as a company is to sell stuff. And this next year we’ve got — you know, I’ve heard different reports, but over $20 billion estimated in prior year R&D spend coming into the marketplace in one calendar year, $20 billion coming into the marketplace.
So what I’m telling our field sellers is this is the time that we have to take the vision and all of the investment and turn it into what I call reality and revenue. This is the time that the field and our partners have to step up. This is what we’ve been waiting for, and we have to go drive as hard as we can to grow share, take care of our customers, and figure out how to go get into new markets and new opportunities.
But this breadth of offering is not going to do anything but continue to expand as we continue to invest, and that’s extremely exciting.
You know, one of the things that I think that I’ve kind of grounded on is the biggest single opportunity we have as a company is to help people create business value. You’re in the midst of a shift within Microsoft where we’re shifting from a product centric company to a solution and a scenario centric company. That is a fundamental thing that I hope you got. That’s what People Ready is. People Ready is about putting people at the center, but it’s also about creating business value, enabling people to create business value. That’s very important for you to note the strategic shift in that, it’s about people.
Ladies and gentlemen, that is my agenda, people — people, customers and partners. That’s what we’re about, that’s what we need to do, and that’s the focus that you’re going to see us take within Microsoft.
And I’m not going to go back through the People Ready channel. You know about the eight customer scenarios, three of them also falling within an optimized infrastructure. You know about those, you know the importance of those. This is air cover for you. This is air cover for you to be able to connect the dots for our customers on solutions.
Allison was involved in creating these campaigns with the eyes of partners. And that’s so important that you know that and that we’re running the company that way, and that we continue to leverage our investment that we’re going to make and have made.
Now, you’ve seen kind of the setup of People Ready in the past. Now we’re going to take it to the scenario. Now we’re going to bring the products in. We’ve wetted people’s appetite. All we’ve done is wet their appetite on what is People Ready; now we’re fixing to take it and put products and solutions with it and show that we’re going to enable people to create business value. Stay tuned, but it’s going to help us go to market faster, it’s going to increase our efficiency and your profitability.
Now, one of the things that I told you I’d do is I’d connect you. The fourth thing was connect you to our mission statement, connecting you to our mission statement. Our mission statement is enabling people and businesses throughout the world to realize their full potential. Now, why would I put this in here? Because I think it’s critical. As leaders, we can’t lead from the neck up. I know our company, and I’ll bet you your company was built on one thing, heart power. It’s about people making a difference together.
And as I’ve traveled the world and been to all these different places and seen all these different activities, there’s been some things that have totally amazed me. And I find our people that just kind of they know about them but we don’t ever share them and we don’t ever tell the story about them.
So I’ve been on this mission to be a storyteller of all these places in the world of where we’re enabling people and businesses throughout the world to realize their potential. And I’ve got to tell you, I had two different scenarios. I said go there and film this, this is unbelievable, nobody is going to believe it. I said we’ll pick one of them and I’ll share it with our partners. I sat down in my conference room last week, watched them both, and I said I cannot pick, I think our partners need to see both of them. And I think when you see it, you’ll understand why. Please roll that video.
KEVIN TURNER: And so that’s how you’re connected to our mission statement. And whether it’s taking a furniture store in Turkey and implementing our Dynamics solution and allowing that person to remove three people out of the back rooms and put them on the sales floor so that their sales could then triple, which is a real story that I got as well, or whether it’s helping people who can’t help themselves enable things, and I would tell you that on behalf of the three partners that we talked about, we’re going to do a $75,000 donation in the name of these three partners, Silicon East, STD Software, and IAMCP, if we could give them a round of applause for this recognition, and they’re here today, as well. (Applause.)
And so Steve opened this conference with these five things, and I’m going to close with it. So it’s not a new five, it’s the same five, the bookends, so that you know we’re all on the same page. But we need you to help us drive enterprise Windows, Office and CAL. We need you to help us upsell it. We need you to get your teams and your solutions built around that, convert yourself, be the first mover, and make sure that we get after that.
We need you to help us get after .NET, Windows, and our SQL. Our SQL business is on fire, and the fact of the matter is our .NET solution, as well as what we’ve got with Visual Studio, is better than J2EE. Developers tell us that, and you know that.
And we need to get after Dynamics. Dynamics is on fire. You saw a lot of great releases this week, and a lot of things coming up. We need you to help us get into that. And we absolutely want to win in the business application space, and it’s important to us.
And then we want you to take a look at these new businesses that we’re getting into. And we know that you have choices to make inside these spaces, but this is a company that if we don’t get it right the first time, we’re going to keep coming and coming and coming, and we’re not going to give up until we get it. And we’re going to get after it. It’s so fun to get proactive with security and start monetizing it. It’s exciting on what’s going on with unified communications and how we’re getting into voice over IP. And then when you look at portal and search and business intelligence, these are all new business opportunities that we encourage you and want and need you to be a part of. And I truly believe it’s a great time to be a Microsoft partner.
And as I tell our team is that, look, I believe that this year is a unique point in time. You notice I didn’t come out and give you the five and 10 and 15 year view of our strategy. What I talked to you about is how do we win together in FY ’07 – right here, right now. This is a unique point in time. And I do believe history generally repeats itself, and I also believe that opportunities don’t, and it takes leadership and your help and participation to make sure that we maximize this opportunity.
And I also want you to know again how much we appreciate the partnership. I believe, and our team believes in the value you deliver for us day-in and day-out, and how we help grow with our customers and drive greater results.
I want to thank you for the hard work in FY ’06, I want to thank you for the hard work that we’re about to get into in FY ’07. And again please take away our appreciation and share it back with your teams and let them know how much Microsoft appreciates it.
And the last thing I’ll tell you is this is my e-mail and my phone number. And I told you I was open for your business. If you have thoughts and ideas and suggestions about how we can improve or you need help, I know we have great teams in place, but in the event that you need some more help, there’s my e-mail address and my phone number. Let me know. Because I truly believe we’re going to win as a company, we’re going to win together, we’re going to win as a community — we’re going to win as a community, and we’re committed to great partnerships. And I do believe that we’ve got the best year ahead of us in FY ’07 than we’ve ever had in the past. And I’m excited to be a part of that, and I want you to know, the last thing I’d tell you is go build your business and count on Microsoft to be there with you. We’ve got your back. Have a great day. (Applause.)