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After the dust has settled – Dianne Greene Ousted

Talks about the departure of Dianne Greene as CEO of VMware.

I’ve been on my holidays recently, and before I went away I saw the news that Dianne Greene had been removed/sacked/left her position as CEO of VMware. I didn’t blog about it at the time for a number of reasons.

Firstly, I wanted to wait and see what the story really was after the dust had settled. There was a lot of hysterical blogging at the time – which I have kept an eye on. Secondly, I was on holiday and there is more to life than virtualization and VMware. I saw a number of families on holiday at the airport with guys with one eyes on their screaming kids, and another eye on their BlackBerry. That doesn’t sound like much of a holiday to me. Finally, I don’t think my opinion as a mere blogger amounts to a hill of beans in this crazy world (as Rick said), having been a small cog in a wheel – I understand that these changes are occurring without much dialog with those at the bottom of the food chain – and the boardroom machinations of C-Class executives have little to do with my world.

I could sit here and dissect the stuff I’ve been reading on other websites – but quite honestly the tittle-tattle and gossip mongering that surrounds these events doesn’t really float my boat. What I want to do is pin-prink some of the hogwash that’s circulating.

Stock Price Thing
Firstly, the share price thing. When the announcement came that the share price dropped, next to this was a warning that VMware might not make its expected earnings. I forget the numbers, but VMware has been growing at 100% or more, and for the first year they said this would be more like– 75% or 50%. So, let’s kill this off right away. A downturn in VMware stock price does not indicate a downturn in the company’s fortunes. We all know the stock market is totally riddled with speculation. These are very volatile times in the market right now. The people who sold on duff mortgages responsible for the “credit crunch” and a lack of “liquidity” (read: a lack cheap money/credit with little investigation if the customer could afford it) have moved on to speculating about the price of commodities (raw food/oil). In our technology connected world all it takes is the butterfly wings of speculation to flap on the Dow Jones, and that will take 2% off the FTSE when London opens.

The fact is VMware is still making great revenues. They still make products that people want to buy. In fact, compared to the airline or the building industry – techstocks are actually pretty strong. Many of you probably work in big corporations that don’t have a fraction of the profit margin that VMware has. What the stock price does show is how badly managed the departure of Greene was. Any management decision that unnecessarily wipes the value of the company is not going to make investors, and employees who hold valuable stock options best pleased.

Should Greene have departed?
There will be many that will be sad to see Greene go, especially the people who worked for the company when there was less than 300 on the staff. It’s only natural that personal loyalties are strongest when you have almost daily personal contact with the founders of a company. VMware now has some 6000 employees worldwide and I doubt if they feel the same way. That’s all so very natural. 

The bigger a company becomes, the more remote the management team is (whether you like that or not it’s a fact). Personalities matter less and less. The bigger the organization, the more the team at the top will struggle to steer the oil-tanker which is a multinational. Especially organizations where the internal corporate culture has a mind of its own.

Despite being a much bigger company, VMware is still small enough that it can be steered effectively.

I never met Greene, and she was never my boss – so who am I to say how good she was at her job? To be honest, I rather liked the semi-professional approach that the Dianne/Mendal brought to the table. That’s not a disparaging or barbed comment. I’m not saying they won’t be completely professional. But just how I like politicians who haven’t tutored by spin doctors and media people – I like the direct approach. So perhaps Mendal and Dianne never looked very comfortable being on stage at these big conferences I attend. But at least there was something human about them. Perhaps like you – you have a soft spot for companies that are founded on kitchen tables in Palo Alto, who take on the big guys. I’ve always sided with David over Goliath. Anyway, putting such sentiment aside – in the hard-nosed corporate world occupied by those same big guys – once they own 85% of you it becomes much harder to persist with this dress-down everyday approach to business. The IT world is red in tooth and claw and perhaps employing an ex-Microsoft guy is the best way to take on Microsoft.

I understand why Greene didn’t want to take another position within VMware. Would you if you founded your own company? If you run your own business – it’s all or nothing. You’re either fully in charge or not. It’s your baby, and it’s quite difficult to hand over your baby to another person. Some people have taken the husband/wife partnership to indicate that Mendal will leave as well. That might very well happen, I don’t know. Perhaps he might be happy to move to a less hands-on, technical role – to more of a founding-father guiding role. Who knows, maybe that’s what he does now? I think it’s more likely that the original management team might see some departures – after all, the new guy will want to make sure they are loyal to the new Caesar – and when you take on a management role it’s currently the fashion to do some “restructuring”. You have to be seen as doing something after all. In time we might take the changes in a much broader way. For a while the “Geeks” were in charge, now “corporate types” have moved in. This shows a much a longer trend which could be a good one.  It could lead to the end of VMware having a “start-up mentality” to adopting a true “enterprise” approach to service delivery. VMware will remain a bleeding-edge, technology focused company – but perhaps with a slicker marketing, PR and sales force to rival its competitors. i.e Microsoft

In final analysis, people buy products because they are good, work well and are reasonably priced against competitors products. As long as VMware gets this right – then the company is fine. I don’t see many people buying or not buying products based on who the CEO is that week.

By the way, did you see that AMD has changed its CEO recently? Are you that bothered? No, I thought not.

 

This was last published in July 2008

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