Microsoft's CEO search and the art of non-denial denials

Once the practice of politicians, temporizing by the likes of reported candidate Alan Mulally is now the norm

Observers of Microsoft's three-month-and-counting CEO search have watched the art of the "non-denial denial" at its best -- or worst -- a public relations expert said today.

"A non-denial denial isn't as bad as lying or misleading, but it strikes a lot of people as too cute, aggravating and even frustrating," said Gene Grabowski, an executive vice president of Washington, D.C.-based Levick, a firm that specializes in crisis and corporate reputation messaging. "But in corporate America, a non-denial denial can also affect stock prices and create all kinds of negative news."

Grabowski was referring to the non-denial denials that purported Microsoft CEO candidate Alan Mulally, currently chief executive of Ford Motor, has been regularly issuing when asked if he is in the running.

As recently as Thursday, at Ford's annual holiday party for the automobile press, Mulally answered reporters' questions about the Microsoft CEO spot with only, "I love serving Ford. No change." Previously, he has consistently refused to directly say whether he would take the Microsoft job if it were offered, and has been called out by pundits and Wall Street analysts for the non-denial denials as proof that he is, in fact, on the list.

Microsoft is looking for its third-ever chief executive, a decision triggered by CEO Steve Ballmer's August announcement that he would step down. Ballmer's abrupt departure has revealed Microsoft's lack of a succession plan, and the scramble by the media to identify possible replacements has been unrelenting.

Mulally has been linked to the Microsoft job in large part because Ballmer went to the automotive executive for insights into a Ford reorganization managed by Mulally. In July, Ballmer announced a similar restructuring of Microsoft, designed to further collaboration.

By refusing to dash claims that he is on the company's short list, Mulally and Ford have declined to put an end to the speculation. There's a reason for that.

"When you hear a non-denial denial, you can deduce that details are being hammered out or variables are coming into place," said Grabowski, who believed that because of those statements, Mulally was being aggressively courted by Microsoft. "There's not a final conclusion yet, so the best he can do is temporize. A non-denial denial buys you time while those details are being hammered out."

The details include compensation, increasingly important in a world where CEOs make millions, tens of millions, even hundreds of millions from salary and stock grants, but in this case perhaps also because they include negotiations on the CEO's independence. Since Microsoft's co-founder and current chairman Bill Gates, as well as Ballmer, will continue to sit on the board of directors, there has been concern that the new CEO may have a hard time pushing through drastic changes he or she believes must be made in the face of resistance from the old guard.

It wasn't always like this.

"The non-denial denial developed into an art form in Washington D.C.," said Grabowski. "But it's leached over into the corporate world."

The phrase has been credited to Ben Bradlee, former editor of the Washington Post, who coined the term in the early 1970s during the newspaper's investigation of the Nixon administration's part in the Watergate break-in. But the practice, once limited to politicians, has been taken up by others, including head coaching candidates of professional and college teams, and, not surprisingly, by top-tier business executives.

The reason?

"It really wasn't that long ago when CEOs were not compensated, not courted as they are now," said Grabowski. "But now, people see these individuals as stars. Everyone is invested in the stock market or corporate America now. The rise of 401k plans heightened the interest in CEOs. In the 30s, 40s and 50s, the media covered unions and labor-management issues. Now we cover personalities."

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