In December 1999 longtime Microsoft CFO Greg Maffei announced he was leaving the software giant to become CEO at Worldwide Fiber, a Vancouver-based communications company now known as 360Networks. While investors barely reacted to the departure of the high-profile finance chief — Microsoft’s share price dropped a mere 12 cents that day — Maffei definitely got out of Redmond while the getting was good. Since his exit Microsoft has, in order: been nearly split asunder by the U.S. Department of Justice, sued for anti-competitive practices by about a third of states in the Union, and taken a $2.6 billion hit in investment losses. Oh yes, in that time the company has also come out with two major product launches (Windows XP and the X Box), watched its share price go up and down more than a Duncan Butterfly, and witnessed an overall sagging in purchases of computers and software.
Welcome to John Connors world. The 12-year Microsoft vet took over as company CFO in January 2000 — only the third finance chief in company history. Before assuming the top finance spot, Connors held a number of executive-level positions at Microsoft. He oversaw Microsoft’s worldwide enterprise group and also served as company controller for two years. In addition, Connors ran Microsoft’s information technology department.
In that time, Connors has earned a reputation as a steely pragmatist. As CIO, he ended Microsoft’s expensive practice of developing its own in-house software, recommending instead that the company buy off-the-shelf applications for internal use. Connors also streamlined Microsoft’s procurement system, saving enough in the bargain to pay for a worldwide rollout of SAP R/3.
In a recent interview with CFO’s Kris Frieswick, Connors talked about corporate venturing, managing during a recession, and what it’s like to run a finance department when the government is trying to bust up your employer.
John, how do you see your role as the Microsoft CFO versus what the role was previously?
I’d say my role is a much broader operating role than what it had been with Greg Maffei or [former CFO] Mike Brown. When Bob Herbold retired as COO, I assumed responsibility for our IT organization, plus all of our worldwide operations, manufacturing, distribution, and licensing programs that we run around the world. I also have responsibility for real estate, procurement, corporate security, and all corporate services, plus, of course, finance.
Corporate investing and corporate venturing have been in the news a lot of late. How does Microsoft run its venturing activities?
In terms of investments, we have a matrixed organization. Ultimately each group, each business unit, is responsible for deciding what investments they want to do. We also have a small corporate development group which works with business development people within those organizations to actually do the deals, negotiate them, and so forth.
Has Microsoft always done it that way?
We had a pretty small corporate development group until the last couple of years. That group grew, and Greg spent a fair amount of his time on investments. Once we make the investment, however, our treasury group manages it on an ongoing active basis, which is pretty consistent with what we’ve always done.