Mark Penn’s questionable road to Microsoft’s Chief of Strategy
by Drew Atkins
Credit: Photo: Bill Rice
What do Disney, military contractor Blackwater, the Clinton impeachment hearings and the 2004 Ukrainian presidential elections have in common?
All have been associated with Microsoft’s new head of strategy, Mark Penn.
As part of his first management shakeup as Microsoft CEO, Satya Nadella named political bruiser and PR pro Penn as the company’s Chief of Strategy on Monday. In a statement, Nadella said Penn would help guide the company’s product development and investments going forward. This is a shift from his previous position, running ad and media strategy with marketing chief Tami Reller.
Among the steady tech backgrounds of most Microsoft brass, Penn’s resume stands out like an orange shirt in a boardroom. Nadella, for example, has been with the company for over 20 years, and once led R&D for the Online Services Division. Penn’s been around less than two years, and once arguably cost Hillary Clinton the 2008 Democratic nomination.
There’s been debate about whether this move represents a promotion or demotion for Penn (more on that later), but there’s no argument that in coming years Microsoft’s challenges are strategic ones. Rather than maintain a steady course, the company must find new categories to dominate, make bigger incursions into existing markets and fend off threats to its core products to thrive in the long-term.
The official driver of these efforts is now Penn, whose background and data-driven, aggressive approach have made him the subject of a lot of conversation at Microsoft. As the freshly minted strategic leader of one of the world’s largest companies, interest in Penn now encompasses a wider audience, and many people are newly curious about his background and record of strategic success to date.
For these questions and more, a Mark Penn primer is in order. Starting with the most important question of all…
What does this mean for you?
If there’s one immediate effect this move will have, it’s on every TV viewer: Microsoft’s commercials will be changing direction. The people in charge of them for the past few years – Penn and marketing chief Reller – have been relieved of duty.
In political circles, Penn is famous for two things: helping patch Bill Clinton’s public image during impeachment proceedings, and his negative approach to campaigning. As Hillary Clinton’s chief strategist in 2008, he advised her to attack Obama’s lack of “American roots,” and his most famous ad is the “3 A.M. Call” spot, which evoked a middle-of-the-night crisis to convince people to vote Hillary.
Penn’s relationship with Microsoft stretches back to the 90s, and reflects both these calling cards. He helped patch the company’s image after the 2000 anti-trust ruling by the U.S. Justice Department and, since joining Microsoft officially in July 2012, he’s established himself with campaign-style attack ads on Google and Apple.
Penn’s “Scroogled” campaign took aim at everything from Google’s privacy policies to the functionality of their Chrome netbooks. Recent ads for the Surface tablet pit it against the iPad, with a Siri-like voice moping about the Surface’s superiority.
Whether the ads moved the business needle for Microsoft is subject to debate, though the Scoogled campaign has its share of critics both inside Microsoft and out. Tech blog Valleywag argued it “did nothing but embarrass Microsoft employees and provide easy jokes.” As Penn and Reller move to new pastures, the ad strategy of the past few years will likely be jettisoned.
If his first initiative at Microsoft didn’t take, why is he now the Chief of Strategy?
For starters, some argue the campaigns were effective. Penn reportedly made this case to Microsoft leadership using poll data, saying “Scroogled” raised awareness of Google’s privacy issues. He’s used such data to justify decisions throughout his career, though it’s been in dispute at times. As a critic at Microsoft recently told the New York Times, “I wouldn’t say they’re cooked numbers [Penn presented], but they’ve certainly been spiced.“
Whatever the case, there’s no arguing he’s used data to craft winning strategies in the past. Using a poll-driven approach, he devised ads for Bill Clinton’s ‘96 re-election and his strategy for the ‘95 government shutdown. His strategies on Lewinski messaging helped Clinton maintain excellent approval ratings during that period. Penn is also credited with helping the UK Labour Party and Tony Blair find their message and net a third term in 2005.
Penn’s famous for politics, but he’s also achieved a lot of success in the private sector. As CEO of massive PR firm Burson-Marsteller and president of polling firm Penn, Schoen and Berland Associates until 2012, his corporate clients have included Disney, BP, McDonald’s, Ford and more. In these positions, he’s also overseen polling and political consultation in the elections of Israel, Ukraine, Venezuela, and Italy, among other countries.
Penn’s data-driven approach is key to his new appointment. In a memo to employees, Nadella praised his ability to fuse “data analysis and creativity,” and said Penn’s “focus on using data to quickly evaluate and evolve our campaigns has driven new insights and understanding.”
His big wins are about a decade old, it seems. How’s Penn’s recent track record?
To be charitable, it’s a little spotty.
Penn started as a little-known political operative and, by 2008, he’d become Hillary Clinton’s chief strategist. (Disclosure: I was a staffer on Obama’s 2008 campaign during the period Penn ran the opposing campaign.)
The road to getting that job was long and impressive for Penn. The road to losing it was much shorter. Critics say playing up Clinton’s inevitability in 2007, then her Washington bonafides in 2008, were strategic nonstarters in an environment geared toward “change.” Reports were that Penn also didn’t understand the delegate allocation system of the primaries, allowing Obama to amass an insurmountable lead.
But Penn’s main offense sprung from the fact he continued to serve as CEO of PR heavyweight Burson-Marsteller while running Clinton’s campaign. As part of his duties as CEO, Penn met with a Colombian ambassador to discuss PR efforts around a trade agreement, even as Clinton was in the midst of denouncing it. He didn’t last long after that was revealed.
His leadership at Burson-Marsteller continued to cause bad PR for Penn after the campaign. MSNBC’s Rachel Maddow ripped Penn and the company, noting it had advised Blackwater after contractors shot civilians, Saudi Arabia after 9/11 and American International Group (AIG) after its multi-billion dollar bailout.
“When evil needs public relations, evil has Burson-Marsteller on speed dial,” Maddow quipped.
Penn started writing a Wall Street Journal column after the Clinton campaign, focused on “microtrends” – trends that start in small groups and catch fire, the sort of thing any company would like to spot. For example, he predicted that “glamping” or “glamorous camping“, would be on the rise soon. When it was revealed that he was using the column to recruit business for his PR firm, it ended shortly after.
Penn came to Microsoft at the behest of former CEO Steve Ballmer, and there’s speculation this latest move represents a demotion under new management. The argument goes that he’s lost control of Microsoft’s mammoth advertising budget in exchange for an important-sounding title.
Forbes.com columnist Peter Cohan argues Penn’s new position represents a graceful exit point before he moves to a 2016 presidential campaign. However, this theory comes from the same writer who thought Microsoft should uproot its over 9 million square foot campus and move it to Silicon Valley. Recent reports depict Penn as a persona non grata in the Clinton world these days, and the progressive base is not his biggest fan.
The spin doctoring biz specializes in messaging turnarounds, and Penn’s excelled at them in the past. His new position demands something deeper, however – not only a messaging-based turnaround, but one involving broad execution. In this new dynamic, crafting a comeback narrative for Microsoft and himself become one and the same.
Penn’s new role at Microsoft is vague, which can be either a sign of power or a lack of it.
As in the political arena, the points he puts on the board in coming months will likely tell the tale.