Who is John Thompson?February 7, 2014: 4:00 PM ET
Microsoft's new chairman brings focus and an even keel to its board of directors.
By Verne Kopytoff
FORTUNE -- When John Thompson resigned as Symantec's chief executive in 2009, he figured he'd do like many other retired Silicon Valley leaders: invest in start-ups and sit on a few corporate boards. In short, he wanted a bit of tranquility after years of hard work.
Retirement has been anything but tranquil for Thompson, however. Just a year after resigning from Symantec (SYMC), he returned to the grind by becoming chief executive of Virtual Instruments, a business technology startup. Then earlier this week, he took on a huge new responsibility. Thompson agreed to become Microsoft's chairman, a role that comes with countless challenges as the company tries to reinvigorate its business under new chief executive, Satya Nadella.
Thompson, with Nadella in the lead, must move quickly and make some inevitably painful decisions. Investors are restive after years of stumbles including the company's failure early on to recognize the importance of smartphones -- a market now dominated by Apple (AAPL), among others -- and the financial rewards of search, which Google (GOOG) rules.
"John has a tremendous level of strategic insight," said James Socas, a former head of corporate development at Symantec under Thompson and, before that, the company's investment banker. "He's also one of the best communicators that I've worked with for his ability to take complicated messages about technology and make them understandable."
Thompson, 64, can call on decades of executive experience. He served for 10 years as chief executive of Symantec, the computer security company. Prior to that, he spent 28 years at IBM -- in sales, marketing, and software development -- before finally serving as general manager of the Americas business unit.
During his tenure at Symantec, Thompson had to tackle a number of issues that parallel Microsoft's predicament. Both company's roots are in consumer and business software, after all. Both also saw their early success erode when their markets started to change. Thompson will be able to draw on those lessons -- the successes and the failures -- when advising Nadella, a first-time chief executive who previously held top positions in Microsoft's online, business, and cloud divisions.
Shortly after joining Symantec, Thompson started a major overhaul to narrow the company's focus. Today, Symantec is known for computer security. But at the time, it had a sprawling business that included software development tools and databases for keeping customer contact information. He sold off or shut down some of the ancillary products while bulking up the company's security business through a series of acquisitions and by building a huge sales team.
"He made some tough decisions," said Socas, who is now a venture capitalist with Updata Partners. "It seems obvious now, but at the time, the forecasts for desktop security weren't as good as they turned out to be."
During Thompson's tenure, Symantec's business ballooned. Annual revenue increased from $600 million when he started to $6 billion when he resigned. But Thompson's reign was hardly trouble-free. In fact, by most accounts, some of the difficulties hastened his exit.
Thompson's $10 billion acquisition of Veritas Software, a data storage firm, in 2005 turned out to be dud, for example. Meanwhile, in the years before resigning, he struggled with slowing growth caused by the economic downturn and intense competition.
Like Symantec, when Thompson started, Microsoft (MSFT) is now in need of focus. Windows software, Xbox video game consoles, Surface tablets, cloud computing and the Bing search engine all compete for attention and resources. Some units may be shut down, spun out into separate companies or sold off. Deciding which ones to nurture and which to unload requires diplomacy and a knack for predicting the future.
"Microsoft had a very scattered approach of trying to be everything to everybody -- but nothing great," said Venky Ganesan, a venture capitalist with Menlo Ventures. "They need to come out and try to be great."
Thompson, one of the few African-Americans executives in the technology industry, grew up in South Florida as the son of a teacher and postal worker. He received a scholarship to play clarinet in a college band in Missouri before he transferred to Florida A&M to study business. He's known as unflappable and a skilled salesman. In his private life, he's an avid hunter and wine aficionado.
In 2012, Microsoft appointed Thompson to its board just at the time the pressure for an executive shakeup started rising. He led the search to replace Steve Ballmer, Microsoft's longtime leader who was eased out following years of stagnant stock performance. Analysts generally praised the choice of Nadella. But many criticized Thompson for dragging out the process for nearly six months, a period marked by repeated leaks and several candidates publically withdrawing their names from consideration.
"Perhaps that's natural for any high-profile search as this, but I wouldn't say it was a majestic effort," said Colin Gillis, an analyst for BGC Partners.
Thompson has been largely quiet about what exactly he'll do as chairman. In a brief video clip released on Tuesday to mark his appointment, he made a vague promise to "engage with shareholders and keep focused on how together we can bring great innovation to the market and drive strong long-term shareholder value."
In a video interview last year, Thompson described the board's role as not so much setting the company's strategy, but rather monitoring it. "Is the strategy right, and more importantly, is the team executing well against that strategy?" Thompson said.
At Microsoft, part of that strategy is to continue with a corporate reorganization that the board approved last year. It also involves integrating the $7.2 billion acquisition of Nokia, the Swedish phone maker, once that deal is finalized.
Ganesan, the venture capitalist, said that wisest thing for Thompson would be to give Nadella freedom from interference by the board. "He needs to make sure Satya isn't a prisoner of the past but rather a seer of the future," Ganesan said. "He should tell him, 'Look, you have the space and time now to think about the problems and make the hard decisions.'"