Book synthesis Microsoft: a successful transformation
A “radical makeover,” a “renaissance”, a “renewal”: Many words have been used to describe the path followed by Microsoft since Satya Nadella was appointed head of the corporation in February 2014. Under Nadella’s leadership, staff at the US juggernaut have worked strenuously to reinvent the Redmond-based company.
Satya Nadella became the third CEO in Micro- soft’s history in 2014, following in the footsteps of Bill Gates and Steve Ballmer. Many at the time were left wondering about Nadella’s abilities: would this somewhat discreet, 46-year-old engineer, with 22 years of experience at Microsoft, have what it takes to lead the world’s number one software manufacturer? Four years later, most observers would agree that Nadella has succeeded in radically transforming Microsoft. When the CEO took over back in 2014, however, her success was far from sure, with the US multinational showing signs of age. The corporation had been struggling to fend off the onslaught of competition for over a decade. As well as being handicapped by its bureaucratic modus operandi, fierce internal feuding had taken the edge off its ability to innovate. Nadella’s assessment of Microsoft at the time she took
over was severe: “PC sales had slowed and we were significantly behind in mobile. We were behind in search and we needed to grow again in gaming. We needed to build deeper empathy for our customers and their unarticulated and unmet needs. It was time to hit refresh.”
Going back to basics
In attempting to find a new path in a world transformed by mobile computing, the cloud and artificial intelligence, Nadella did not opt for a total break with the past. On the contrary, the new CEO decided to reconnect with Microsoft’s roots. On taking office, he launched a wide-ranging internal consultation based on two simple questions: “Why do we exist in the first place?” and “What are we going to do now?” Nadella explains: “The response to the first question was loud and clear: we exist to build products that empower others.” The answers to the second question helped Nadella define the direction the changes were going to take: creating partnerships that would widen the company’s playing field combined with maximum openness to innovation. Armed with this roadmap, Nadella set to work. A few weeks after the consultation, he sent a one-page memo summarizing his goals. At the same time, he reorganized his inner circle, choosing leaders with the ability to listen to each other and debate issues productively (whereas the past had been marked by rivalries). The CEO also shook up the company’s major internal rituals, beginning with the annual conference for the 150 top executives. At the 2014 meeting of what until then had been a collective retreat for the “happy few”, Nadella invited along the founders of companies recently acquired by the corporation and organized a long tour to meet customers.
Cultural transformation and a growth mindset
Once the outline of the changes had been decided, Nadella tackled his primary objective: to bring about the cultural transformation of the sleeping giant that Microsoft had become. The challenge was to transition from “know-it-all” mode to “learn-it-all” mode with the aim of establishing a new growth mindset. The program has included annual, week-long hackathons for employees keen to grow their ideas in the Microsoft ecosystem; a system for identifying emerging talent with the personal involvement of the CEO and executive committee; and the introduction of new, daring projects (deve- loping the HoloLens virtual reality headset, launching Windows 10 in Kenya, etc.) that boost the risk appetite of a company with a reputation for being over-cautious. The style of leadership adopted by Nadella to support this cultural shift has been based on frank
and frequent communication.
Excerpt from Business Digest N°283, February 2018
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Published by Caroline Schuurman
