From stagnation to being the most valuable company in the world
Microsoft CEO's top 3 leadership themes
This is Microsoft's history in a picture:
Microsoft started as a small software company that aimed to bring personal computing to the people.
The company's breakthrough came with the development of MS-DOS and later the Windows operating system, which changed the way people interacted with computers.
Under the leadership of Bill Gates, Microsoft was a dominant force in the tech industry.
However, when Gates was replaced by Steve Balmer, the company went stagnant and missed out on the most important trends of the time, like the search engines and mobile phones.
In 2014, Satya Nadella stepped in and changed everything.
In today’s article I’m going to discuss how Nadella turned Microsoft around through his leadership style.
In the book, Nadella talks about 5 different themes and I chose the top 3 for you.
I have come to understand that my primary job is to curate our culture so that one hundred thousand inspired minds — Microsoft’s employees — can better shape our culture.
- Satya Nadella
Empathy
Satya’s empathetic leadership style came from different experiences in his life, mostly affected by his son, Zain, who was born disabled and died at the age of 26.
“My son’s condition requires that I draw daily upon the very same passion for ideas and empathy that I learned from my parents (…)
I am always searching to understand people’s thoughts, feelings and ideas. Being an empathetic father, and bringing that desire to discover what is at the core, the soul makes me a better leader.”
Nadella believes that empathy is the primary driver of Microsoft’s growth. His empathy can be divided into three parts:
Empathy for customers
Nadella realized that for the customers to be happier, Microsoft has to know exactly what hurts them the most.
In order to do that, he went out into the world to see exactly how people use the products and learn what they need.
He invited schools and nonprofits to his team’s annual retreats, so that Microsoft’s team could understand the customers’ problems and work together to solve them.
The theme of putting the customer in the center appears in many large, successful companies. One of them is Amazon, which is obsessed with its customers. We have elaborated more on what made Amazon successful in another article:
Empathy for employees
When Nadella took over as CEO, he promised employees that he would listen to them to better understand the problems the company faced.
He actively encouraged employees to give feedback and speak their minds in meetings and debates.
One interesting thing that he did, despite his seniors’ resistance, was inviting juniors to their annual brainstorming retreat.
Empathy for Competitors
Nadella believes that it’s important to talk directly with your competitors to learn from them and settle arguments.
He met with executives from large tech rivals like Apple and Meta to better understand what they were doing well that Microsoft was not doing.
Other CEOs are less empathetic to their competitors and can be straight-up ruthless.
Mark Zuckerberg, for example, “stole” Instagram buyout from Jack Dorsey’s. After Dorsey agreed with Kevin Systrom, co-founder of Instagram, to buy Instagram for $500m, Mark invited Systrom to stay together for the Easter weekend. During the weekend, Mark did everything needed to close a $1b deal with Systrom, which came as a big surprise to Dorsey.
Leadership
Put your team ahead of yourself
Individuals, no matter how talented, can break a team if they are focused on their personal achievements rather than the collective success.
Don’t grow complacent
Don’t get fixated on the way “things had always been done”. Take risks, question your systems and processes regularly, and keep looking for new opportunities for growth.
In the Gates era, Microsoft had a huge part in leading the personal computer revolution, though it missed out on other important trends like search engines and mobile phones, in the Balmer era (I’ll elaborate a bit more later).
Fun fact:
There’s a YouTube video that shows Balmer mocking the iPhone, 6 months before its initial release.
Have both a long-term and a short-term perspective
In order to spot opportunities and take smart risks, a company must always consider how those decisions would affect the world around it and its own long term.
For example, Nadella talks about the importance of anticipating the disruptive effects AI could have on the workforce. He says that companies should find ways to make AI complement workers rather than making human capabilities obsolete.
The book was written in 2017, way before ChatGPT emerged!
Innovation
Microsoft’s growth was stagnant when Nadella stepped into the CEO role.
He believes that the reason is that Microsoft grew a fixed mindset. It rested on past successes instead of continuing to take risks and innovate.
Nadella helped Microsoft break out of its fixed mindset by adopting a growth mindset.
Growth mindset
Nadella made risk-taking and innovation a part of the day, which led to new opportunities in AI (Investment in ChatGPT) and cloud computing (Azure), and changed the general atmosphere at the company.
Diverse workforce
Nadella believes that having diverse employees prevents homogeneous thinking and opens the company to different values and perspectives, which ultimately lead to better ideas and products.
Here’s the latest report:
Working together
Before Nadella, Microsoft was infested with bureaucracy and isolation between departments.
He believes that the key to moving forward is collaboration and being open to other people’s ideas.
Nadella and his executive team introduced an annual week-long hackathon, in which teams from different departments work together to solve problems creatively.
Final words
Nadella’s leadership style got Microsoft from being a failing company that relies on its past successes, to a growth machine that keeps up with every new trend and even leads some of those.
Keep in mind that although this way of leading can be quite appealing, it doesn’t work for everybody and it’s not the only way to get things done.
We wrote about Elon Musk’s managerial style, which is 180 degrees from Nadella’s:
What we enjoyed reading this week
Increasing Your Intensity Is the Cheat Code to Success by
- An incredibly well-written and eye-opening article about why intensity and being aware of how time-limited we are is crucial for success.- - It’s incredible how we’re taught from a young age to save every penny we can, but doing the exact opposite with the right mindset might be a lot better. Read the article to understand why :)
I’ve seen a lot of startup growth, and I like dumb plans by
Thanks, Orel, for putting these lessons up here.
I enjoyed these truly remarkable three themes!
This looks very interesting.
Adding to my wishlist
Thanks for your post