Hailing from the Southern part of India which has given birth to leaders of giant companies around the world, Satya Nadella has made Microsoft the largest company in the world, in terms of market capitalisation since he took over 6 years ago. His leadership style has been completely different from what the company had witnessed under its past leaders. From Steve Ballmer’s flashy and supposedly ‘epic’ speeches, Nadella brought a more calming effect to the table. This has certainly worked for the company. Instead of a sideward movement of the stock prices witnessed under Ballmer’s reign, the share prices have only been going up under Nadella’s leadership. Nadella, a proponent of the growth mindset philosophy, believes in the growth of individuals and the team as a whole. Instead of focussing too much on tradition, he convinced the employees that innovation is the only thing that is respected in their industry. Often under the guidance of Ballmer and Gates, Microsoft had begun living off of its past rather than focussing on providing world-class tech to its users. However, tradition is fleeting and the only constant is change in this ever-changing world. This philosophy has helped Nadella in bringing Microsoft where it is today. When Nadella was given charge of Microsoft’s Cloud services, Ballmer had warned Nadella that he would be fired if he doesn’t make it work, and yet again while taking charge as the CEO, he faced a similar do-or-die situation.
Microsoft, by many accounts, was in dire shape before Nadella took over in 2014. Windows 8 had debuted with poor reception, and it was struggling to navigate the smartphone revolution. Although the Surface tablet is a modest success, Microsoft’s smartphones have flopped despite the firm paying more than €5.4 billion ($6.2bn; £4.7bn) for Nokia’s handset business. Apple’s iPhone, and then Google’s Android left Microsoft in the dust. Additionally, ‘Zune’, the company’s iPod lookalike, was considered one of the worst product flops in tech history. There was no doubt that Microsoft had maintained a longstanding legacy in Silicon Valley, but many agreed that it needed a new strategy to compete against its more nimble counterparts like Apple Inc and Alphabet Inc. The major problem was that Microsoft was not dynamic. It had not been changing with time, and was not adapting to the changes that its competitors were creating in the business environment. Where Bill Gates had taken the wind of personal computing, Steve Ballmer failed to do the same with smartphones. However, Satya had no intention of committing the same mistake. He made a pronouncement on day one, “The world is about cloud-first, mobile-first”, and made clear the direction in which the company would be going for the next five years.
Under Nadella’s leadership, Microsoft has embarked on a major transition towards becoming a cloud computing giant through its Azure platform. The cloud business, growing at a rate of 47%, continues to be the primary driver of the company’s success in recent years. The company’s current flagship business has a 20% market share in the cloud business. Azure is second only to Amazon’s AWS, with 31%. The coevolution of software and hardware will digitise most of the things that we do and experience in business, life and the world. It will be interesting to see who comes out on the top in the cloud competition in this world that is moving towards more sophisticated tech every day. Microsoft surely seems to be on the right path, being one step ahead of the change and not relying too much on its past successes. Nadella has completely shifted the company’s focus from its core business of Windows in the tenure of his leadership.
Microsoft has also forayed into the world of cloud gaming with Azure. Cloud gaming is like a subscription for games that you can play on any platform (mobile phone, laptop, gaming consoles, etc.). For Microsoft, getting the first-mover advantage would be key as Google too is planning to capture the market with ‘Stadia’. However, it should be easier for Microsoft to establish a strong foothold in this area as it already has experience with its gaming console business ‘Xbox’. The company has been using gamers’ data and constantly improving itself, to give the customers what they want, according to their preferences.
Nadella opposed the decision to purchase Nokia as he could not see why the world needed a third ecosystem in phones. He focussed on more sensible acquisitions, such as that of the job-search portal, LinkedIn. With this acquisition, Microsoft has become the leader in professional data. The Redmond giant plans to integrate the portal and make it available inside Outlook, Office, Skype, and Windows, thereby creating an ecosystem that is inescapable for the customer. Moreover, plans to integrate Cortana with LinkedIn have also been made. If something like this happens, Cortana would be able to assist the users in a much more complex manner by providing intel on customers’ business relations.
Nadella has also incorporated lessons from his personal life into his leadership style. Talking about his son’s struggle with cerebral palsy in his book Hit Refresh, he talks about how that experience instilled in him the feeling of empathy. He believes that it is important for people working in an innovation-centric company to be empathetic. In order to find a solution for a problem that your consumer is facing, you need to first be able to put yourself in his shoes and feel the need for innovation. He has repeatedly pressed on the importance of understanding what others are going through in order for a business to be successful.
Nadella’s managing style, say those who know him, is akin to cricket’s long-form (a sport of which the CEO is very fond of): slow, deliberative and patient. He makes no snap decisions. He focuses on a handful of the most important issues facing the company and takes a deep dive into each, encouraging serious input from others. Listening, probing, questioning. When he’s satisfied that he has enough information, he makes his decision — not a minute sooner. Nadella and his team know exactly what Microsoft is and what they want it to be: an innovative technology company that exists to help other businesses thrive. This vision is what has kept them growing, and will continue doing so in the years to come.
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