Satya Nadella: How Hitting Refresh Turned Microsoft Around

Source: Microsoft

When I’m not working, parenting or on TikTok, I read. In recent years, my reading material has veered towards biographies and memoirs. I’m fascinated by how great men/women ascend to the top of their chosen fields.

Satya Nadella’s memoir, Hit Refresh, is right up my alley. With his thoughtful leadership, there has been a renewed sense of vigour about Microsoft. When I think of Microsoft, I imagine a benevolent behemoth that’s nimble and ready to dominate the industry again (this time with kindness and empathy). Microsoft has learnt its ways; the evil monopolistic image is so 1990s and has long been eschewed. It’s no accident that Microsoft was excluded from the congressional antitrust hearing in July 2020.

A tale in three takes

Nadella’s memoir is in three parts:

  1. His journey from India to Microsoft;
  2. Microsoft’s transformation;
  3. The next wave of technological shifts, and his thoughts on the resulting economic and social impact.

A series of fortuitous life decisions brought Nadella to Microsoft in 1992 when the company was in its ascendancy. His own rise within Microsoft makes for an interesting read. The meat of the book, however, is in how Microsoft is being transformed under his leadership.

Transforming Microsoft

Before Nadella took leadership in early 2014, Microsoft’s share price languished below US$40. It has since increased by more than 5x. Investors have lucked out because Microsoft could have remained lacklustre without the shift in leadership, strategy, and culture.

Microsoft was a company on the wane. Sales of personal computers, the computing device Microsoft was dominant in, were declining. Mobile computing platforms like Apple’s iOS and Google’s Android were on the rise. Microsoft’s response was the Windows Phone, an ill-conceived product that was not sufficiently differentiated. Out of desperation to gain grounds in mobile, Microsoft bought Nokia in 2013. The resulting line of phones was a dud and the Nokia acquisition was eventually written-off. Microsoft was in trouble.

Bill Gates and Paul Allen started Microsoft in 1975 with, what was then, an audacious goal to democratise computing:

A computer on every desk and in every home.

Microsoft’s founding mission

Satya Nadella knew that Microsoft needed to hit refresh and return to its roots of democratising technology – making “powerful technology accessible to everyone and every organisation”. His strategy boils down to transforming Microsoft into a “mobile-first and cloud-first” company with the end goal of putting customers’ needs first. In practice, it means making products, that empower others, work across any device and any platform (even competitor’s). Notable examples include making Office work on iOS and Android, Minecraft on Facebook’s virtual reality headsets, and Azure on Linux.

Defining the strategy and vision for the company was the easy part. Like most large organisations, Microsoft was a confederation of fiefdoms. There were established processes and dogmas. Change was resisted. Nadella realised he had to do the following things very well from the outset:

  1. Communicate, clearly and regularly, a shared sense of mission, worldview, and business and innovation ambitions.
  2. Drive cultural change from top to bottom, and get the right team in the right place.

Leadership means making choices and then rallying the team around those choices.

Satya Nadella, Hit Refresh

Microsoft’s transformation is far from being complete. Satya Nadella is setting the stage for the company to dominate in the next wave of technological shifts.

The next wave

Microsoft is invested to lead in three key technologies:

  1. Artificial intelligence – advanced machine intelligence that enables contextual insights;
  2. Mixed reality – immersive environment that blends reality with a virtual one;
  3. Quantum computing – computers that can perform certain calculations exponentially faster than existing ones, which “will make artificial intelligence more intelligent and mixed reality an even more immersive experience”.

The vision is clear; Satya Nadella sees these as the next “run time” i.e. systems on top of which programmers will build and execute applications. This strategy is best encapsulated in the business parable from the California Gold Rush: it was far more lucrative selling shovels (and other tools and services) than it was mining gold. Microsoft is firmly in the tools and services business.

In the book, Satya Nadella also shares his thoughts on how these emerging technologies will bring about economic growth and social good. He is cautiously optimistic, aware, as he is, of the numerous challenges. For example, how do we tackle the short-term economic displacement that will result from automation enabled by technology? Disappointingly, he does not offer definitive answers but raises food for thoughts.

It’s not unreasonable to look to him for concrete solutions. After all, he’s successfully halted the decay (an inevitable plague of large organisations) at Microsoft, and has quietly made the company exciting again.

The bottom line: Hit refresh is an instructive read for leaders who are tasked to turn around a declining business. It also includes valuable lessons on effective leadership, and insights into the next wave of innovation and technological shifts.