How do you turn around the culture of a 130,000-person company
March 27, 2014, and Satya Nadella was about to make his first public appearance as CEO of Microsoft. The tone, he knew, would be important. Nadella’s predecessor, Steve Ballmer, was famous for making public appearances feel epic. At a 1991 meeting in Japan, he seemed to injure his vocal chords because he was screaming “Windows” with such force. In 2000, when Microsoft celebrated its 25th anniversary, Ballmer reportedly popped out of a giant cake. And in 2013, when he announced he was stepping down, he bid farewell to 13,000 Microsoft employees as “(I’ve had) The Time of My Life” blared through the speakers of Key Arena in Seattle. Through tears, the 6’5” Ballmer shouted, “Soak it in all of you. You work for the greatest company in the world.”
Nadella has not been that kind of CEO.
A 5’11”, cricket-loving engineer from Hyderabad, India, Nadella had built a reputation as a mild-mannered manager who spends his free time taking online classes on neuroscience and reading poetry. He had become CEO of the world’s fourth most valuable company, but the Microsoft he inherited was a far cry from the one he had joined in 1992.
For one thing, Microsoft had just paid $7.2 billion to acquire Nokia’s mobile business, a deal Nadella had voted against as a member of the senior leadership team because, as he explains in his autobiography, he “did not get why the world needed the third ecosystem in phones.” The Windows phone had a mere 4% market share, sipping on the dregs left over from Apple and Google.
But on that day in March, Nadella was not thinking about how to integrate Nokia’s 33,000 employees into his team. He was about to make an announcement that would set a precedent for his tenure as CEO.
Microsoft was going to release a version of its signature software suite—Microsoft Office—on the iPad, bucking Microsoft’s reputation for not collaborating with rivals. (As the keynote speaker at Salesforce’s Dreamforce conference two years later, Nadella used an iPhone during a product demo, a sight that would’ve been unimaginable in the Ballmer era.)
For this announcement, though, there was not much pomp and circumstance. The company rented out a small room in a San Francisco event space. It was an intimate setting, filled mostly with journalists and a few Microsoft employees. There Nadella was in the heart of Silicon Valley, in his first public appearance as CEO, about to start a partnership with one of his company’s sworn enemies.
However, on the morning of the event, Nadella and his team were not worried about what he was about to say. They were worried about where he was going to say it.
The room was set up with a two-meter tall stage from which Nadella could speak down to the audience. But Nadella and his team didn’t want to send the message that he was a supreme ruler, bestowing the plebeians with his presence. Before he spoke, he wanted to shorten the stage.
Shortening the stage has become an apt metaphor for Nadella’s tenure as Microsoft’s chief executive. He has, by and large, shifted the spotlight away from the pulpit and onto the masses. Since taking over as CEO five years ago this February, Microsoft’s share price has tripled. Last November, its market capitalization briefly passed Apple’s, temporarily making Microsoft the most valuable company in the world.
The company has made notable acquisitions of the popular game Minecraft, the developer platform Github, and the social network LinkedIn. And it has successfully repositioned itself—going from a “devices and services” company to a “mobile and cloud” company.
But if you ask Nadella how he reinvented Microsoft in half a decade, he won’t talk about the cloud computing or the billion-dollar acquisitions. For him, changing the direction of a ship carrying 130,000 employees could only be done by changing the culture on board.