If you were following tech news in 2012 and 2013, you know that it was widely reported that Microsoft was in serious trouble. It announced losses that landed it in hot water with investors, and there were numerous reports about just where the company had gone wrong, many centering on the perceived flaws of Windows 8.
The familiar drumbeat of the time was that Microsoft was on its way out and that it would be displaced by competitors in the marketplace.
Then, in 2014 Satya Nadella replaced long-time Microsoft CEO Steve Ballmer and headlines decrying Microsoft’s future have since told a much different story. Now the word “turnaround” is used frequently, and Nadella is credited with turning the tide on the doomsday prophecies.
How did he do it? By transforming the company’s entire culture and relying on data-driven decision making to calculate next moves.
Microsoft’s New Culture
Nadella has chronicled the changes he made at Microsoft in his book Hit Refresh, a close look at the transformation. He also credits books as his source of new ideas and inspiration, and his tome of literary references frequently stand out to those who interview him. Nadella believed that there were many small things that Microsoft was doing well but, to turn the ship around and make a measurable difference, he had to change the culture.
When Nadella arrived, Microsoft had a reputation for infighting and competitiveness, and Nadella’s reflections suggest it was a reputation well-earned. One of the first changes Nadella made did not immediately go over well within the company walls. He knew that the annual retreat, which was previously attended by 150 of the top executives, did not actually spark new ideas and growth. Instead, it had become a place for aggressive posturing and criticism. To shake things up, Nadella invited the founders of Microsoft’s recently-acquired startups, individuals who were not senior enough to have secured invitations in the past. They were asked to share freely without upper executives to interrupt, and fresh ideas flowed.
Nadella also asked those top executives to read Marshall Rosenberg’s Nonviolent Communication. He began pushing a complete overhaul of the interpersonal dynamics of the company, promoting collaboration over competition. This isn’t the only book credited with saving Microsoft. Many have also noted that Nadella’s strong reliance on principles of the growth mindset as championed in Carol Dweck’s book Mindset have helped the company to regain its foothold and maintain relevance in a rapidly-changing technology field.
All of these principles have come to a head in Microsoft’s embrace of data-driven decision making. Talking about promoting collaboration is great, but Microsoft took it further by using their own technologies to analyze that collaboration in a data-driven way.
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A close look at the data, and the ways with which people were successfully collaborating led to company-wide policies that snowballed into sustained, meaningful transformation. For instance, Microsoft saw that larger, more inclusive networks produced more sales for salespeople yet, such networks took a year to grow to a sufficient size. To nurture this, they focused on strategies that would stabilize roles and promote from within to develop existing networks.
Another observation was that customers reported more satisfaction with the company when they got more attention from reps. Microsoft reduced the customer load for its enterprise account reps so that each could spend more time with key customers. Data has given them the tools they need to rethink their high-growth accounts, focus on their underserved accounts, and better predict customer satisfaction.
Satya Nadella knew that Microsoft had the talent, ideas, and skills necessary to reach its full potential. What he had to do was change the culture, and he used the data all around him to make a case for those changes.
In short, it is the collection of meaningful data and the tools to interpret it coupled with the mindset that takes it seriously that allowed Microsoft to shake off the worst of its missteps and reemerge as a serious force in the current marketplace.