The selection of a new CEO is the ultimate next step for any enterprise. Microsoft’s selection of a new CEO this week offers us the chance to analyse the importance of taking the right step. Few companies offer such a tangle of elements that allow us to predict with some accuracy the probable direction for Microsoft as far as any of us can see. If you judge by the as-wide-as-possible display of Satya Nadella’s photo on the Microsoft website [link], partly captured below, it’s clear that Microsoft sees this change in leadership as a BIG change for the company.
Consider the stage onto which Nadella (@satyanadella) stepped this week. There was the legendary co-founder and original CEO, Bill Gates. There also was Gate’s hand-picked successor, whom Nadella succeeds: Steve Ballmer. Nadella assumes the leadership of a company that generated close to $78 billion USD in revenue last year. It still has a huge level of influence on the desktop computing world, and Nadella has said that he wants to honour Gates by inviting his future participation on the strategic direction of the company — a clear point of deference to Microsoft’s past.
Yet, in an e-mail letter to all Microsoft employees (but widely published around the world) [link], Nadella made it clear that he is aiming for a seismic shift in how its core products and services (software) are built, deployed, and create value for customers.
Nadella’s e-mail touches on the company’s purpose (for the employees) and strategic intent (for the shareholders) while also including a glimpse of his personal background and feelings. Yet, when I printed his e-mail and highlighted some of the key passages, one stood out even though it was not in boldface type. Placed without huge emphasis in the e-mail are these words:
While we have seen great success, we are hungry to do more. Our industry does not respect tradition — it only respects innovation. This is a critical time for the industry and for Microsoft. Make no mistake, we are headed for greater places — as technology evolves and we evolve with and ahead of it. Our job is to ensure that Microsoft thrives in a mobile and cloud-first world.
Nadella has made it clear that Microsoft’s past is not what will propel it into the future. It is, in a way, a declaration that is as profound as that of Boeing and others when they stopped making propeller-driven airplanes. Goodbye, Microsoft of old. Hello, Microsoft of new.
This is a critical inflection point, not only for Microsoft but also for software in general and computing as we know it. The movement from desktop to mobile/tablets is a given, as far as mass communications and search concerned. And, while Microsoft will not abandon its Office suite, it’s making it much more expensive and difficult to procure outside of the realm of cloud-based downloading. Looking at all the productivity software, it’s plain that Google Docs (and others) are challenging Office as never before.
One level up from applications is, of course, the operating systems battle, which is being fiercely fought. There are three warriors: Microsoft Windows, Android/Google, and Apple’s iOS; and this field remains a multi-billion dollar contest.
The real question for Nadella, however, is not tied to the fate of Microsoft Word or even Windows 8. What Nadella must figure out is how Microsoft can go from an “engineering culture of builders” to an “entrepreneurial culture of discovers and shapers”. I would also ask whether Microsoft can go from a culture of domineering empire builders (everything must be centred around Windows) to that of smart-application makers who embrace a more fragmented landscape of smaller solutions. In a sign that Nadella was the right pick for the job, his e-mail answers these questions bluntly:
In our early history, our mission was about the PC on every desk and home, a goal we have mostly achieved in the developed world. Today we’re focused on a broader range of devices. While the deal is not yet complete, we will welcome to our family Nokia devices and services and the new mobile capabilities they bring us.
As we look forward, we must zero in on what Microsoft can uniquely contribute to the world. The opportunity ahead will require us to reimagine a lot of what we have done in the past for a mobile and cloud-first world, and do new things.
You can easily find articles that suggest that Steve Ballmer was pushed out of the top job at Microsoft [link], simply because he was not going to lead the company in the direction demanded by the marketplace. Yet, one has to acknowledge that Nadella has been with Microsoft 22 years. He’s an insider and may be averse to shaking up the culture as much as an outsider could have done.
How will we know if he has a chance to succeed? Watch for pivots in the company’s strategic emphasis and for cultural changes that seem to be coming at a faster pace than Ballmer was able to execute. Strategy and culture. Culture and strategy. The intricate mix of these two aspects of leadership creates either great companies or corporate crashes. To be sure, Microsoft will have to find its next in a landscape that is fluid, idiosyncratic, and fraught with disruption and ambiguity — a landscape that will require thinking in new ways, reshaping strategic intent and challenging the status quo. Though I do not personally know Nadella, I wish him luck. Welcome, Satya, to the world of nextsensing.