Lead­ing While Learn­ing

Nadella makes it his mis­sion to teach, lis­ten, and ab­sorb new ideas.

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Mor­fit, the pres­i­dent and CIO of Value­act, an ac­tivist hedge fund that had got­ten a say in the new CEO hire by in­vest­ing $2 bil­lion in Mi­crosoft. “I was per­son­ally more in­clined to lean to­ward an out­sider.” So were most other Mi­crosoft watch­ers. Nadella, who had joined the com­pany in 1992 at the age of 25, was hardly a fa­vorite, de­spite the fact that he was al­ready run­ning Mi­crosoft’s cloud business. (“There’s no ques­tion that I’m an in­sider,” Nadella says, with a touch of cheer­ful de­fi­ance. “And I’m proud of it! I’m a prod­uct of Mi­crosoft.”) When his name was an­nounced, some crit­ics de­scribed the choice as a fall­back.

Since then, Nadella has not only re­stored Mi­crosoft to rel­e­vance; he’s gen­er­ated more than $250 bil­lion in mar­ket value in just three and a half years—more value growth over that time than Uber and Airbnb, Net­flix and Spo­tify, Snapchat and We­work. In­deed, more than all of them com­bined. Only a hand­ful of Ceos—names like Be­zos, Cook, Zucker­berg—can boast sim­i­larly im­pres­sive re­sults. Mi­crosoft’s shares have not only re­turned to their dot­com-bub­ble highs but sur­passed them. “[Nadella] has ex­ceeded all my ex­pec­ta­tions,” says Mor­fit, now a mem­ber of Mi­crosoft’s board. “I wish I could say we saw it all hap­pen­ing. That wouldn’t be hon­est.”

How Nadella turned things around comes back to the book he had his top lieu­tenants read, and the cul­ture that took hold from there. He has in­spired the com­pany’s 124,000 em­ploy­ees to em­brace what he calls “learn-it-all” cu­rios­ity (as op­posed to what he de­scribes as Mi­crosoft’s his­tor­i­cal know-it-all bent) that in turn has in­spired de­vel­op­ers and cus­tomers—and in­vestors—to en­gage with the com­pany in new, more mod­ern ways. Nadella is a con­tem­po­rary CEO able to em­pha­size the kinds of soft skills that are of­ten de­rided in the cut­throat world of cor­po­rate pol­i­tics but are, in to­day’s fast-mov­ing mar­ket­place, in­creas­ingly es­sen­tial to out­size per­for­mance.

“There’s a long list of other lead­ers Mi­crosoft could have hired,” says Aaron Le­vie, CEO of Box, which made its name as a cheeky startup by putting up bill­boards bash­ing Mi­crosoft but now part­ners with the com­pany on a va­ri­ety of ef­forts. “There aren’t a lot of case stud­ies about cul­tural shifts of the size and scale that Satya is cre­at­ing.” It’s 8 o’clock on a Fri­day morn­ing— which means that the mem­bers of Mi­crosoft’s se­nior lead­er­ship team (SLT) are gath­er­ing around a horse­shoe-shaped ta­ble in a board­room down the hall from Nadella’s of­fice. As ad­di­tional ex­ec­u­tives stream in, Sur­face de­vices in tow, Nadella, dressed in a black Mi­crosoft AI school T-shirt, plops him­self in a seat at the mid­dle of the ta­ble and picks at a plate of grapes and pineap­ple chunks.

The meet­ing be­gins with a reg­u­lar seg­ment, in­sti­tuted by Nadella, called “Re­searcher of the Amaz­ing,” which show­cases some­thing in­spir­ing go­ing on at the com­pany. On this day in late June, en­gi­neers at Mi­crosoft Tur­key, in Is­tan­bul, are patched in via video con­fer­ence to pro­to­type an app they’ve built for the vis­ually im­paired that reads books out loud. Af­ter an up­lift­ing open­ing such as that, the weekly meet­ing can some­times stretch for as long as seven hours. Ini­ti­ated by Ballmer late in his ten­ure as CEO, the SLT ses­sion has be­come a hall­mark of Nadella’s team-sport ap­proach to run­ning Mi­crosoft. He so­lic­its opin­ions and of­fers pos­i­tive feed­back through­out, at one point nod­ding in vig­or­ous agree­ment with some­one’s point while hold­ing a card­board cof­fee cup in his clenched teeth, leav­ing his hands free to ges­tic­u­late ex­pan­sively.

The gath­er­ing’s re­laxed feel is quite a change from the days when col­lab­o­ra­tion at Mi­crosoft in­volved a large dose of show­ing off how smart you were. In the past, says pres­i­dent Smith, “all of us who grew up here knew that we needed to be well pre­pared for ev­ery meet­ing. There’s noth­ing wrong with that, but that meant try­ing to dis­cern the an­swers be­fore the meet­ing

be­gan and then be­ing tested on whether your an­swers were right. Bill [Gates] and Steve [Ballmer] both used that to great ef­fect to tease apart ar­eas where the think­ing needed to be de­vel­oped fur­ther.”

When I ask Nadella for his own ac­count of work­ing with his pre­de­ces­sors, he’s blunt. “Bill’s not the kind of guy who walks into your of­fice and says, ‘Hey, great job,’ ” he tells me. “It’s like, ‘Let me start by telling you the 20 things that are wrong with you to­day.’ ” Ballmer’s tech­nique, Nadella adds, is sim­i­lar. He chuck­les at the im­ages he’s con­jured and em­pha­sizes that he finds such di­rect­ness “re­fresh­ing.” (Upon be­com­ing CEO, Nadella even asked Gates, who re­mains a tech­nol­ogy ad­viser to the com­pany, to in­crease the hours he de­votes to giv­ing feed­back to prod­uct teams.)

Nadella’s ap­proach is gen­tler. He be­lieves hu­man be­ings are wired to have em­pa­thy, and that’s es­sen­tial not only for cre­at­ing har­mony at work but also for mak­ing prod­ucts that will res­onate. “You have to be able to say, ‘Where is this per­son com­ing from?’ ” he says. “‘What makes them tick? Why are they ex­cited or frus­trated by some­thing that is hap­pen­ing, whether it’s about com­put­ing or be­yond com­put­ing?’ ”

His phi­los­o­phy stems from one of the prin­ci­pal events of his per­sonal life. In 1996, his first child, Zain, was born with se­vere cere­bral palsy, per­ma­nently al­ter­ing what had been a pretty care­free life­style for him and his wife, Anu. For two or three years, Nadella felt sorry for him­self. And then—nudged along by Anu, who had given up her ca­reer as an ar­chi­tect to care for Zain—his per­spec­tive changed. “If any­thing,” he re­mem­bers think­ing, “I should be do­ing ev­ery­thing to put my­self in [Zain’s] shoes, given the priv­i­lege I have to be able to help him.” Nadella says that this em­pa­thy— though he cau­tions that the word is some­times overused—“is a mas­sive part of who I am to­day. . . . I dis­tinctly re­mem­ber who I was as a per­son be­fore and af­ter,” he says. “I won’t say I was nar­row or self­ish or any­thing, but there was some­thing that was miss­ing.”

Zain “is just such a joy at this point,” Nadella says of the on­go­ing in­spi­ra­tion he draws from his son, who turned 21 in Au­gust. “Ev­ery­thing else that’s hap­pen­ing in my life is sud­denly brought into per­spec­tive when I think about how he has en­dured through all his chal­lenges. The one thing that he can com­mu­ni­cate is, when I get close to him, he’ll smile. And that makes my day, and makes my life.”

Grow­ing up in Hy­der­abad, India, Nadella

liked com­put­ers al­most as much as he did cricket. When he was 15, Nadella’s mid­dle-class par­ents bought their only child a com­puter kit

from Bangkok. On his 21st birth­day, Nadella ar­rived in the U.S. to study com­puter sci­ence at the Univer­sity of Wis­con­sin–mil­wau­kee. Af­ter grad­u­a­tion, he spent a cou­ple years at Sun Mi­crosys­tems be­fore be­ing lured to Mi­crosoft. It was Mi­crosoft’s boom years—the 1990s—and Nadella found him­self steadily pro­moted. “Say­ing, ‘Well, I’m wait­ing for the next job to do my best work’ is the worst trap,” he con­tends. “If you say, ‘The cur­rent job I have is ev­ery­thing I ever wanted,’ life be­comes just so much more straight­for­ward.”

Doug Bur­gum, who ran Mi­crosoft’s business so­lu­tions group and is now gov­er­nor of North Dakota, be­came a men­tor. “Early on, Jeff Be­zos was try­ing to re­cruit him [to Ama­zon],” says Bur­gum of Nadella. “It was my job to re-re­cruit him.” Though Ama­zon had al­ready be­gun to spread its reach, Bur­gum suc­cess­fully ar­gued that the op­por­tu­ni­ties avail­able at Mi­crosoft beat any­thing a mere book­seller could of­fer. “I was wrong about my char­ac­ter­i­za­tion of Ama­zon,” Bur­gum ad­mits, “but I was right about con­vinc­ing Satya to stay.”

Bur­gum groomed Nadella to be his suc­ces­sor. In 2007, at Bur­gum’s last cus­tomer con­fer­ence at Mi­crosoft, he lav­ished praise on Nadella in front of an au­di­ence of thou­sands and then handed the key­note off to him. But right af­ter the con­fer­ence, Ballmer stepped in, reshuf­fling the staff. He de­cided that Nadella would be more valu­able run­ning a dif­fer­ent group, the en­gi­neer­ing arm of Win­dows Live Search, later known as Bing.

“Steve was very clear,” re­calls Nadella, de­scrib­ing the po­si­tion, which he felt he couldn’t refuse. “He just said, ‘Look, this is the most im­por­tant chal­lenge I have. I don’t think this


Lili Cheng, gen­eral man­ager of Mi­crosoft’s ex­per­i­men­tal FUSE Labs, has been em­pow­ered un­der Nadella to take risks— and re­cover from any mis­steps.

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