Leading While Learning
Nadella makes it his mission to teach, listen, and absorb new ideas.
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
“IF YOU SAY, ‘THE CURRENT JOB I HAVE IS EVERYTHING I EVER WANTED,’ LIFE BECOMES JUST SO MUCH MORE STRAIGHTFORWARD.”
Lili Cheng, general manager of Microsoft’s experimental FUSE Labs, has been empowered under Nadella to take risks— and recover from any missteps.