In-Depth

Hitting Refresh at Microsoft

In his first book as CEO, Satya Nadella reveals much about what motivates him as a leader, and how he wants to use Microsoft's existing strengths to vault to new heights.

Microsoft is refreshing its technologies, roadmaps, partnerships, business models and more at a blistering pace these days.

In an effort to share what's driving these changes, Microsoft CEO Satya Nadella wrote, "Hit Refresh: The Quest to Redis­cover Microsoft's Soul and Imagine a Better Future for Everyone." Released during Microsoft Ignite in late September, the revealing book consists of a series of what Nadella describes as meditations on transformation, on his past, on Microsoft and on big technology questions.

The book is a reintroduction to the world of sorts for Nadella, who became CEO three and a half years ago. Respected within the Microsoft ecosystem and Silicon Valley, Nadella hasn't had as high a profile outside of the tech world as the two men who preceded him as CEOs of Microsoft.

Bill Gates, the iconic co-founder of Microsoft known for his brilliance, temper and hard-charging competitiveness, was revered by some and reviled by others, but almost everyone in or out of tech had an opinion on the (then) richest man in the world. Steve Ballmer enjoyed popular familiarity as a boisterous and blustery salesman when he took over Microsoft, which was still the dominant company in technology, making his ascendance a huge business story at the time.

The Microsoft board chose Nadella as CEO in February 2014 from a large field of candidates, from a lower-profile position within Microsoft and at a time when Microsoft's importance to the broader tech industry was not nearly as central. The company launched a major introductory campaign for Nadella in 2014, featuring photos of him in hoodies and sneakers, and detailing elements of his past, including his life growing up in India, his love for cricket and his history of significant roles and projects during 22 successful years at Microsoft.

The Nadella who has emerged in public since then in keynote speeches, in public interviews and in the company's actions has been low-key, thoughtful, technically fluent, imaginative, open to partnerships, consistent in focus and capable of spurring Microsoft to fast execution on multiple fronts.

"Hit Refresh," co-written with Greg Shaw and Jill Tracie Nichols (published by HarperCollins Publishers), upends none of those earlier impressions of Nadella, but it delves deeper into the forces that motivate him, and provides insights into where he sees Microsoft going in the decades ahead and how he intends to guide the company in that direction.

Nadella doles out interesting biographical detail throughout the 242-page book. His father was a senior Indian government official with Marxist leanings. His mother was a Sanskrit scholar. He loved cricket as a boy and played seriously until early in his college career. He got his first computer, a Sinclair ZX Spectrum kit from Bangkok with a Z80 CPU, at 15, and computing was his second love, after cricket. He came to the United States for a master's in computer science at Wisconsin in 1988, worked at an ISV, and then later spent two years at Sun Microsystems Inc. before moving to Microsoft (and an enthusiastic attaboy from Ballmer for having left Sun). His first job at Microsoft in 1992 involved lugging heavy Compaq computers from customer to customer as a Windows NT evangelist. Later roles involved working on the Tiger Server video-on-demand project, running the Microsoft Dynamics business, starting up the Bing search engine, then leading the Server and Tools Business (STB) in its critical transformation to cloud.

Among the most important facets of his past that Nadella chooses to display in "Hit Refresh" are his competitiveness and his personal journey to greater empathy.

In the book, Nadella admits he doesn't have the competitive bluster that has been a Microsoft hallmark. "Microsoft is known for rallying the troops with competitive fire. The press loves that, but it's not me. My approach is to lead with a sense of purpose and pride in what we do, not envy or combativeness." But his book effectively warns the world not to underestimate a competitiveness developed in his cricket career. In a section on leadership, Nadella shared a lesson he learned facing a talented Australian team: "The first principle is to compete vigorously and with passion in the face of uncertainty and intimidation."

Nadella also contends that one of the many lessons he took from Microsoft's antitrust struggles "was to compete hard and then equally celebrate the opportunities we create for everyone. It's not a zero-sum game."

Stories he shares about his own personal journey toward greater empathy, meanwhile, suggest that overtures to accessibility and the seriousness with which Microsoft takes software quality will be far more than PR fluff as long as Nadella is in charge at Microsoft. From botching an empathy question in an early interview for one Microsoft position, Nadella became far more attuned after the 1996 birth of his son Zain, who has severe cerebral palsy.

On one of his son's hospital ICU stays shortly after Satya Nadella became CEO, the Microsoft executive noticed how many devices in the room were running Windows and were connected to the cloud: "It was a stark reminder that our work at Microsoft transcended business, that it made life possible for a fragile young boy. It also brought a new level of gravity to the looming decisions back at the office on our cloud and Windows 10 upgrades. We'd better get this right, I remember thinking to myself."

As for the direction of the company, Nadella has little to say in "Hit Refresh" about current initiatives like Office 365 or Windows 10 or even Azure. Instead he brings a wider lens, with a discussion of the "digital transformation" that all companies must go through as the world enters a "fourth industrial revolution."

For Microsoft, Nadella describes his own investment strategy for avoiding the trap of the innovator's dilemma, which is allowing revenues from current products to block next-generation product development that could one day make the cash cows irrelevant. Nadella is taking what he calls a three-growth horizon approach:

"On horizon one, our customers and partners will continue to see quarter-by-quarter, year-by-year innovations in all of our businesses. On horizon two, we're already investing in some exciting nearer-term platform shifts, such as new user interfaces with speech or digital ink, new applications with personal assistants and bots, and Internet of Things experiences for everything from factories to cars to home appliances. On horizon three, Microsoft is highly focused in areas that only a few years ago sounded distant, but today are frontiers of innovation -- mixed reality, artificial intelligence [AI] and quantum computing."

The horizon view provides a valuable framework for under­standing where Microsoft's myriad technology initiatives fit into the roadmap. For example, quantum computing, AI and mixed reality, which Nadella discusses extensively in "Hit Refresh," and which feature prominently in Microsoft keynotes, remain relatively distant goals.

Nadella's biggest theme is culture. Saying the C in CEO stands for culture, and quoting the famous Peter Drucker line, "Culture eats strategy for breakfast," Nadella devotes many of his reflections to the culture he wants to encourage at Microsoft.

He describes starting out the CEO job in pursuit of first principles, listening to employees by asking them, "Why does Microsoft exist?" Between their feedback and his own sense, he wound up at the mission statement in use over the last few years: "To empower every person and every organization on the planet to achieve more."

An upgrade from the largely successful "PC on every desktop" mission of early Microsoft, Nadella fiercely defends the empowerment aspect in his book, despite saying that he believes Wall Street currently undervalues the idea.

"I do have a bias for which I am unapologetic. It is a bias for driving investment toward technological advancements in services like LinkedIn and Office that help people create, connect, and become more productive rather than software that is simply entertaining -- memes for conspicuous consumption," he writes.

Prior to the launch of the iPhone more than 10 years ago, Microsoft was the unquestioned 800-pound gorilla of the tech industry, although the company was already struggling with its responses to Google Inc. and Linux. Five years ago, the industry seemed to have given up on Microsoft. These days, Microsoft is on the cusp of re-consideration. Listening to business discussions of the tech giants -- Amazon, Google, Apple and Facebook -- are in every conversation. But sometimes Microsoft is lumped in with those four. With his accomplishments so far, his culture-focused, steady leadership and the priorities revealed in "Hit Refresh," Nadella gives every indication that Microsoft will be included in more of those top-tier conversations.

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