At the close of Thanksgiving week 2018 in the United States, Microsoft reached a major market position as they became the most valuable company in the world. For those that have worked at Microsoft for many years, this is an amazing transformation after years of little to no increase in stock prices, very public black eyes with software releases, and falling behind the competition in many areas. As I have watched Microsoft go through their transformation, I have seen three important lessons I think all companies and all leaders should be considering.
- Focus on Culture and People
- Drive Innovation
- Expand Partnerships and Openness
Focus on Culture and People
When Satya Nadella became the CEO of Microsoft, he was stepping into a tough culture where teams weren't working together as well as they should, the recent Nokia devices merger was struggling, Microsoft was falling behind in leadership in multiple areas and people simply felt burned out. Shortly after taking the CEO role, Satya required all of his executives to read the book "Nonviolent Communication" by Marshall B. Rosenberg to help the leadership team better understand how to communicate and the impacts of their communication styles. As the leadership team started to embrace new ways to communicate and express their needs, it started to change the culture. Satya also made numerous other internal changes, though not all popular, to help drive the change needed in the organization. One of my friends at Hitachi Consulting, Susan Anderson wrote about this very challenge recently in a blog called "Defining the entire elephant."
In an interview with USA Today in February 2017, he stated, "What I realize more than ever now is that my job is curation of our culture. If you don't focus on creating a culture that allows people to do their best work, then you've created nothing."
Where we often struggle is building the right culture and people focus in our organizations and empowering people to be successful. I think Stephen R. Covey said it best when he stated, "Treat your employees exactly as you want them to treat your best customers."
A key aspect to Microsoft's ongoing culture and people focus are centers of excellence focused on deep analytics and insights to help identify patterns faster, break down barriers, better identify interactions with customers, and providing real people data on the organization. A foundation for these centers of excellence start with Microsoft's Workplace Analytics solution. Hitachi Consulting is now partnering with Microsoft in this area to help drive transformation and change in our client's organizations.
In a previous blog post, I talked about driving innovation using Microsoft 365. At the beginning of that post, I shared some statistics about the need and imperative for change and driving innovation. We have a greater need to innovate now more than ever. Failing to innovate and change can quickly result in failing behind the competition, failing to support the needs of the customer, or even going out of business.
What I find interesting about Microsoft's innovation is one specific element - be willing to change or give up your major revenue driver to drive the future of the organization. For years Microsoft's primary revenue generators were the Windows desktop client and the Office desktop suite. Microsoft measured the number of "seats sold" of these two products and provided new versions almost like clockwork every three years. And, those three year cycles just happened to line up perfectly with the Enterprise Agreement (EA) renewal process.
The new Microsoft is very different. Don't get me wrong - Windows and Office still generate a lot of revenue for Microsoft. But, Satya recognized the shift to cloud was critical to the future of Microsoft and all teams doubled down on making the transformation. Every single product would be built for the cloud first and on-premises second. Every product would focus on faster release cycles, deep hybrid connections between on-premises and cloud tools, and every product would connect in some form to the Azure cloud platform. Today Microsoft releases two major versions of Windows and Office every year. Services like Office 365 have become the most used cloud application across business organizations and Microsoft delivers almost 50 new features and capabilities per month. More than 90% of all Fortune 500 companies are now using the Microsoft cloud.
Making these changes was difficult. It required Microsoft to discontinue many products and services. It required changing internal teams and organizations. It required spending and investing a lot of money to drive the transformation. And, there have been bumps along the way.
The question we need to face is are we innovating fast enough and are we willing to make the big sacrifices that are sometimes required to stay relevant in the future?
Expand Partnerships and Openness
One of the other major focus areas for Satya was being a better partner with Microsoft's partners and with companies and organizations that would never be considered a Microsoft partner in the past. In an article published on June 1, 2001 in the Chicago Sun-Times, then Microsoft CEO Steve Ballmer was quoted as saying, "Linux is a cancer..." Microsoft leadership for years attacked open source programs and especially Linux. Linux was seen as a real threat to the Windows business which was the primary revenue driver for Microsoft at the time. Satya recognized that driving innovation and providing the best customer experience required Microsoft to change how they worked with other companies.
After Satya took the CEO role, Microsoft released Office for iOS and Android, became close partners with many Linux vendors including offering the deepest support for Red Hat Enterprise Linux of any cloud vendor, releasing SQL Server to Linux, releasing .NET and programming languages to open source, and more. Microsoft works aggressively to contribute to open source, to bring all types of solutions and vendors into the Microsoft cloud ecosystem, and to drive innovation with these solutions. In 2017 Microsoft was the largest contributor to open source in the world.
The ultimate goal for Microsoft has been driving innovation and solutions that meet the needs of Microsoft's customers wherever they may be in the world and with whatever technology solutions those customers are using. This openness helps customers move faster and easier to Microsoft's cloud platforms like Azure and allow customers to focus on their own innovation.
No one company can be everything to everyone. Being more open to embracing partnerships and looking at ways to drive a better customer experience should be all of our goals.
Microsoft will continue to have bumps in the road, ongoing changes, and challenges like any organization. Their position as the most valuable company in the world will also change. But, I suspect we will continue to see tremendous leadership and innovation coming from Microsoft.
For our organizations, creating the right culture and focus on people, driving innovation and real transformation, and being open to partner and change how we work with other organizations can be powerful tools in our own change and growth.
The one thing I know for sure is it will be a fun and interesting ride!