Satya’s Strategy Playbook

Since his appointment as Microsoft CEO on February 4th, 2014, Satya Nadella has undoubtedly had a significant impact on the Redmond-based tech giant’s direction and has certainly shaken...

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Since his appointment as Microsoft CEO on February 4th, 2014, Satya Nadella has undoubtedly had a significant impact on the Redmond-based tech giant’s direction and has certainly shaken things up. Whether the changes he has made will be successful remains to be seen but one can’t dispute that he has been decisive and moved quickly to lead Microsoft in a new strategic direction. And although it may be too early to tell if his tenure as CEO will be judged a successful one, there have been a number of indications that his leadership and decision-making are sound. The market seems to agree with a 15% in Microsoft shares in the first year of Satya’s reign and 12% increase in revenue in the same period. So what can we stand to learn from Nadella’s actions in his first 17 months?

Play 1: Make your intentions known and understood

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As Aaron Levie, CEO of Box and long-time critic of Steve Ballmer’s Microsoft, put it “Under the leadership of Satya Nadella, the company has dramatically changed not only its tune, but its course as well.” The change in course that Levie is referring to is Nadella’s clear vision and mission to make Microsoft a ‘cloud first, mobile first’ organisation. This short, digestible, easily-communicated sound bite has become Microsoft’s mantra under Nadella, the drum beat to which it marches, and the over-arching objective that informs its day-to-day decisions. It also displays a recognition of the market trends that are driving the tech industry and instils at least a modicum of confidence that Microsoft might be willing to shed the complacency that comes of years of domination and move with the times before it’s too late.

Play 2: Let your actions speak for themselves

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More important still than his battle cry and its clarity, is his ability to back it up with decisive action. Nadella set out his stall early, within his first 52 days in the job in fact, with the release of Office for iPad with the caveat that an Office 365b subscription was required to enable the applications. This move illustrated the intention to prioritize mobile and cloud but also signaled a more platform-agnostic approach. If the rumors are to be believed, Microsoft had been sitting on the applications for over two years, opting not to release them in the vain hope of driving the corporate market towards its own fledgling tablet offering, Surface. The move was also an unequivocal recognition of the fact that the company’s competitive advantage lies in software but that it could not continue to attempt to use its dominant position in office productivity software to bully customers into going with their hardware offering too. Nadella’s is a softer approach and one which might help customers to love Microsoft again.

Play 3: Surround yourself with the right people

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A key starting point for any leader in taking over the helm of a ship the size of Microsoft is to surround yourself with the right people. Upon his appointment, Nadella quickly announced a shake-up of his senior leadership team. Tony Bates who headed up business development was ousted along with marketing boss, Tami Reller. Mark Penn, the man behind the ill-conceived Scroogled ad campaigns was re-assigned and Chris Capossela took over the CMO role. Not to mention the return of Stephen Elop and the promotion of Scott Guthrie to head up the Cloud division. Notwithstanding the subsequent reshuffle in June 2015, effecting all of these changes within his first month was further clarification of Nadella’s strategic direction and clarity of purpose. In any organization, when trying to bring about an overhaul of that scale, any personnel who are not fully onboard have no place in senior positions – everyone must share a common goal and motivation. They must also believe in their leader, which if Nadella’s internal approval rating of 85% on Glass Door is anything to go by, is certainly the case so far (for comparison, Ballmer’s rate was a much lower 39%).

Play 4: If the solution can’t be found inside, look outside

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Another important factor that Nadella seems to understand is that you not only need the right people inside the company but also the right people external to the organization who will help you achieve your goals. Microsoft under Ballmer was a notoriously closed, bureaucratic, and difficult company to partner and do business with. Nadella’s Microsoft is a different animal. There is a new found willingness to integrate its services with those of competitors and it has worked closely with the likes of Dropbox and Salesforce amongst others to ensure a seamless experience for their millions of shared customers. Nadella has also realized that some of the areas in which Microsoft is weakest can be best improved by way of acquisition. Purchases like Accompli, and its subsequent integration as the new Outlook app for iPhone, as well as those of 6Wunderkinder and Sunrise have demonstrated a willingness to that there are other companies out there who do certain things better than Microsoft can. Another external ecosystem that Nadella has made a point of renewing ties with is developers. The developer community is actually getting excited about Windows 10 and the sentiment in Silicon Valley is that Microsoft has become much more open to working with them, accepting and integrating their feedback, and making it easier for them to develop on their OS. Time will tell if this openness bears fruit.

Play 5: Go big or go home

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It may well turn out to be one of the defining moments in Nadella’s term as CEO, and possibly a pivotal moment in Microsoft’s history, but in any case the release of Windows 10 this summer will be telling. Microsoft made a big bet on mobile in its acquisition of Nokia’s Devices and Services business back in April 2014. This big bet definitely didn’t pay off as the company announced today that 7,800 jobs will be axed and $7.6 billion written off the company’s value after the acquisition of failed to result in significant new sales for Windows Phone devices. The key problem for Windows Mobile (and the reason why I switched away from it myself) is the dearth of apps available on the platform and, in short, the release of Windows 10 will either solve the app problem for both desktop and mobile of for neither.

Microsoft is betting the house on the idea that there shouldn’t be a difference between desktop and mobile and the user experience should be seamless across all platforms. If it works, it could be beautiful. If not, it could be a disaster. In any case, it’s a ballsy move and one which could make or break Satya Nadella’s reputation in the same way Windows 8 was the breaking of Ballmer. Will the product division of this developer win where the bluster of his sales guy predecessor failed? We will be watching closely to see how it all plays out.

by Michael Cullen @michaelcullen87

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