Much has happened in the halls of Microsoft over the last four years. That’s how long Satya Nadella has been at the helm of the company as CEO and he has steered Microsoft in a different direction. In fact, it could be argued he simply put the company back on course. Speaking to Forbes, Nadella has offered some insight into how he has righted the ship.
Before delving into what Satya Nadella said, it is worth remembering what has happened since his tenure as Microsoft CEO began in 2014. Nadella replaced the outgoing Steve Ballmer, who had led the company since replacing Bill Gates in 2000.
It is fair to say Ballmer gets some unfair treatment, but it is also fair to say his tenure was a mixed bag at best. There were plenty of bad decisions under Ballmer’s wing, including Windows 8 and the idea of moving Microsoft towards being a hardware brand. Chasing mobile after entering the market too late was also an error that cost Microsoft.
Nadella entered and decided Microsoft needed to get back to basics, such as through software experiences. Expanding on Microsoft’s traditions, Nadella introduced a cloud first, mobile first strategy driven by Azure. The strategy has paid off, with Microsoft breaking records in terms of revenue and profit.
Another area where Satya Nadella has transformed Microsoft is in the open source community. Those who have followed the company long enough will know Redmond was staunchly against open source in the past. Moving with the times, Nadella has led the company into a new era of embracing open source.
Perhaps that new support of open source has been best exemplified by the $7.5 billion purchase of GitHub this year. In the interview with Forbes, Nadella points out that the acquisition was two years in the making. When closing the monster $27 billion acquisition of LinkedIn in 2016, Nadella asked an adviser if he could make a move for GitHub, a company he wanted under Microsoft’s wing.
“Can we do it?” Nadella asked the executive. “Have we earned the trust?” He says the answer was a firm no. Microsoft was making its way into the good graces of the open source community, but a history of trying to close down open source solutions like Linux would not be forgotten easily. GitHub perhaps encapsulates what the open source community is and can be, Nadella would have to wait.
He says he has rebuilt Microsoft in the image of the company founded by Bill Gates. In the company’s halcyon days, companies and services were built based on Microsoft software. “Bill used to teach me, ‘Every dollar we make, there’s got to be five dollars, ten dollars on the outside,’” Nadella tells Forbes.
“That’s what I want us to rediscover,” he says.
“People are finally coming around to saying, ‘It’s not just the surplus you’ve created for yourself. What’s the state of the world around you?’” Nadella says. “That’s where I feel like we’re at our best.”
Moving from Mobile
Nadella entered the Microsoft CEO hotseat just months after the company closed a $7 billion deal to take control of Nokia’s Lumia division. It seemed an ill-fated purchase and a last attempt to salvage something in mobile. Nokia had lost its mass appeal of half a decade earlier and Windows Phone was in the midst of failing.
Upon becoming CEO, Nadella swiftly wrote off that $7 billion and shuttered Microsoft’s mobile software and hardware. That decision is still seen as controversial by many, but the truth is the damage had been done to Microsoft’s mobile ambitions long before.
“When we achieved our success, with that success came out the classic hubris that I describe as being the know-it-alls,” Nadella says. “I said, ‘Let’s shed that.’”