5 Things the Channel can Learn from Satya Nadella’s Rejuvenation of Microsoft
April 16, 2019
How to retain great talent, how to generate new business, how to innovate and how to stay on top of new skill sets that the industry demands. These are just a few issues that are top of mind for nearly every practice in today’s technology services market.
The cloud and the subscription model have created a fundamental shift in the way that IT services are bought and sold. Today, technology companies now win and lose based on the quality of the services they can provide. This shift poses significant economic challenges to older IT business models which traditionally relied on large up-front contract fees.
In the not-so-distant past, similar hurdles plagued Microsoft. Yet, it was the leadership of their CEO, Satya Nadella, who understood the sea change and capitalized on it.
Just a few years ago, Microsoft was seen as a large tech company that had once been great, but had run out of fresh ideas. It was big and still quite profitable, but the company had lost its appeal. As Apple, Google, and Facebook innovated, Microsoft fell flat in a number of key markets: e-books, music, search and social networking have all proven to be stumbling blocks.
Now, with the rapid rise of Azure and a timely culture shift, Microsoft is now once again considered to be one of the front-runners of the tech world. To achieve this, Nadella had to turn the ship – more like the aircraft carrier in this case – around with overhauls in several key areas. He accomplished the feat in a challenging, changing climate in technology. IT customers that were once mostly loyal to one brand like Microsoft or Oracle – and that were in the habit of buying full suites of products up-front – started to cherry pick top-tier offerings across vendors, thanks to cloud services and subscription models.
To adapt to this new way of thinking and take full advantage of digital transformation opportunities, businesses in the Channel could benefit from several ideas out of Satya Nadella’s playbook to inject life into business models that need a rethink.
1. Focus on empowering people
Nadella told USA Today “When I joined the company in 1992, we used to talk about our mission as putting a PC in every home, and by the end of the decade we have done that, at least in the developed world. It always bothered me that we confused an enduring mission with a temporal goal.” But on June 25, 2015, he sent an email that gave Microsoft a new and more lasting point of focus: “Our mission is to empower every person and every organization on the planet to achieve more.” From that moment on, Microsoft became people focused instead of product focused.
Nadella replaced Microsoft’s know-it-all approach and internal cutthroat competition, underscored by stack rankings, with a learn-it-all attitude and growth mindset.
The belief that anyone could grow and develop if he or she were nurtured encouraged thoughts and ideas from everyone across the company. Failure – once considered taboo – was considered a learning experience. Nadella also believed Microsoft should work for employees. In other words, he encouraged employees and their teams to pursue a particular passion or personal philosophy in their projects.
Finally, influenced by his son who was born with severe cerebral palsy, Nadella made diversity and inclusion a key piece of day-to-day life at Microsoft “because we all come with different styles, we have different cultural upbringings, what makes us tick is different. So you got to have leaders who are in-tuned with that,” he told students at NYU in 2017.
Skills are increasingly important in today’s technology market. The takeaway here for the Channel is that a core change in philosophy helped make Microsoft a cool place to work again and drove innovation by creating a safe space for learning new skills and exploring leading-edge ideas that embraced everyone.
According to Entrepreneur, 95 percent of millenials believe that continued learning and skill evolution is key to a successful career. In fact, they will seek training on their own. So, opening up a dialogue and supporting employees with regard to skills acquisition and application in their role will increase the likelihood that they will stick around to use new skills to benefit their current services-based practice that earned their trust.
Nadella insisted that Microsoft applied the same learn-it-all approach toward its customers. Instead of acting like a bull in a china shop with its end users by assuming and asserting what was needed, Nadella directed his people to approach customers outside the company with the mind and curiosity of a beginner. He stressed the importance of bringing new knowledge from the outside back into the fold to create meaningful solutions that would also “surprise and delight,” using empathy to lead innovation.
Partners must do the same to become or to stay competitive. Diana Nolting, Director of Product at Anvl, told Computerworld, “IT must consult with users through an investigation of the core problems that exist behind the initial ask. End-user needs are never static, so IT needs to fully embrace ongoing user research and conversations as part of an iterative, agile approach to delivering features and functionalities.” If one practice isn’t listening to a customer’s needs, another one will.
Microsoft realized the opportunities afforded to some in pursuit of its mission left the company with a responsibility. It needed to lift up the less fortunate and encourage the sustainable development and use of technology. In 2018, Microsoft donated $1.4 billion in software and services to non-profits worldwide and achieved 100 percent carbon neutrality by is global operations.
When a business gives back and fosters a feeling of connectedness with its community, even more opportunities are potentially created to understand what more is needed from both a humanitarian view as well as an IT services standpoint. Other benefits of corporate social responsibility for any service-based business include improving the company’s brand, engaging customers, retaining top talent and helping a company stand out from the competition, according to Investopedia.
2. Plan doggedly, strike quickly
Before Nadella rose to CEO at Microsoft, he was invited to accompany Netflix CEO Reed Hastings to Netflix meetings. Nadella had never experienced a company other than Microsoft and was captivated by the entertainment company’s ability to change direction quickly based on new data and new trends. In comparison, slogs through Microsoft red tape made it tough to get things done quickly.
Nadella understood that achieving 100 percent certainty in a new idea was impossible, and waiting to do so would leave the company in the dust. Chief accessibility officer Jenny Lay-Flurrie told In the Black, “I’ve found him to be a learner, curious, a listener, but very decisive when needed, moving things forward in a very collaborative way.” Nadella’s well thought out and quickly acted-on strategies relating to Microsoft’s investments in cloud services and HoloLens, as well as the acquisition of LinkedIn, provided the company with strong positions in the markets.
Speed in recognizing trends and acting on those hunches is crucial if a business in the Channel wants to surge ahead and not be flattened by the rapid pace of technological change. MIT Sloan Business Review conducted a survey of 20,000 business executives, managers, and analysts worldwide over five years and published it in March 2019. The survey revealed that 22 percent of respondents believed the factor with the most impact in a digital organization was “a transformative vision, which includes the ability to anticipate markets and trends, make savvy business decisions, and solve tough problems in turbulent times.” Another 20 percent said “being forward-looking, which includes having clear vision, sound strategy, and foresight” was the most important. These two qualities combine to allow an organization to first recognize how business trends emerge as technology advances and then to steer the business in an agile fashion.
3. Turn your adversaries into partners and reap the rewards
Microsoft had long worked within its own silo and had no desire to collaborate with the outside world and develop strategic partnerships – particularly with its perceived competitors. The company likely lost revenue opportunities because of its inability to play nicely with others. Ballmer even went so far as to call one competitor, Linux, a cancer.
However, groundwork was laid for big changes with Nadella’s first announcement as CEO in 2014. He declared that Microsoft would launch Office for Mac and Android, which would have been unimaginable a few short years before. Microsoft also opened its World Partner Conference in 2015 to companies like Oracle, Salesforce and Amazon — all companies which had been banned in years prior. And that “cancer” of which Ballmer spoke in 2001? Well, in perhaps a sign of kinder, gentler and more open times at Microsoft, a significant portion of Azure virtual machines run on Linux today.
Members of the IT ecosystem from top to bottom — businesses, customers and employees — stand to benefit from strategic partnerships formed by service-related firms. Today’s environment is one in which technology moves too quickly for a lone wolf approach to work. For businesses, leveraging talents from all across the Channel is the best way to scale innovation. Symbiotic relationships between partners can also create the best path for growth, increase exposure in new verticals, and, in turn, increase revenue. Customers, too, will have better outcomes when solutions are developed with the strongest parts of multiple parties involved. And, finally, partnerships feed into employee growth and education by placing a new lens on repeated challenges and offering exposure to new expertise.
When forming a partnership, finding the right business with which to work is key:
- Do you both have strong, complementary resources available that will enable you both to shine? A tool like Dynasource can help you evaluate this. You can try our search feature here.
- Do you have common goals?
- Can you communicate effectively? / do your cultures mesh?
4. Find leaders that are on point
While speaking at the Mobile World Congress in Barcelona in February, Nadella enumerated three key traits that he looks for in leaders:
- Provide clarity – an often-underestimated quality in a chaotic situation
- Generate energy – be a dealer of hope who is passionate and inspires people to follow
- Drive success – in any condition, even when there are bumps along the way
The quick pivots that ever-evolving technology demands in the Channel require a steady hand and level head to maintain organizational focus and to keep morale up. Instead of finding a coach who could get a group through a marathon or a sprint, an IT-services business leader needs to be someone who can inspire people to finish a marathon of sprints.
5. Think like a startup (even if you’re not one)
Under Nadella, employees and teams have been encouraged to harken back to Microsoft’s early days when it was a small startup. The thought process of a company that’s over four decades old can move slowly and can be stuck in the past, resting on how things have been done and not looking forward to innovating at scale.
Being nimble and willing to embrace new thought is essential to survival in today’s turbulent services-led IT industry. Terence Mauri, author of The Leader’s Mindset: How to Win in the Age of Disruption, says there are three hurdles to clear when it comes to an older organization being able to think like a startup. They are:
- Organizational barriers – make risk appealing to push fear aside.
- Cognitive barriers – daily demands tax our minds: take a “brain break” to allow for new ideas to bubble up.
- Schlep blindness – A term coined by Paul Graham suggests there are great ideas lying around unexploited right under our nose. In other words, “ideas can be obvious but hard, easy, and overcrowded, or not obvious but hard.” Bounce ideas around with teams and work through hurdles to turn what starts as a bad idea into a good one.
- Acknowledge and reward innovation – Recognize and celebrate work that makes a difference.
Does your company have the right cloud skills?
Learn more about the state of today's IT ecosystem with our study on the Dutch IT services market.Download now