Microsoft’s new CEO Satya Nadella’s leadership style revealed



You will never get a second chance to make a first impression!

MicroSoft has appointed its third CEO in about 37 years.  Satya Nadella took over from Steve Ballmer on February 4, 2014 amidst very different circumstances.  Each of the three leaders have had different leadership styles.

This was not a “shoe-in” appointment.  Steve Ballmer announced he was stepping down as CEO in August 2013.  The appointment came a full 6 months later.  In the interim, the Board, purportedly reached out to Alan Mulally (the Ford “turnaround” specialist) and former Nokia CEO, Stephen Elop, among others. 

Between August and February, Satya would have continued to do his job, and not would not have co-worked with Steve as CEO.

Microsoft in the current marketplace

Microsoft operates in the following businesses:

a.      Windows Division (competition: Unix, Apple OS) – 27.3% of revenue

b.      Server and Tools (competition: HP, IBM) – 24.3%

c.       Games and game devices (competition: Nintendo, Sony) – 17.6%

d.      Office software Word, Excel, etc. (competition: Apple, Google) – 26.6%

e.      Online search (competition: Google, Yahoo) – 4.1%

While MS still maintains its lead in the Office software space, it has lost substantial ground since its heyday.

In all other businesses, it has to work very hard to maintain its non-leading position. 

Microsoft CEO performance

Microsoft CEO performance

New challenges for Satya

In the backdrop of the dynamic competitive environment, new disruptive business models and Microsoft losing ground to the competition, Satya’s challenge list would look something like the following:

a.      Countering competitive challenges posed by Google, Apple, Amazon

b.      How to foray further and stronger into the gaming industry

c.       Further reinforcing their position in their strongest businesses

d.      Entering new businesses such as social media or mobility

Opening letter to employees – there will never be another chance

A CEO’s letter to employees is very powerful communication tool. In one instrument, the CEO can accomplish some or all of the following:

a.      Provide the vision from the company cockpit to EVERY employee and create business awareness

b.      List out the challenges facing the company and the CEO’s prioritization

c.       Present a plan of attacking the challenges, so that collectively all employees know where to focus their efforts (rallying the troops)

d.      Declare the vision for the next few years, and the CEO’s plan on how to execute on that vision

e.      Present a glimpse to employees on the CEO’s inner personality

f.        Showcase their leadership style

A CEO’s FIRST letter becomes even more important.  The first letter gives a clean slate to the CEO to sketch out plans, get the people behind the company and shine the spotlight on the most important company initiatives.

Satya’s opening letter to Microsoft employees

Satya Nadella sent out his first letter to about 125,000 Microsoft employees on February 4, as soon as he took over as CEO.

From a careful analysis of the letter, frankly I found it fell way short from the perspective of maximizing the powerful “CEO’s first letter to employees”.

My conclusion is based on the following observations:

a.      A tenth of the letter contained nebulous statements (such as “we are headed for greater places”.

b.      One statement was confusing.  If the deal with Nokia was not complete, why state it?  Was it intended for competition to take note?  Or was it an indication of Microsoft’s foray into devices and mobility?  Why mention the name “Nokia”?

c.       I would have expected to see a few challenges listed, and the CEO’s prioritization of the challenges.  The letter could also have included a path on accomplishing those goals, with a timeline.

d.      Four statements indicate how Satya will work with others to achieve some goals (unspecified).  There is NO indication in the letter as to what Satya will do, direct, supervise, fix, ensure or otherwise manage on his own.  As a CEO, Satya should have used this “first letter” to FIRMLY state HIS approach.

From here on, all successes will go into Satya’s account, just as all failures will also be pinned on Satya.

e.      There was no clear, focused, “call to action”, leveraging the employees collectively. 

f.        About 60% of the letter contained innocuous statements.  In a letter such as this one, these statements use up precious real estate and help in losing reader attention.  Statements such as “everyone needs to do our best work”, “many companies aspire to change the world”, etc. could have been eliminated.

Additionally, at least twice Satya says “like everyone else” and goes on to state a factor in common with the employees.  This shows that he has no airs about him and does not consider himself “above” others that work for the company.  While this is fine, the employees also want to know what makes Satya different from others.  This letter is the place to showcase the difference.  The difference is the reason why Satya and not anyone else, has been appointed the CEO.

g.      The big change for the company with Satya’s appointment is a drastic change in CEO personality.  From a self-driven, profit-focused, authoritarian personality of Steve Ballmer, the employees would now be led by a calm, steady, “participative/collaborative” leadership-styled Satya Nadella.  I thought this should have highlighted somewhere, even if to let the employees know that they need not adapt.

The effective components of Satya’s letter

Satya’s letter loudly proclaims the collaborative, participative and non-disruptive style of leadership that his personality brings.

About 26% of the letter contains emotional statements.  Such statements convey a feeling of trust, dependability, and sincerity and display the writer’s value system.  The genuineness that is on display tells me that no one else wrote the letter for Satya.

Such a leader “pulls” people along with him.

About 12% of the letter contained new information on Satya’s personal make-up.  This shows he is quite open and not shy of saying that he is still in the quest of learning.

There is a reference to some high-value activities as part of One Microsoft strategy.  Perhaps this is something that is well-known within the company and this was well-highlighted.

In conclusion

The biggest question that the letter does not address is how Satya plans to take Microsoft back to the top.  While Steve or the Board may have spoken or written about this, the CEO’s FIRST LETTER would have been the ideal place for Satya to squarely lay out the current situation, his plans and what the employees must do to help achieve those plans.

From a leadership perspective, clear vision of the goal, solid understanding of the team task to be achieved and clarity of team member roles are required to be effective.

As a leadership communication tool, this letter could have been more effective.

Image: ©” target=”_blank”>Johannes Hemmerlein


Satya Nadella portion was added into the chart on the above site