Adam Bryant interviews Satya Nadella on his new role as Microsoft CEO

Adam Bryant interviews Satya Nadella, who says — and convincingly — that Microsoft needs to change, which in today’s business world means harnessing an entrepreneurial mindset in which change is always about ‘building a better culture’. Note however that this phrase is a code word for 1/ management’s role in setting strategy is legitimized by company performance, not ownership or longevity, and/or 2/ changing the conditions for employees to theoretically increase productivity, often by speeding up the assembly line. Nadella seems to be saying both.

Adam Bryant: Your company has acknowledged that it needs to create much more of a unified “one Microsoft” culture. How are you going to do that?

Satya Nadella: One thing we’ve talked a lot about, even in the first leadership meeting, was, what’s the purpose of our leadership team? The framework we came up with is the notion that our purpose is to bring clarity, alignment and intensity. What is it that we want to get done? Are we aligned in order to be able to get it done? And are we pursuing that with intensity? That’s really the job.

Culturally, I think we have operated as if we had the formula figured out, and it was all about optimizing, in its various constituent parts, the formula. Now it is about discovering the new formula. So the question is: How do we take the intellectual capital of 130,000 people and innovate where none of the category definitions of the past will matter? Any organizational structure you have today is irrelevant because no competition or innovation is going to respect those boundaries. Everything now is going to have to be much more compressed in terms of both cycle times and response times.

So how do you create that self-organizing capability to drive innovation and be focused? And the high-tech business is perhaps one of the toughest ones, because something can be a real failure until it’s not. It’s just an absolute dud until it’s a hit. So you have to be able to sense those early indicators of success, and the leadership has to really lean in and not let things die on the vine. When you have a $70 billion business, something that’s $1 million can feel irrelevant. But that $1 million business might be the most relevant thing we are doing.

To me, that is perhaps the big culture change — recognizing innovation and fostering its growth. It’s not going to come because of an org chart or the organizational boundaries. Most people have a very strong sense of organizational ownership, but I think what people have to own is an innovation agenda, and everything is shared in terms of the implementation.

First, Nadella explicitly starts by asking the purpose of management. And, true to the entrepreneurial mindset, the purpose of management is to clarify a strategy for the business, and to get everyone to align with it’s implications in their own area of responsibility. And he suggests that the company needs to up the intensity. Note: ultimately all cultural change comes down to people changing their behavior, and perhaps the values that underlie them. So, he is saying he wants people to up their personal intensity, and presumably, the ones that won’t will be ushered out.

This is the contemporary norm for established high tech business. Including the emphasis on innovation, and the implication that the role of management also includes acting as a funding source of innovative ideas to be tested within the company, in a marketplace of ideas.

Nadella’s recapitulation of the entrepreneurial baseline comes as no surprise: how else could he have gotten the job? And for a 39 year-old company that has only been run by two CEOs, one of which is the iconic Bill Gates, to try to become a mainstream entrepreneurial company instead of the original top-down, command and control machine that Microsoft was in the 90’s, well, maybe that’s a good start.

HIs statement about ‘a strong sense of organizational ownership’ is a reflection of the neofeudal management style of Microsoft’s first 30 years.

It may fall the the next CEO to make the more difficult adjustment, or Nadella a few years hence, if he survives. The next challenge is to move past the leadership-centric entrepreneurial model — flattened hierarchy with a small elite controlling strategy, an aligned workforce marching in step toward the official future, and where ‘strong culture’ is shorthand for lack of diversity, enforced consensus, and heteronomy  — and to transition to a much more agile, decentralized, and faster organization filled with highly autonomous workers: leanership.

The key to getting out to the edge of rapidly changing markets in a time of great uncertainty and change is not trying to build an organization where the elite makes the right bet and the rest carry the chips, but to allow many people to make their own bets, most of which may be in conflict. The only rational approach in a time of great uncertainty is to accept a higher degree of risk.

So when Nadella says clarity, alignment, and intensity I don’t expect to see the company becoming looser, more people-centric, more agile, or more innovative. On the contrary. At least not right away.

Once again, Nadella might have to start by breaking down the fiefdoms left over from the Gates/Ballmer neofeudalism that reigned for 30 some years, and this constitutional monarchy that he is proposing might turn out to be a necessary waypoint on the road to a more democratic and modern Microsoft. But it might be difficult to transition from being a Monarch to a Prime Minister.

Relevant Analyst
Stowe Boyd

Stowe Boyd

Lead analyst, future of work Gigaom Research and stoweboyd.com

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