The creator of Y-Combinator, Paul Graham, wrote an essay titled Microsoft is Dead in 2007. The article's central claim was that Google's services, Mac computers, and the internet had rendered Microsoft obsolete. Actually, at the time, Y-Combinator invited Yahoo, which was a more relevant firm at the time, to its demo days instead of bothering to ask Microsoft to see any of their companies.
Having worked at Microsoft from 2002 to 2019, I largely concurred that the firm had ceased to exist as a cutting-edge software company in 2007. During Steve Ballmer's tenure as CEO, the corporation excelled in revenue extraction and developed software for commercial clients. But the business also made attempts to enter new markets and was unable to create any market-leading items. The firm made an unsuccessful attempt to develop a popular mobile operating system, email service for consumers, social networking application, search engine, or music services. With the Zune and tablet PC failing to gain traction, it also attempted and failed to manufacture hardware.
It was decided to refer to the entire period of time as Microsoft's Lost Decade. During that decade, I recall observing as an employee that the stock price consistently hovered about $27± $2. For my first ten years on the job, it never went below $25 or over $29 in value. On August 23, 2013, Steve Ballmer announced his resignation, and the stock price was about $34. August 23, 2013, the day Steve Ballmer announced his resignation
On February 4th, 2014, Satya Nadella became leadership of the corporation and set about transforming its business performance and culture. The market, staff, and clients reacted well to his adjustments. With a current stock price of $410, Microsoft has tripled its return above the NASDAQ Composite since Satya took control. Numerous people refer to him as the most successful CEO in the computer sector because of the way he transformed Microsoft.
The question that is worth a trillion dollars is how Satya changed Microsoft. Here are my thoughts on the major adjustments he made to the firm that fundamentally altered its course.
Lesson 1: Breakfast Is Eaten by Culture
Satya started the task of transforming Microsoft's culture right away.As seen by his first letter to staff after taking over as CEO, Satya had a deep belief in the company's goal, but he also saw that Microsoft was being held back by its culture.
The culture that was typified by Steve Ballmer was one of arrogance and complacency. Many at the firm acted as though we were the greatest thing since sliced bread despite failure after failure since we had two of the most successful software products ever created: Windows & Office.
By urging all employees to adopt a development mentality, Satya actively sought to dispel such way of thinking. Our firm was supposed to be made up of learners rather than experts. It was expected of them to try new things, be open-minded, and welcome change. Every conference room had stickers that contrasted meetings with a progressive attitude with those with a stuck one.
Everyone in the organization was urged to take risks, grow from setbacks, and avoid complacency. Here, Satya set an example by altering some of our business practices because the organization had grown used to its methods. Every team inside the organization felt the impact of this revolutionary shift in the company's culture, which began at the top.
Lesson 2: Put the customer first and forget about strategy.
Microsoft was a corporation that placed a high value on strategy. Every company action was a chess move meant to establish a long-lasting competitive edge. This has been an excellent solution for years. Office and Windows had developed into a winning combination where businesses purchased Office because it was the greatest productivity application for Windows and Windows because they required Windows to run Office optimally. The enterprise market expanded like a vine because, once Active Directory and Exchange were in place, a host of additional Microsoft products could be added, such Sharepoint, which, despite much criticism from both inside and outside the firm, quickly grew to become a billion dollar product.
But a lot of this tactic was also counterproductive to users. The objective behind Windows 8, a failed attempt to transform desktop Windows into an iOS-style operating system, was to stop the iPad from upending Windows. The best way to achieve this was to have a touch tablet that could also run Windows desktop programs. It was never a question of whether or not we could really produce a usable product.
Additionally, Microsoft chose not to provide its productivity programs for mobile devices or the web, even though it was obvious that they had already prevailed and the Windows desktop was losing.
Within a month after taking over as CEO, Satya announced Office for the iPad, sending a message to the firm and our customers that those days were past. The Office team had been working on this product for some time, but they believed it was "off strategy" and would never be approved for shipping. Other customer-oriented actions followed, such Satya's declaration a few months later that "Microsoft Loves Linux," which made it apparent that Azure will now prioritize hosting Linux virtual machines (VMs) rather than being primarily focused on hosting Windows VMs.
Under Satya, Microsoft, which popularized the idea of "strategy tax," which advocates integrating products at the expense of making it more difficult for a single product to succeed independently, gave up on this idea. Because iOS and the web increased the value of Windows, Office no longer had to ignore them. Linux no longer had to be disregarded by Azure since it reduced the value of Windows Server.
Lesson 3: Sometimes It's Necessary to Just Stop Losing
Steve Ballmer had an obsession with rival companies, and he would stop at nothing to pursue a rival that Microsoft had its eye on. The firm spent almost $6 billion purchasing aQuantive after DoubleClick rejected it; aQuantive was then sold to Google for $3 billion, but the investment was written down to zero. The corporation also squandered billions of dollars on Bing while pursuing Google for years. Finally, the company paid $7.2 billion to acquire Nokia in an attempt to pursue the iPhone.
It was evident when Satya took over the firm that iPhones and Android phones were well ahead of Windows Phone and Nokia Lumia smartphones. Nearly 26,000 Nokia employees were let off over the course of two years by Satya, who wrote off the whole acquisition cost of $18,000 in 2014 and an additional 7,800 in 2015.
When it became evident that Nokia's smartphone division had little chance of being significantly successful, Satya abandoned the company and disregarded the sunk costs. I saw a comparable cold-blooded winding down of firms where there was little return on investment during my tenure at Microsoft.
As Microsoft's rival to Fitbit, which was discontinued in 2016, I was a huge admirer of the Microsoft Band. When I asked Satya about this in a leadership Q&A, he said that the business model wasn't very good and that even Fitbit, which was the market leader at the time, wasn't that good. Fitbit was bought by Google for $2.1 billion in the midst of doubt over the company's future, proving Satya was correct.
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