From Ego To Empathy: A Microsoft Transformation

Seeking Alpha article on Microsoft’s remarkable transformation and why it’s working.

Summary

  • Microsoft is going through a historical pivot.
  • Culture changes in the market have changed Microsoft’s approach.
  • People and process will be critical in progressive policies.
  • Qualitatively explores how culture improves performance.

The world largest pivot. Microsoft’s tremendous change in philosophy has been a boon for the tech world.

In part, simply just having technology is no longer a competitive advantage. Previously, the mission statement “Put a computer on every desk and in every home” focused on producing technology accessible to the masses. While still more to be done, the advantage now comes from the symbiosis between human and machine toward a sense of purpose. Nadella’s new mission “Our mission is to empower every person and every organization on the planet to achieve more.” reflects this transformation both of the company and how technology should impact all of us.

For large enterprises to make real change, it takes focus, decisiveness and a shift in culture. Here’s what is taking shape or needs to develop in order to realize the full potential.

Employees

During the transition, melding generations of experienced and innovative employees will be an on-going challenge. One of the most immediate culture shifts was moving away from internal competition and glory grabbing. Instead, Microsoft has rewarded and recognized teamwork and collaboration.

“We used to talk about know-it-alls at Microsoft. Now we talk about learn-it-alls.” –Kristen Dimlow, VP of Human Resources

In order to accomplish this, enabling or recruiting leaders who can do the following is aiding in this shift in culture:

  1. Healthy Curiosity – In ideas, colleague’s thoughts and vulnerable areas.
  2. Focus & Strengths – Clarity starts at the top and tie team members focus on what they uniquely bring to table.
  3. Never Perfect – Working hard on weaknesses can have diminishing returns.
  4. Open Opportunities – Give everyone room to shine allows people to grow.

We see the changes already:

BeforeAfter
Employee receive mandates from C-levelIdeas are shared company-wide through hackathons
Combative relationships with competitionCoopetition approach
Desktop on every desk missionProductivity and collaboration

One key in invigorating the entrepreneurial spirit and culture is to also bring in Microsoft advocates who live and breathe it.

Partners

Microsoft has one of the largest partner ecosystems. The shifts toward the cloud has created the opportunity for partners to capture what lies ahead. For some ,the shift will require lots of support and Microsoft hopes to enable partners to adapt.

“Microsoft already has the largest ecosystem of partners in the world. Hundreds of thousands of companies worldwide build and sell solutions that support our products and services. … My ultimate goal is to be the biggest platform provider underneath all of this entrepreneurial energy, with an unrelenting focus on creating economic opportunity for others.”

— Satya Nadella, Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone.

Azure plays a central role for the entire ecosystem. 64% of the 1,100 partners surveyed who are active in the cloud business realized making money within 12 months. On the other hand, nearly a third cited as one of the major challenges was cloud/Azure training and education.

There is a possible story here. If Microsoft can make the transition, so can many other customer-centric organizations. Regardless, partners supporting and being supported by Microsoft will define the company’s future.

On another note, we find that more engineers are transitioning toward relationship-based careers. Peggy Johnson, EVP of Business Development describes how much her engineering background had played a significant role in tech spec discussions. Today, technology is more ubiquitous among businesses and the decisions makers experiences with them.

Peggy shares, “But I’m still an engineer at heart. To this day, I find myself applying my engineering mindset all the time, whether I’m brokering negotiations with a partner, working with other senior leadership team members to align on an acquisition strategy, or evaluating an interesting new technology we’re considering investing in. It all comes back to that same problem-solving skillset I learned as an engineer.”

This shift in culture and the marketplace has redefined the relationships with partners. More empathy, collaboration, education and enablement provide greater growth opportunities for all.

Customers & Community

The final component is the community at large. Customers who need to become advocates. A community who can believe Microsoft enables the world toward good progress. The company culture and partner ecosystem need to exemplify the collaboration, education, innovation, and empathy.

Hubspot and Atlassian are other examples which exemplify empowering the community (customer, partner, employee) can improve shareholder performance.

“…Business should be personal…” said Matt Wallaert, a leading behavioral science guru. In a dynamic, complex, interconnected world, nothing truer.

For Microsoft, there is still plenty of people to people interactions with their solutions.

One advantage of Microsoft is its diverse revenue streams. While it may come with its own challenges, the vast ecosystem of products and services have more tangible touch points with the customers and the community than other. While the chart below is 2016, and we are in 2018, we have seen a strong push toward physical interactive technology and storefront acquisitions/development which may change the game.

We’ll see how the digital and personal experiences play out. With the ecosystem building and partnerships, there is confidence in this more data and data feedback-driven Microsoft will continue to remain a leader in technology.

Diversification of Revenue

Conclusion

It’s hard to argue with the results. By shareholder value standards, the company seems to be doing well One of the largest company transformations in the midst of driving an estimated $4.5 Trillion digital transformation in the marketplace.

MSFT Stock Price since Nadella’s CEO Appointment

Some would critic Steve Ballmer for holding the ground or having failed to recognize these new trends. However, I would suggest the critics review the marketplace, culture and competitive environment. For the longest time Mr. Ballmer, the enthusiastic, sales-driven, early entrepreneur helped Bill Gates for two decades rapidly build the company. While foregoing dominance, it has been built to sustain and withstand financial and technology crises for which Satya Nadella has a platform to redefine and progress.

Some have said there are two Microsoft’s. One of tradition and the other of innovation. If Microsoft can continue to build upon instead a tradition of innovation, it will have a winning formula for decades to come.

It’s an interesting cycle where technology shifted the culture and now culture is shifting technology. Stay curious, be bold!

Disclosure: I am/we are long MSFT, HUBS, TEAM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Original Post: https://seekingalpha.com/article/4136583-ego-empathy-microsoft-transformation