How Microsoft Has Profited From Its Culture Change

In a connected world, enterprises and the humans who work in them have to become more open to outside influences. This is often easier said than done: we are genetically hardwired to view intrusions, even ostensibly friendly ones, as threats.

And in this economy - with its right-sizings, off-shorings and strategic re-positionings - that suspicion is not entirely without foundation. But as the following article explains, Microsoft, considered of late to be an impregnable repository of 'not-invented-here-ism,' has emerged under its new CEO as a place that welcomes new ideas and people (albeit probably not yet a universal truth...) because it knows it needs to do so after a generation of watching younger, more agile, open and entrepreneurial competitors eat its proverbial lunch in mobile and a host of other cutting-edge technologies.

This shift is not without risk and certainly not without pain. It requires a different mindset, especially for a company that feasted for years on its dominance based one technology. It is the fact that that sinecure was first circumvented and then undermined by another that emphasizes the urgency of the change and gives impetus for the willingness to embrace it. Necessity may be the mother of invention, but successful institutions understand that it is difficult to sustain without a shift in psychology as well. JL

Margaret Heffernan comments in the Financial Times:

Where once founders were deemed a threat, now their position as entrepreneurial outsiders is seen as an asset, an opportunity to learn and to refresh know-how. Microsoft’s approach is both harder and potentially richer: recognising in its acquisitions the opportunity to reinvigorate itself and its place in the world. The transformation has replaced fortress walls with a porous membrane: a dynamic relationship between the company and the markets it serves, because that is the only way companies stay young and relevant
When I ran software companies in the late 1990s, my peers and I both hoped for and dreaded meetings with Microsoft.
The prospect of being acquired and making real money — that was tempting. But little fame and glory would follow. Chances were high that the technology would be bought in order to kill it; partnering and collaboration were decidedly and pointedly not the name of the game.
How things have changed.
Since chief executive Satya Nadella was appointed in February 2014, Microsoft has become a far more open place. Many in the tech world thought the sky had fallen in when Kirk Koenigsbauer, vice-president of Microsoft’s Office 365, appeared on stage at an Apple product launch. But that was indicative of a new mindset: instead of trying to eliminate every other tech company, these days Microsoft wants friends. Partnerships abound: Dropbox hosts billions of Office 365 documents, while Skype and Salesforce are integrated into Office productivity apps.
Acquisitions are done differently too. Where acquired businesses were once shut down, now they are tapped for wisdom and insight. Founders of acquired companies are taken seriously as entrepreneurs, their views canvassed not just about Microsoft’s products but about its culture too. Where once founders were deemed a threat, now their position as entrepreneurial outsiders is seen as an asset, an opportunity to learn and to refresh culture and know-how.
Anyone who has been part of an acquisition knows that, however strategic such moves may be, what makes them succeed or fail is how well the cultures fit. So most companies insist that the newcomer conforms to the ways of its acquirer. Microsoft’s approach is both harder and potentially richer: recognising in its acquisitions the opportunity to reinvigorate itself and its place in the world.
You could say that the cultural transformation at Microsoft has replaced fortress walls with a porous membrane: a dynamic relationship between the company and the markets it serves, because that is the only way companies stay young and relevant.
Most companies I know today are attempting something similar. Daunted by the pace of change, they are trying to become more adaptive: less obsessed with planning, more concerned with flexibility. At Microsoft, this is framed as a shift from a fixed mindset — one that depends on a few superstars — to a growth mindset, in which everyone must be open to learning from everything and from each other.
This shift is in line with Mr Nadella’s strategy: one in which all technology moves to the cloud and works seamlessly with every kind of software. To be a company that can do this requires people who can work effectively with all kinds of technology and all kinds of people. So the company has to be inclusive — both technologically and culturally. And because the technology environment changes at a furious pace, people must be able to do likewise.
In the past, Mr Van der Bel told me, performance was all about numbers. If the numbers were great, only at the end of a good third quarter might you start thinking about corporate culture. But not now. “Now,” he says, “you have to perform and transform at the same time, all the time. Sitting in your office looking at spreadsheets won’t help you meet your numbers. You have to get out, talk to partners, to customers — directly. You have to think about: what have you done differently in your behaviour that makes the company better? What are you learning?”Mr Van der Bel carries an iPhone. It is OK to be curious and informed about other companies’ products. He is learning, he says, that for everyone else to change, they have to see change in their leaders immediately.
“It starts with you. You must always show up energised and open. Annual surveys are a thing of the past; you have to get a sense of pulse on a weekly basis. I’m much more thoughtful about which meetings I attend, how I add value. You have to get out more and listen more.”
No one at Microsoft believes they have got it all right and, given the task they have set themselves, change never ends. With acquisitions such as its $26bn deal for LinkedIn, no doubt the company is due another dose of honest feedback. But at least this time, Jeff Weiner, LinkedIn’s chief executive, is less likely to fear being relegated to the broom cupboard — and a lot more likely to be talking to the board.