MICROSOFT REWRITES THE CODE
SATYA NADELLA’S CORNER OFFICE, ON THE FIFTH FLOOR OF BUILDING 34 AT MICROSOFT’S REDMOND, WASHINGTON, HEADQUARTERS, FEATURES A CAN’T-MISS 84-INCH TOUCH-SCREEN COMPUTER THAT DOMINATES ONE WALL. BUT WHAT DEMANDS EVEN MORE ATTENTION ARE THE VAST QUANTITIES OF BOOKS IN THE ROOM. THEY FILL ROWS OF SHELVES AND ARE PILED BY THE DOZEN ON A LONG TABLE NEXT TO NADELLA’S DESK. The place looks more like a neighborhood bookshop than the command center for the third-most-valuable company on the planet.
“I read a few pages here or a few pages there,” Nadella says, in his typically understated manner. He is sitting in a turquoise armchair, with multicolored socks showing above his casual brown shoes. The stacks around him include heady tomes such as Bionomics and How Will Capitalism End?, but his taste is eclectic. At one point during our conversation he references a Virginia Woolf essay about illness; at another, Trinidadian author C.L.R. James’s literary take on cricket. When explaining the impact of Microsoft’s Cortana AI assistant, Nadella eschews market-share data for Shakespeare: “If Othello had Cortana, would he have recognized Iago for who he was?”
One of Nadella’s first acts after becoming CEO, in February 2014, was to ask the company’s top executives to read Marshall Rosenberg’s Nonviolent Communication, a treatise on empathic collaboration. The gesture signaled that Nadella planned to run the company differently from his well-known predecessors, Bill Gates and Steve Ballmer, and address Microsoft’s long-standing reputation as a hive of intense corporate infighting. (Cartoonist Manu Cornet crisply summed up the Microsoft culture in a 2011 org chart spoof that depicted the various operating groups pointing handguns at each other.) “It was the first clear indication that Satya was going to focus on transforming not just the business strategy but the culture as well,” says Microsoft president and chief legal officer Brad Smith, a 24-year company veteran. Nadella has been committed to altering how Microsoft works by changing how it thinks.
The Microsoft that Nadella inherited was regarded by both Wall Street and Silicon Valley as fading toward irrelevance. The tech industry had shifted from desktop computers to smartphones—from Microsoft’s Windows to Apple’s iPhone and Google’s Android. (Windows’ market share on phones was less than 4%.) Apple and Google had soared to record market valuations; Microsoft’s stock price had stalled, despite the fact that revenue had tripled and profits had doubled during Ballmer’s reign as CEO from 2000 to 2014. When Ballmer announced his intention to retire, in August 2013, succeeding him wasn’t necessarily seen as a plum assignment. A Bloomberg story about the search for a successor was simply titled “Why You Don’t Want to Be Microsoft’s CEO.”
“I was envisioning [someone with] more of a bull-in-a-china-shop mentality,” says Mason Morfit, the president and CIO of ValueAct, an activist hedge fund that had gotten a say in the new CEO hire by investing $2 billion in
