When I met Satya Nadella in 1992, we were both engineers at Microsoft, and I never would have guessed we’d go on to be life-long friends or that he’d end up running the company for over a decade.
This Sunday, Feb. 4 marks 10 years of Satya at the helm of the second company in the world to reach a $3 trillion market cap. This is no small feat given that Microsoft wasn’t even part of FAANG, the name Jim Cramer coined in 2013 for the tech stocks (Facebook, Apple, Amazon, Netflix, and Google) driving the market and consumer mindshare.
When Satya stepped into the CEO role, the industry’s opinion was that Microsoft was on a path to becoming irrelevant. While Microsoft was an early pioneer in personal computing, it missed the mobile and search waves, didn’t participate in the consumer social networking wave, and was coming from behind on cloud.
More and more, people were not thinking about Microsoft as innovative, and its underperforming stock painted a clear picture — Microsoft just wasn’t part of the conversation.
Fast forward through Satya’s 10-year run as top executive, and that has all changed.
Microsoft’s valuation surged from $300 billion to $3 trillion, rivaling Apple as the world’s most valuable company. And it is part of the Magnificent Seven (or should we say Fabulous Five) surging stocks due in no small part to Microsoft being out ahead of everyone on the generative AI wave.
Satya’s leadership style, characterized as grounded, decisive, and empowering, reshaped the company’s culture, fostering agility, innovation, and collaboration. That success and Satya’s strategic focus on the cloud, acquisitions, and AI revitalized Microsoft and propelled it to the forefront of the tech industry. Companies just starting out and those already a couple decades in can learn from the transformation we have all witnessed.
Cultural transformation
As CEO, Satya reset the company to embrace a growth mindset, empowering people to learn and grow and to focus on prioritizing what customers wanted. This shift fostered a culture of innovation and collaboration within and outside the company that has undoubtedly contributed to Microsoft’s sustained success over the past decade and set the stage for its current partnership with OpenAI.
Satya’s first public announcement as CEO was launching Microsoft Office across mobile platforms — even rival Apple and Android products. That was a visceral signal to those in the company that there was a new sheriff in town and that it was OK to build for other platforms that consumers were embracing in their digital lives. This shift also marked a departure from the traditional model of selling software licenses toward a subscription revenue model that is now deeply ingrained across the entire consumer and enterprise technology ecosystem. Satya wasn’t afraid to steer the company in a new direction.
Now, nobody is perfect. And people do make mistakes. But the best leaders recognize their mistakes, fix them, apologize, and learn from them. Overall, Satya has done everything possible (Hit Refresh) to move the organization toward a culture of innovation and collaboration. As Peter Drucker said, “Culture eats strategy for breakfast.”
Cloud leadership
One of Satya Nadella’s most significant achievements has been Microsoft’s scale and success in the cloud.
The company was always a leader in the server business, but with Satya at the helm, rather than protecting what the company had at all costs, Microsoft embraced the future and stayed laser-focused on cloud execution, bringing Microsoft and Azure to where it is today.
Steve Ballmer planted the seed here, but Satya executed it and prioritized the growth of Azure, offering consumption-based services for businesses to host applications, store data, and utilize other cloud-based functionalities. Satya was key in transforming Microsoft from a Windows-first company to a cloud-first company.
Under Satya’s leadership, Azure has grown to become one of the leading cloud computing platforms globally, giving AWS a run for its money and positioning Microsoft as a key player in shaping the future of digital infrastructure. He could have just as easily shot himself in the foot by holding on to what Microsoft had, only to be left behind.
Successful acquisitions
Satya’s ability to recognize strategic opportunities has been instrumental to Microsoft’s success and a clear break from the past. Over the last 10 years, Microsoft has acquired 102 companies — compared to 128 companies combined over the previous two decades.
GitHub, LinkedIn, Minecraft, and the Activision acquisition each brought (and will bring) a new audience into the Microsoft ecosystem. The 2018 GitHub acquisition brought the open-source development community into the Microsoft ecosystem, fostering collaboration while also demonstrating Microsoft’s commitment to open-source development. The 2016 acquisitions of LinkedIn and Minecraft brought social networking for businesses and people using gaming to build experiences, respectively.
These acquisitions expanded Microsoft’s footprint and exposed and integrated large user bases to Microsoft’s productivity tools.
Betting on AI
Satya took an early bet on AI that has paid off significantly. In 2019, Microsoft partnered with OpenAI with a $1 billion investment. There wasn’t a lot of detail at the time, but it was clear Satya saw promise in the approach OpenAI was taking to integrate AI into applications.
And in 2021, AI-powered products began to roll out, starting with GitHub Copilot. I remember having a dinner conversation with Satya in 2021, where he was thrilled beyond belief about the potential of GitHub Copilot, which was still in the early days of development. ChatGPT launched in late 2022, and then 2023 brought more copilots like Copilot for Microsoft 365. Microsoft also doubled down with a $10 billion investment in OpenAI early last year, to cement their leadership with Azure for building and running AI applications.
Throughout 2023, the wisdom of this partnership was made incredibly clear as Microsoft was in every conversation about AI — and everyone from investors to consumers was talking about AI.
In late 2023, the situation at OpenAI reached a surprising and transfixing situation with the face of OpenAI, Sam Altman, being ousted. But Satya played it masterfully, announcing that Sam and his team had a home at Microsoft. While the situation was resolved, Microsoft made clear that they stood with Sam and OpenAI and came out on top. This was another excellent example of Satya’s thoughtful, decisive, and masterful leadership in a crisis.
VR/AR isn’t mainstream yet
I can’t leave this decade without noting a big miss, though it is one the entire tech industry is still waiting to mature.
Microsoft, along with separate initiatives at Meta and Google, invested heavily in virtual and augmented reality with the development of HoloLens. Now, Apple has joined the pursuit. It has yet to catch on for the mass market, and it is clear that HoloLens hasn’t realized its full potential, at least yet.
All said, Microsoft’s transformation in the past decade has been nothing short of phenomenal. While Satya could not have done what he has without Bill Gates and Steve Ballmer laying the foundation, I look forward to seeing where this visionary leader will take the company next. There is growth ahead and potholes, as well, but I believe that transformational change is here to stay.
