When Microsoft changed its leadership culture

Written by guest author, Steve Bodanis Tuesday 24 November 2020
The fascinating transition from Steve Ballmer's high-octane leadership style to Satya Nadella's partnership-centred approach
MS Teams meeting

Steve Ballmer discovered early on that intimidation worked: that screaming at subordinates, lunging forward till you’re almost in their face, veins popping out on your neck, was an effective way to get them to do your bidding.

Back in 2000 when Ballmer became CEO of Microsoft after Bill Gates’s retirement, the company was dominant – a tank, unstoppable. But tech rarely stays still, and soon new competitors such as Google were threatening Microsoft’s dominance. In theory, this could have been Ballmer’s chance to work out what to do next. However, he wasn’t a man who operated like that. If there were threats coming from outside, he felt his job wasn’t merely to block them. His job was to obliterate them.

The Linux operating system was directly targeted, since Ballmer saw its free (or relatively free) model as a direct threat to Microsoft’s cash fountains in Windows and Office. Ballmer, accordingly, tried to deter Linux’s customers by warning that it was a “cancer” and as bad as “communism”.

When Steve Jobs announced the first iPhone in 2007, that also needed not just to be criticised, but undermined in its entirety. Ballmer discouraged the many business customers who looked to him for advice from buying one. “It doesn’t have a keyboard,” he explained, his tone heavy with mockery, “which makes it not a very good email machine.”

Executives within Microsoft who suggested new business models were abused with special belligerence. They weren’t merely wrong to suggest that the separation of chips, systems and software that Microsoft had profited by so far could be changed. They were attacking the company, and no retaliation could be too hard.

Not only did Forbes magazine describe Ballmer as “the worst CEO of a large publicly traded American company”, but his furious, border-closing defences had ensured his company missed out on smartphones, social media, key aspects of the cloud and pretty much every other major development in tech during his tenure. On the day he announced his departure, Microsoft’s stock jumped up by 7.5%.

Ballmer’s successor, Satya Nadella, was the opposite in almost every way that counted. From the time he took over in 2014, he showed that it was possible to resist attacks, fight entropy, build up complex structures and make a company profitable without intimidating, yelling or bullying.

Ballmer had called Linux a “cancer”, so at an early presentation Nadella stood smiling on stage with a large “Microsoft ❤ Linux” slide projected above him – what one analyst called a “hell freezing over” moment. Microsoft was going to be in partnership with the open-source movement now.

Ballmer had hated Apple too, so Nadella made a point of holding up an iPhone at another early presentation, as he explained the work Microsoft would be doing in the Apple ecosystem. He also set up close relations with Google, Facebook and many others. “Partnering,” Nadella observed, “is too often seen as a zero-sum game, as though whatever is gained by one participant must be lost by another.”

Nadella’s efforts in his first years as CEO paid off. In the Ballmer era, Microsoft had disparaged the wider world and looked within. In the Nadella era, bringing in partners and adopting a kinder style was going to make the company stronger, not weaker. And as the financial results soon showed, the decent approach proved to be the right choice.

Learn more about management styles to find out if you’re the type of leader that builds exceptional talent – and ask yourself what kind of leader are you?

This is an extract from The Art of Fairness by David Bodanis. David studied mathematics and history at the University of Chicago, and for many years taught the 'Intellectual Toolkit' course at Oxford University. He is the author of many books including the New York Times bestseller E=mc2, which was adapted into the PBS documentary Einstein's Big Idea. He has been a popular speaker at the World Economic Forum in Davos and at many multinational companies including Google, Goldman Sachs, Unilever and Shell, where he worked at length with their standard-setting scenario team.

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