Microsoft’s new CEO, Satya Nadella, was quick to pounce on formulaic brilliance as the way to keep the Internet giant atop the software industry or worse, from becoming obsolete. He speaks the language of systems engineers and operations research scholars in arguing for self-adjusting, complex companies and cultures that focus on innovation.
He speaks in Darwinian terms and echoes Harvard Business School’s Clayton Christensen’s mantra that big companies too big to innovate out of their profit margin box or customers’ field of vision risk loss of market and ultimately economic viability. Nadella puts that question to himself and his leadership task: “How do you create that self-organizing capability to drive innovation and be focused? You have to be to sense those early indicators of success, and the leadership has to really lean in and not let things die on the vine. When you have a $70 billion business, something that’s $1 million can feel irrelevant. But that $1 million business might be the most relevant thing we are doing.”
Nadella is talking about creating something new. He’s saying what everyone is saying who knows the world has changed. “What people,” and he means everyone in the company, “have to own is an innovation agenda, and everything is shared in terms of the implementation.”
He’s creating a 360-degree culture at Microsoft, the company that pioneered Windows, and like the Coca Cola Company, spent the focus of its R&D optimizing its various constituent parts. Nadella now realizes it’s about discovering the new formula.
He’s also hiring with that new systems and culture perspective. “Longevity in this business is about being able to reinvent yourself or invent the future. In our case, given 39 years of success, it’s more about reinvention.” So he asks people two things: first, what are you most proud of? It is some new standard, some breakthrough? Some achievement? And second, what’s the thing that you regret the most where you felt like you didn’t do your best work? How did you reflect on that?
Why does he ask that? Because if he’s going to turn Microsoft into or back into a complex, self-adjusting system for innovation and creativity, he needs an employee complement that is always learning, that is self-aware, that is looking at the current context and raising the standard.
In the world of high-tech, in a software-dominated industry like Microsoft is, at the beginning of the revolution (like 39 years is), the future will belong to those who are best prepared to meet it. As Facebook demonstrated when it bought WhatsApp, paying the equivalent of $343 million for each of WhatsApp’s 55 people for a whopping $19 billion dollars, the sharks in the water are fast smelling blood and you don’t have to read “Origin of Species” to know that the fittest survive. Look at what free (or almost free) text messaging companies have done to business models that relied on SMS fees. Global carriers lost a combined $32 billion in revenue last year. And that is only going to increase. The question Nadella and everyone else with his hand on the company’s DNA switch, is what partners, what environment, and what diet do we need to survive and prosper? Nadella seems to get that message in spades.
Here’s Adam Bryant’s revealing interview in the NY Times: