Satya Nadella: The C In CEO Stands For Culture

In this excerpt from Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone, Satya Nadella frankly assesses the culture he inherited when he took over in February 2014, how he set out to fix it, and explores his own mistakes along the way.

The CEO is the curator of an organization’s culture. Anything is possible for a company when its culture is about listening, learning, and harnessing individual passions and talents to the company’s mission. Creating that kind of culture is my chief job as CEO.

Microsoft’s culture had been rigid. Each employee had to prove to everyone that he or she was the smartest person in the room. Accountability—delivering on time and hitting numbers—trumped everything. Meetings were formal. If a senior leader wanted to tap the energy and creativity of someone lower down in the organization, she or he needed to invite that person’s boss, and so on. Hierarchy and pecking order had taken control, and spontaneity and creativity had suffered.

The culture change I wanted was centered on exercising a growth mind-set every day in three distinct ways. First, at the core of our business must be the curiosity and desire to meet a customer’s unarticulated and unmet needs with great technology. This was not abstract: We all get to practice each day. When we talk to customers, we need to listen. We need to be insatiable in our desire to learn from the outside and bring that learning into Microsoft.

Second, we are at our best when we actively seek diversity and inclusion. If we are going to serve the planet as our mission states, we need to reflect the planet. The diversity of our workforce must continue to improve, and we need to include a wide range of opinions and perspectives in our thinking and decision making. In every meeting, don’t just listen—make it possible for others to speak so that everyone’s ideas come through. Inclusiveness will help us become open to learning about our own biases and changing our behaviors so we can tap into the collective power of everyone in the company. As a result, our ideas will be better, our products will be better, and our customers will be better served.

Finally, we are one company, one Microsoft—not a confederation of fiefdoms. Innovation and competition don’t respect our silos, so we have to learn to transcend those barriers. It’s our ability to work together that makes our dreams believable and, ultimately, achievable.

Taken together, these concepts embody the growth in culture I set out to inculcate at Microsoft. I talked about these ideas every chance I got, but the last thing I wanted was for employees to think of culture as “Satya’s thing.” I wanted them to see it as their thing. The key to the culture change was individual empowerment. We sometimes underestimate what we each can do to make things happen, and overestimate what others need to do for us. I became irritated once during an employee Q&A when someone asked me, “Why can’t I print a document from my mobile phone?” I politely told him, “Make it happen. You have full authority.”

Because I’ve made culture change at Microsoft such a high priority, people often ask how it’s going. My response is very Eastern: We’re making great progress, but we should never be done. This is a way of being. It’s about questioning ourselves each day.

I’m not exempt from having to ask myself these questions. Do a search for me and karma. It’s a fall day in Phoenix, Arizona, and I am attending the Grace Hopper Celebration of Women in Computing, the world’s largest gathering of women technologists. Diversity and inclusion is a bedrock strategy in building the culture we need and want, but I recognize that as a company and as an industry we’ve come up far too short. Which makes what I said that day in Phoenix all the more perplexing, not to mention embarrassing.

Near the end of my interview onstage, Dr. Maria Klawe—a computer scientist, president of Harvey Mudd College, and a former Microsoft board member—asked me what advice I had for women seeking a pay raise who are not comfortable asking. It’s a great question, because we know women leave the industry when they are not properly recognized and rewarded.

I only wish my answer had been great. I paused for a moment and remembered an early president at Microsoft who had told me once that human resource systems are long-term efficient but short-term inefficient. “It’s not really about asking for the raise but knowing and having faith that the system will actually give you the right raises as you go along,” I responded. “And that might be one of the additional superpowers that women who don’t ask for the raise have, because that’s good karma. It’ll come back. Long-term efficiency solves it.”

Dr. Klawe, whom I respect enormously, kindly pushed back. She used it as a teaching moment, directing her comments to the women in the audience but clearly giving me a lesson I won’t forget. She told the story of a time when she was asked how much pay would be sufficient, and she just said whatever is fair. By not advocating for herself, she didn’t get what was fair. She encouraged the audience to do their homework and to know what the proper salary is. Afterward, we hugged and left the stage to warm applause. But the damage was done.

The criticism, deserved and biting, came swiftly through waves of social media and international radio, TV, and newspaper coverage. My chief of staff smugly read me a tweet capturing the moment: “I hope Satya’s comms person is a woman and is asking for a raise right now.” I was frustrated, but I also was determined to use the incident to demonstrate what a growth mind-set looks like under pressure.

A few hours later I shot off an email to everyone in the company. I encouraged them to watch the video, and I was quick to point out that I had answered the question completely wrong. “When it comes to career advice on getting a raise when you think it’s deserved, Maria’s advice was the right advice.” A few days later, in my regular all-employee Q&A, I apologized, and explained that I had received this advice from my mentors and had followed it. But this advice underestimated exclusion and bias—conscious and unconscious. Any advice that advocates passivity in the face of bias is wrong.

Since my remarks at Grace Hopper, Microsoft has made the commitment to drive real change—linking executive compensation to diversity progress, investing in diversity programs, and sharing data publicly about pay equity for gender, racial, and ethnic minorities. In some ways, I’m glad I messed up in such a public forum because it helped me confront an unconscious bias I didn’t know I had, and it helped me find a new sense of empathy for the great women in my life and at my company.

I had gone to Phoenix to learn, and I certainly did.

Adapted from Hit Refresh by Satya Nadella. Copyright © 2017 by Satya Nadella. To be published September 26 by HarperBusiness, an imprint of HarperCollins Publishers. Reprinted by permission.