Nadella: Microsoft's Old Way Of Doing Things Won't Cut It In The Future

New Microsoft CEO Satya Nadella wants his employees looking ahead at future opportunities instead of resting on the laurels of past successes. And he seems to think getting rid of the old organizational structure, which happened when ex-CEO Steve Ballmer unfurled the "One Microsoft" plan in July, is an important first step down this road.

In an interview with The New York Timesthat ran Thursday, Nadella acknowledged that Microsoft's leadership will need to tackle market opportunities differently than it has done in the past.

"Culturally, I think we have operated as if we had the formula figured out, and it was all about optimizing, in its various constituent parts, the formula. Now it is about discovering the new formula," Nadella told The New York Times. "So the question is: How do we take the intellectual capital of 130,000 people and innovate where none of the category definitions of the past will matter?"

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"One Microsoft" is supposed to be about getting business units cooperating with each other instead of competing. And Microsoft already has made some progress on this front. Last November, the software giant ditched its controversial stack ranking system, which employees loathed because it bred friction and negativity within the ranks.

Nadella told The New York Times that Microsoft needs to "invent things that are really going to drive our future," and stay the course on potentially game-changing products that aren't delivering huge financial returns.

"So you have to be able to sense those early indicators of success, and the leadership has to really lean in and not let things die on the vine," Nadella said in the interview. "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."

While Nadella didn't mention it, Microsoft's Courier tablet, which emerged from the R&D shadows in 2009, could be considered an example of a promising product that fell victim to opposing viewpoints within the company's executive leadership. Even if Courier had flopped in the marketplace, Microsoft could have learned from it and potentially been farther down the path to hardware than it is right now with Surface tablets.

Andrew Brust, CEO of Microsoft analyst firm Blue Badge Insights, New York, told CRN he's optimistic about the company's future under Nadella because the 22-year Microsoft veteran is a listener who eschews the "my way or the highway" approach.

"He is much more thoughtful, humble and practical than that," Brust said of Nadella. "Whether he's up to that task of propagating his style into the company culture is something we’ll have to wait and see."

PUBLISHED FEB. 21, 2014