Nadella And Why it's Apparent This Was A Good Move for MSFT

Added on by Arturo Gutierrez.

I drafted a response to his hiring soon after the announcement in February of 2014 but felt increasingly uneasy about declaring his hiring as CEO a smart move after so little time. Two years later, I think i can say with confidence that Nadella's hiring was a great move for Microsoft.

When you consider the scope of Microsoft's business units (Applications and Services, Sofware, Devices and Studio, etc) and layer on top of this the different waves of technological innovation it's had to roll through (search, social, VR, gaming) it's quite an accomplishment to have weathered relatively unscathed through the first decade for the 21st century. Add increasing competition from tech companies more agile to adopt and market emerging technologies, and it's hard not to appreciate it's current position across its various offerings.

So it surprised me that with so much to consider as a firm and the many complexities of the businesses that Microsoft is involved in, a number of journalists believed that bringing an outsider from industries like Automotive or Telecom would have been a better option than an internal hire. It was clear to me that a CEO for Microsoft should have a sound understanding and some experience in the many variables that are associated with success for Microsoft, which for the past decade has been consistent dividend growth and milking the revenue drivers: software and servers. 

So in came Nadella. And I just want to point out a few things that I see are positives as he's taken the helm.

  1. Doing away with Stack and Rank. Widely addressed and reported on for years, the stack and rank performance review system was a contributor to stifled innovation and inter office politics. To be fair, these attributes can be found within organizations with different performance systems, but as the other large technology companies continued to prosper and innovate, it was clear Microsoft had a culture problem rooted in one of the core practices of their talent strategies.
  2. The start button is back. 
  3. Share price
    • When he took over as CEO in Feb, 2014 stock price was hovering around $36.00 a share (now at $51.83. It has experienced growth of about 44%. 
  4. It's success in personal devices, specifically Surface. It's not a clear winner yet, and it's sold nearly 400k less units than the iPad pro according to the latest IDC report on tablets. However, ending in FY15, Surface did post 3.6 billion in revenue, up 65% from 2014. 

And yes, Microsoft continues to do well in gaming and other traditional revenue generators, but what I listed above is the new stuff. The areas of the business that are changing Microsoft, for the better.

 

- arturo gutierrez