A CASE ON ORGANIZATIONAL CULTURE

Anshul Gautampurkar
Jayesh Menashi
Omkar Kulkarni
Rashmi Rao
NADELLA’S DIAGNOSIS OF PROBLEMS AT MICROSOFT

 Flexibility: Not at all flexible/Short sighted company

 Microsoft was perceived as only a Windows centric-company

 Openly opposed open source software
 Innovation: Stalled

 Company plagued by internal knife fights, bickering and inertia.

 High internal competition mentality which resulted in employees
focusing on self-growth in increasing expansive market
opportunities.
 For a decade, a culture that crippled innovation flourished at
Microsoft.
 Markets crashed when Ballmer was appointed as CEO
Microsoft share prices crashed when Ballmer
was appointed as CEO
NADELLA’S DIAGNOSIS OF PROBLEMS AT MICROSOFT

 Performance management system: Stack ranking

performance management system
• Pitted employees against each other every six months.
• Slots of Top, Good, Average and Poor which meant that 1 in 10
received a poor rating regardless of his performance
• It killed collaboration & innovation.
• Priorities were getting highest ratings over quality of work.
• It had become an understanding that political games were always
important for career development.
• Employees were leaving faster than they could be replaced amidst
wave of external competition from firms like google because of their
rapid growth.
Performance management system pitted
employees against each other
NADELLA’S DIAGNOSIS OF PROBLEMS AT MICROSOFT

 Product development processes: Lagging

• Bing failed, Zune Failed. The ideas of products that seemed replacements or market busting product developments were
suppressed (smart phone, eBook, Microsoft phones)
 Trust in managers: Very low
• People were not open in front of their bosses as they were reluctant to put their ideas in front of their bosses.
 Mindset: Know it all/Fixed
• Not any new idea was entertained and mistakes were not taken positively. Employees were competing for recognition and
promotion, not for company’s growth.
ACTIONS THAT NADELLA TOOK TO SOLVE PROBLEMS AND
REPOSITION MICROSOFT

 Flexibility: Very flexible and embraced everything

• Tried its hands on AI, quantum computing and the emerging technology trends
• Company also embraced Linux which it previously opposed
 Innovation: Nurturing innovation
• Mobile first cloud first executives given chance to go to executive retreats:
› Nadella believed that if given chance they would bring new ideas to the table
› Invited customers from different product lines to the retreats and shuffled executives from different lines with them
› Resulted in executives presenting new learnings and ideas that would shape the future of Microsoft.
• He tried creating a growth/learning culture where potential is nurtured and not predetermined by changing mission from “A
computer on every desk and in every home.” to “To empower every person and every organization on the planet to achieve more.”
• The growth mindset was based on three pillars: Customer obsession, diversity and inclusion and one Microsoft which also
indicated that everyone was welcome to put forth their ideas so that customer can be served well and reduce internal competition.
• Hackathon was introduced which nurtured curiosity and innovation of all employees around the world
ACTIONS THAT NADELLA TOOK TO SOLVE PROBLEMS AND
REPOSITION MICROSOFT

 Performance management system: Encouraged team performance and empowered everyone

• The infamous stack ranking performance system was abolished and replaced by continual feedback and coaching
 Product development processes: Started leading
• Nadella believed that the industry doesn’t respect tradition, it believes in innovation and made bets on emerging technologies
such as quantum computing and mixed reality and innovations such as HoloLens, a holographic computer that enables
people to interact with holograms
• 95% of fortune 500 companies used Azure
• Acquired LinkedIn and made use of its 500Mn users and Office 365’s 85Mn user’s data for its AI innovations.
 Mindset: Learn it all/Growth
 Started taking risks & also in case of Chatbot failed miserably with its Chabot
 Nadella said, “to be a successful company you got to have certain hits and misses”.
 In one instance, he corrected what he said to a question by a lady that women are paid less than men.