Satya Nadella

ceo • microsoft

Satya Nadella is Chief Executive Officer of Microsoft. Before being named CEO in February 2014, Nadella held leadership roles in both enterprise and consumer businesses across the company.

Joining Microsoft in 1992, he quickly became known as a leader who could span a breadth of technologies and businesses to transform some of Microsoft’s biggest product offerings.

Most recently, Nadella was executive vice president of Microsoft’s Cloud and Enterprise group. In this role he led the transformation to the cloud infrastructure and services business, which outperformed the market and took share from competition. Previously, Nadella led R&D for the Online Services Division and was vice president of the Microsoft Business Division. Before joining Microsoft, Nadella was a member of the technology staff at Sun Microsystems.

Originally from Hyderabad, India, Nadella lives in Bellevue, Washington. He earned a bachelor’s degree in electrical engineering from Mangalore University, a master’s degree in computer science from the University of Wisconsin – Milwaukee and a master’s degree in business administration from the University of Chicago. Nadella serves on the board of trustees to Fred Hutchinson Cancer Research Center as well as the Starbucks Board of Directors. He is married and has three children.

Kathleen Hogan

chief people officer • microsoft

As Chief People Officer and executive vice president of Human Resources at Microsoft, Kathleen Hogan empowers 100,000+ global employees to achieve Microsoft’s mission. In her role, she focuses on making Microsoft an exceptional place for employees to work, and ensures that the company is creating a culture that attracts and inspires the world’s most passionate talent.

Hogan previously served as corporate vice president of Microsoft Services, a team dedicated to helping businesses and consumers maximize the value of their investment in Microsoft technologies. She has also served as corporate vice president of Customer Service and Support. Prior to joining Microsoft in 2003, Hogan worked at McKinsey & Co. and Oracle Corp.

Hogan earned her bachelor’s degree in applied mathematics and economics, magna cum laude, from Harvard University. In addition, she holds an M.B.A. from the Stanford University Graduate School of Business. She sits on the board of directors of the Puget Sound affiliate of Susan G. Komen for the Cure and the National Center for Women & Information Technology.


Drew Kugler: Kathleen Hogan is the Chief People Officer at Microsoft. Full transparency: Kathleen and I have known each other since the late 90's when I worked with her and her colleagues at McKinsey and Company in Silicon Valley. Last fall I was fortunate enough to be able to be introduced to our other guest here today. Satya Nadella is the Chief Executive Officer of Microsoft. He was one of the interviews that I got to conduct as part of an engagement that I was doing here last fall and at the end of the interview, I took a shot and I invited him to join us in today's podcast. He very graciously accepted. The truth is there are very few senior executives who I want to be on this podcast. You see the thing is most senior executives will talk a very good game about leadership and change. The difference with these two individuals here at Microsoft is they are playing and they are winning at a very hard game; changing a culture. Satya termed it the re-finding of the soul of Microsoft. This is Drew Kugler with Kathleen Hogan and Satya Nadella on Tell Me What To Say

Kathleen and Satya thank you for joining me here today. Satya I'll go to you first. What made you put down such a big bet on the connection between culture and it as a vehicle for growing your business? What did you do to figure that out?

Satya Nadella: First of all thank you for having me on the podcast. You know, if you look at any successful organization, company, institution what happens is you get into this amazing cycle between the concept of the idea that you had for your company, the capability that you built around that concept, and then the culture that implicitly grew. And you really get into this complete reinforcement between the three and round and round it goes. Except at some point, the concept that you originally came up with will run out of gas, because there's no such thing as a perpetual motion machine. And when that happens, that's when your culture will matter. Which is the culture that implicitly grew in the first place. Was it conducive enough to build a new capability long before it was needed for the new concept? So for me at Microsoft, given where we are in our life cycle—which is we're forty-three years old—we've had tremendous success as a company. For me, coming in as a CEO, I recognized inherently that beyond not only meeting new concepts, new ideas that we need to pursue, we needed to work on culture as a first class thing that in the first place would allow us to build that capability and concepts. And so that's why I prioritized culture.

DK: Right. How did you go about deciding how you were going to use culture? What were some things that you looked into—was it—many listeners call me what can I read on that, and what were the real prompts for you to to move you to that point? 

SN: There was a book I had read, maybe couple of years before I became CEO, which was more instrumental in sort of changing things outside of work which is called Mindset by Carol S. Dweck. And in fact my wife introduced me to it—more in the context of my children's education—and I read it and I realized that a lot of this—the way I distill it down—is this one very simple concept of if you take two kids in school, one of them is got even more innate capability, but the other one has less innate capability. But the person with less innate capability is a learn-it-all and the person with more innate capabilities a know-it-all; we know how that story ends. The person who is a learn-it-all will always do well in the end. I think that that applies to CEOs, that applies to everyone, and companies at large.

So it appealed to me. And, I felt that if—because the pursuit I wanted, or the cultural meme I wanted for us to even begin the dialogue of culture as something first class at Microsoft was a learning culture. But always it was hard for me to grab onto what's the way to talk about learning? And this metaphor of growth mindset or transitioning from the know-it-all to the learn-it-all was something that, at least to me, felt like a great way to make it accessible, make it something that appeals. And I didn't want it to be new dogma from whether Kathleen or me. It needed to be something that appealed to individuals because it will make them a better parent, it will make them a better partner, better colleague, better leader...and so that's the other reason why I think this one appealed a lot to me and so we picked it up as the culture of meme. And of course Kathleen and all the rest of our leaders and managers and individuals in the Microsoft have shaped it a lot.

DK: So Kathleen in Satya's book Hit Refresh he refers to you as his partner in the cultural transformation. How did you begin your piece, as the Chief People Officer, to to start your contributions in efforts to such a huge undertaking?

Kathleen Hogan: Well, thanks and it's great to be here as well. And I'll talk about quote my role, but again it's been a total team sport in terms of transforming the culture, right, with all the employees here. But when Satya first approached me about leading H.R., and I don't know if you remember this Satya, but I remember coming in and saying you know, “What's my scorecard?” You know I was running services at P&L. All sorts of things and Satya said, “The one thing I want you to do is help me transform the culture.” So even back then, he was crystal clear that that was really going to be important, right? The mission and the culture of things that I want to be eternal. Our strategy is going to evolve, but that's going to be really important to us.

And so, and at that time, he had been reading that book Mindset and—but then we actually went through a nine month process from that point to really engage many, many, many people in this process. We engaged the SLT [Senior Leadership Team], we had offsite with the SLT—we can talk about that. We took our hundred eighty corporate vice presidents offsite and had—where we broke into seventeen teams and created the culture cabinet. We were doing surveys, we were doing focus groups. So we spent about nine months—this concept of going from a learn-it-all to a know-it-all; (laugh) wrong way—that we probably went from a know-it-all to learn-it-all culture before we ultimately grounded it in this concept of a growth mindset. So it was a it was a pretty long process that we went through. So it wasn't just Kathleen or Satya coming up with this. We engaged a lot of people before we declared what our “aspire to culture” is; which is this growth mindset really focused on being customer obsessed, more diverse and inclusive, and one Microsoft.

DK: So stay with me on this idea of all of these conversations that you were creating, and one of the things I like to point out is important conversations are very deliberate and very intentional. You can't just walk in the room and hope for the best. I am guessing though—that I'll take thought from you and a story from Satya as well—what comes to mind when you think about the best moments and the toughest moments in those conversations, which by your own description, nine months laying the ground work. That was that was a critical time. What's a example that comes to mind of success and struggle?

KH: Well, many, frankly many, come to mind. I mean and I mentioned the first offsite that we had with the SLT, and this was the first time we went into a room like this where we were literally sitting on couches and chairs. No PCs, no phones. You know, you thought that we had asked them to give up their first born, right, because that was really hard for people. And so I did—that started out difficult—but by the end when we really were talking about what's our purpose, what authentically do we do we want as an SLT? And I thought that was a that was a good conversation that we had.

The other one was we—and Satya talks about it in the book—when we have this executive offsite one hundred eighty CDPs we said let's talk about culture. And I think you—Satya said—we thought it might be a cute nod where everybody over dinner would say fine we'll spend five minutes talking about culture and then we'll do whatever we want. But people stayed late into the night and really talked about the culture that they wanted to have. And then when we met in the morning, Satya and I met with the seventeen leaders of the team captains of the tables, they had really thought deeply about this. And so I'd say that was a good conversation in terms of—I think it surprised us how much people really wanted to define the culture, and that the culture was going to matter to our leadership team.

SN: Yeah, I mean one of the things that strikes me—you know whatever multiple years now into this journey—is we never framed this cultural conversation or change in transformation as sort of a get from attribute ABC to attribute XYZ as fast as possible and call it done. If anything, we framed it as this continuous process of renewal. In some sense, we will never reach a destination. You're never going to claim—in fact the first day you'll never be—you'll go from being a learn-it-all to know-it-all is when you say you're done. And so that has actually helped us in two ways. One is not to get overly anxious about making quick progress. This is not about—so the ability to give each of us even breathing space.

What does growth mindset mean to you? Or what does it mean to be a learn-it-all? Bring your own personality, even in that first SLT that we had—or the senior leadership team offsite we had. One of the most interesting exercises, was each of us had to go around and talk about what is it that personally drives us? What's in fact our personal philosophy? And we would then go on to relate that to saying look we've got to be able to take whatever drives you, whatever it is your passion, your personal philosophy and connect that to Microsoft's mission. And that's when you have created the necessary condition for a learn-it-all culture, because without that it's going to be hard. I mean it's just—you know—you're not going to do things at this company—in fact many times I describe this as— what if we turn the equation, which is don't consider it as your working for Microsoft, but Microsoft as a platform is working for you. Is that the way to switch on the right mindset?

Because the real thing that we're asking here is for you to confront your own fixed mindset, right? I mean the growth mindset is not about wow I learned all this. In fact acknowledging the every day— starting with me—all the places where, “Oh wow, I wish I'd listened more. I wish I had sort of taken the cues. I wish had sort of been more in touch with the unmet, articulated needs of customers.” Those are the things that I think really will shape our culture.

KH: I know you talk about important conversations, and Satya's always said the first important conversation is the one you have with yourself, right? Which is where did I show up with a fixed mindset? I mean and Satay every Friday when we debrief, always talks first about himself. You know, "Gosh in that meeting I showed up with you know more of a fixed mindset than I might have wanted to." And I think that's really important, because in the beginning people would show up and say, “Hey Satya I have I five people who have a fixed mindset.” And he kept saying, “No it's not about that, it's really—it starts with yourself," right?

DK: Do you help—when someone comes to you with their inventory of the fixed mindsets that they have found—what's the—because I would see that is the difficult moment—because that also then depletes to a certain extent the individual. What do you say to them? How do you keep them infused with energy?

SN: It's a great question. I mean one of the things that I've also come to realize is—although I would call it your own personal example of being that person who is confronting your own fixed mindset— or exhibiting the attributes of a learn-it-all is the best way to create energy. As a CEO, though I should also acknowledge that sometimes the system may not let a person, and so therefore my job should always be to work on, with Kathleen and others, on how do we make sure that the company's overall environment—take inclusiveness and diversity. You absolutely want to make progress where everyone who comes into this company can do their very best, because they find the overall culture to be more inclusive and more diverse. And you have to do a lot of things right in order to get that culture. But that said, individually my advice to anybody would be do not underestimate the power you have to influence and change. And don't overestimate the power of everybody else has. And that I think is true in all of our lives. You don't need to be CEO to do that. But that doesn't mean I don't acknowledge my responsibility as a CEO to create a better and a better environment each day. But I think that's how I would say we go about it.

And the practical way is—sometimes the question that both Kathleen I would get—is, “What is this growth mindset? It seems abstract or how do I go about exercising this?” Simple. Every customer conversation—for a salesperson it might be an actual conversation. For a developer it could be looking at the log files. Either one of them is a great opportunity for us to confront maybe some of the hypotheses we had in the past, and now get more in touch with the unmet and unarticulated needs. So that would be an example—every meeting that we have—if you want to be more inclusive in our culture—that will require each one of us to say, “How do I invite everyone to contribute?” The people with the idea is able to surface them. So these are just two examples of practically exhibiting it.

KH: And Satya and I've talked about what I would say are—what are big symbolic things that you can do, but then just small things like you talk about inclusive behaviors. We've rolled out ten inclusive behaviors and now a lot of teams just have a discussion: pick one, right? Satya himself in the monthly Q and A has talked about the inclusive behavior he works on. And wow, that's, that's powerful in terms of role modeling that. And so it's small things, but then also big symbolic things. We changed our company meeting where for four hours we would talk at employees, and now we have this hackathon where for a week we're really getting ideas from employees. And that's been very symbolic. So I think we've tried to be intentional about big symbolic things, small things.

The other thing I think that has been really helpful is Satya— you know this podcast about conversation—Satya I think such a has a monthly consistent conversation with all the employees. And I think that's really helped with a consistent drumbeat around the mission and the culture. And he always comes back to that, even if the strategy is evolving. And you know people, anybody can come to the microphone and ask a question, and often you do get questions about fixed mindset and you know that's an opportunity for Satya to talk about the culture. Reinforce it.

SN: Right. I mean what you just mentioned Kathleen I think is an important one, which is the consistency of the overall frame, whether it's our sense of purpose and mission, or our culture and going back to it, and letting it in some sense permeate for people to think about it, ask the hard questions and go dig deeper and deeper on the same set of teams has been helpful. Because one thing I've come to realize the power of is having simple frameworks like this. Even at our scale, without that simplicity, is very hard because it's too complex. And if you change the frame then it becomes even more confusing. And then there's no shortcut to time. That's why I think framing this is a continuous process of renewal, not looking for perfection in some finite time and having tolerance for it. The fact that you may have to go back—and quite frankly sometimes I also get impatient—and you know Kathleen sort of catches me on those moments. And then I realize that well, you know this is what —you're only human—what we're looking for is that personal meaning in what we do. And that is not consistent, even for anyone of us, and so therefore letting that be OK. And that's why I never like to sort of talk about oh let's celebrate some transformation. I want to in fact celebrate the struggle every day of the imperfect sort of world we live in.

DK: So let me build on the notion of struggle for a second, have you comment on something I want to thing in your book that really struck out. And I just want to read it very quickly and get you both, if you will, to comment on how you deal with it. “Culture change is hard.” he wrote. “It can be painful. The fundamental source of resistance to change is the fear of the unknown. Really big questions for which there may be no certain answers can be scary.” In my world, I deal with—that is the currency I deal with every day—is people afraid to change. I'm curious, especially as you get out into the other countries, the wide one hundred thousand employer each you have to have. How do you help both yourself and others process and confront the fear?

SN: It's a great question. One thing we're focused a lot on is also something that we describe as leadership principles—there are three of them. One of them is...

KH: Create clarity.

SN: Create clarity. Create energy, and generate success. Especially the attribute of creating energy I think is super important, which is: if you have what I would call a very deep accountability culture, which we have, and we take a great pride in it. It does work against this change which is because of the way I just described it, which is, “Wow I want to change, and I don't know what I want to break, but I'm accountable.” That's what creates resistance. So for example, in our case we've had to make some systemic changes in what we measure, what hold people accountable for, and what permission do even give people to get things wrong and it's OK. So we've had lot—one of most classic one is for example—in sort of measuring things like revenue and profit as the only things, even though I am measured on it each quarter, which I think you can't get away as CEO you're going to have to report your quarter. But at the same time if you say you know since I've measured on revenue and profit every quarter, I want to take that same pressure and permeate it through a hundred thousand people. It's just not going to work, because there's going to be people who have to sort of create new things, fail at them. The leading indicators of success is what you should track.

So to me that fear or can only be mitigated if you give them the mission to fail and that's an artform. Nobody wants to fail for failure's sake, but you can fail and learn and get better. And being able to coach one through that process I think is probably one of the most important leadership exercises. That's what creates energy. You know it's classic when leaders come in and say when things have gone wrong, is when they need to create energy. Not when things are going great. Energy will always be there. And to me that's words at a premium. 

KH: Well, and that's the I think the essence of the growth mindset. In fact Dr. Dweck—we met with Dr. Dweck early on, and she really talked about how the key conversations you have to have are not just about people who took risks and were successful. You know, of course, that's what you want to celebrate, but how do you look at the people who took risks, failed, but made you better, stronger and got you closer to the answer, than the person who just played it safe? And how do you do that to really allow people to feel like they can take risks and fail? And it's going to be OK. And let's be clear that's not the same as people who are just taking dumb risks all the time and failing all the time, right?

SN: And this is where I think—you know I'm a big fan of Joseph Campbell. And I think you have to have these myths inside the company that people believe it, because that's you know—wow I failed at it, I learned, and I didn't get punished. Unless and until that is true, is not that the CEO is saying it, it has to be true in the company. And unless that is the case, then it's not going to come true.

KH: And I think it's case after case after case. I have my own example with Satya where like a month into this role I was failing. I mean we really couldn't schedule interviews and I had to go in and I said, “Satya I'm going to send out my first email to all Exec staff basically saying that I'm failing on this and would you read the e-mail?” And I promised that was the only time I was going to ask you to read my emails. But you know Satya said to me, “You know you're too apologetic. You guys made a bad decision, but you're fixing the decision. Just assert that and move on.” And wow, when I went back and told the team. It was like a huge burden had been lifted off their shoulders. And I tell you that the team has had the most creative recruiting ever in the last two years, and I think part of that was the permission to try fail and get better and stronger, versus play it safe. And so it's those moments, you know, it's not just Satya, it's all of us as leaders in those moments. How you behave, I think creates the you know, mitigates the fear that you're talking about so that you can really get to the change that you want to see.

DK: Exactly. So Kathleen I'm I'm conscious of our time here, so I want to, out of the time we've had in our years as colleagues and friends, I want to give last question to you.

KH: Oh no.

DK: Oh no, it's not that. But it really is, now that I've been around here a little bit over the past few months, the some of the word on the street, is you know we need to do this because Satya wants us to do this. You hear reference a lot—the book—everything how do we you and your colleagues separate from Satya, keep it a Microsoft transformation, and not Satya's.

DK: You know it's a great question. And again I think that's partly why we don't think we will ever be declaring success here, right? Like Satya's always said, it's not that we freeze and unfreeze culture, right, we're on this constant journey. And it can't just be about Satya. To your point I think it's necessary, but not sufficient. I mean certainly if you have a CEO that's willing to drive a culture as much as Satya has and be as authentic to the culture, that's certainly an accelerator. But then it's really about how do you activate all employees, right, like the hackathon that I mention. And then the other area really is the sixteen thousand managers, right? How do you take sixteen thousand managers—and we've been on that journey with the managers—for them to truly believe it? As opposed to it's because Satya said so.

But I'd even go back to when we first defined the culture, spending nine months. This wasn't Satya coming up with the culture. This was nine months of activating thousands of focus groups. In focus groups/engineering sales. Millennials/non-millennials. US/outside the US. I mean you go through all the different groups that we brought on board into this dialogue around the culture we wanted, that I really feel confident when we landed the culture, it was something that in general people wanted that culture. This wasn't Satya wanted it; nobody else wanted it. I think everybody wanted this culture and now together we've been figuring out how we all can lean in and create the culture that we want to have.

DK: Good.

KH: So I can spend a lot more time on that, but...

DK: But that's how you did it.

KH: Yeah. I mean it's meant yet to activating all layers right from employees to the managers to the senior leaders to play an important role. But ultimately it's about people believing in the growth mindset. You know, for me personally, the reason why I love this culture is because I truly believe in it. I believe in it for myself, right? I mean if you truly believe that potential is not pre-determined, that you really can grow and learn, and that you get your mindset—that this is about learning versus looking smart—it really can unlock amazing things. And I see that in myself. I see that with my—the people I work with. I see that with my son. I've used growth mindset—I mean it started with a Satya's wife using that book in his personal life, and I've used my personal life, too. So if you if you can get something that you truly believe, that's what it's about. It's about having everybody truly believe in it at Microsoft versus because somebody said so.

DK: Yeah. Satya is it where at this point where you had hoped for as you started out and read Dr. Dweck's book?

SN: Well, you know there are two thoughts on that. One is it's actually a pleasant surprise that something like this has taken root, and quite frankly and the only reason why it's taken root is definitely not because of some new dogma for me. It's because I think it speaks, as Kathleen so eloquently put it, to each of us individually. No one would say I want to be a learn-it-all or confront my fixed mindset because my CEO asked me to do it. They'll only do it if they felt that this is going to make them a better parent, a better partner, a better a colleague. And I think that's what's woke and so I'm pleasantly surprised because I had not understood the power of picking a cultural meaning that doesn't discriminate between your life at home and your life at work. It talks to your complete self. So that's I think what in some sense we're lucky to have picked up this as the cultural meme.

And the second aspect of it is, we are not sitting here and trying to—like we really resist this temptation—although we like to see how are we doing, how we are improving, how are we confronting a fixed mindset each day. But we definitely are not going to sit and claim any at any point in time some victory. Change that we've had over the last whatever four years has been good. But I think going forward, we will have to do the same amount. And it will be the same; it's not going to be some easy process. Every day in fact is going to be a new challenge, and are ready to confront it? Time will tell, quite frankly. So therefore I don't sit around and claim any kind of victory or destination reached.

DK: Good. Just a lot of hard, persistent, diligent work.

SN: That's correct.

DK: Thank you, thank you Kathleen. It's been an honor and I appreciate both of your time more than you know.