How did Microsoft come back to life after it was in decline? What leadership principles from the story can you apply in your own business?
When Satya Nadella took over as CEO of Microsoft in 2014, the company was in decline. Once the wealthiest corporation in the world, it found itself lagging behind other tech giants like Apple and Google. Hit Refresh describes how Nadella brought new life to Microsoft by rediscovering its “soul.”
Here’s an overview of Hit Refresh by Satya Nadella.
Hit Refresh by Satya Nadella
Hit Refresh by Satya Nadella is an account of how he took over as Microsoft’s CEO in 2014 and sought to rejuvenate the company after a long period of stagnation and decline. He describes how he reinvigorated the company by rediscovering its “soul”: He articulated the company’s mission and reminded everyone of the why behind their work, transformed the corporate culture from one plagued with in-fighting to one of collaboration, and formed strategic partnerships with Microsoft’s fiercest competitors.
Throughout the book, Nadella discusses the key leadership principles that helped him “hit refresh” on Microsoft and the business practices that allowed the company to thrive once again. He connects these principles to his life experiences of growing up in India, immigrating to the US, working his way up at Microsoft, and being a father to a child with special needs. He also offers his thoughts on the future and how companies and policymakers can—and must—ensure that technology isn’t just a means for economic growth but, above all, a force for good that is grounded in empathy, augments (instead of replaces) human capabilities, and helps solve the world’s big problems. We’ve synthesized his main themes.
Theme #1: Empathy
The theme that is the most central to Nadella’s business philosophy is empathy. Nadella defines empathy as the cornerstone of all that he does, both personally and professionally, and he believes that it’s shaped his career at Microsoft and his vision for the company.
For Nadella, empathy is about understanding others’ points of view and also seeking to empower them. He believes that empathy enables Microsoft to understand its employees and customers better, helping the company to anticipate the needs of its clientele while also creating a more welcoming and dynamic environment in the workplace.
How Nadella Practices Empathy
Nadella asserts that empathy is rooted in direct engagement. He believes that this engagement should be the cornerstone of all of a CEO’s relationships:1) Empathy for employees: Nadella believes that CEOs must actively seek out employee feedback and be willing to listen to their ideas and concerns with an open mind. He opened the lines of communication by bypassing some of the hierarchy and bureaucracy that made it harder for lower-level employees to be heard.
For example, he invited junior members of Microsoft to what had traditionally been a seniors-only annual brainstorming retreat. The fresh ideas generated and a willingness to listen led to a more productive and dynamic retreat.
2) Empathy for customers: Nadella also invited customers—schools, nonprofits, small businesses—to the annual retreat so that Microsoft’s senior researchers, engineers, sales, and other executives could understand the customers’ problems and work together to solve them.
3) Empathy for competitors: Nadella believes in engaging directly with competitors in order to learn from them or to resolve conflicts. He also writes about forging mutually beneficial strategic partnerships with them, which we’ll discuss in detail later in the guide.
4) Empathy for partners: Empathy plays a big part in Nadella’s approach to business disputes with partners—he seeks common ground instead of trying to win or dominate others. He argues that empathy allows leaders to understand the legitimate concerns and objections others may have and to find solutions that work for both parties. For example, when Microsoft had a contract dispute with Yahoo, Microsoft listened to Yahoo’s concerns instead of making threats and demands. They found a solution that satisfied both parties—without costly litigation.
Theme #2: Leadership
While empathy is at the heart of Nadella’s leadership, much of Hit Refresh focuses on how he defines good leadership more generally. In this section, we’ll discuss Nadella’s key leadership principles and some of his priorities as CEO.
Key Principles of Good Leadership
Aside from having empathy, Nadella gives the following tips for becoming an effective leader, regardless of your industry:1) Put your team ahead of yourself. As a lifelong devotee of cricket, Nadella understands the importance of working together as a team. He writes that individuals—no matter how talented—can destroy a team if they’re more concerned about personal glory rather than collective success.
2) Have conviction. Nadella says that Microsoft can do a lot of good in the world through its democratizing approach to technology. To help inspire employee conviction when he became CEO, Nadella drafted a mission statement that defined the company’s beliefs and goals in a succinct and accessible way. This gave employees a sense of direction and a renewed sense of purpose.
3) Think long-term and short-term. To spot opportunities and take smart risks, a company must always consider how the decisions it makes today could affect both its own standing and the world around it over the long term. An example of this is Nadella’s approach to AI: While openly enthusiastic about AI’s potential, Nadella also stresses the importance of anticipating the disruptive effects it could have on the workforce. He argues that companies must plan ahead to avoid inflicting hardship upon workers and find ways to make AI something that can boost efficiency while also avoiding rendering human capabilities obsolete.
4) Don’t be complacent. While Microsoft played a big part in ushering in the personal computer revolution of the 1980s and 90s, it missed out on other important technological trends such as search engines (an area in which Google would dominate) and mobile phones. Nadella realized that Microsoft had grown too fixated on doing what it had always done and that the key to remaining competitive was to take risks and seek new opportunities for growth.
Prioritizing Corporate Culture
Nadella believes that, as CEO, his first and most important job is to foster a good corporate culture.
When he took over as CEO, he believed that Microsoft had lost its soul and no longer reflected its original core values. The company had fallen behind its competitors and its employees were dissatisfied and disillusioned. Nadella sought to transform the culture into one that would lead to a positive work environment by:1) Speaking and listening to employees. Nadella showed that he was open-minded and ready to listen by soliciting honest feedback through his surveys and meetings.
2) Engaging with staff. Nadella hosted meetings in which senior managers could share more personal experiences and ideas with one another. Beyond getting to know senior managers, Nadella argues that CEOs must remember that they lead an entire company, not just senior management. Thus, a CEO must always stay in touch with the broader base of employees as best as they can, and they must seek decisions that benefit the company overall.
3) Clearly and succinctly defining Microsoft’s mission. Nadella writes that having a clear mission inspires others and gives them a sense of direction. To get everyone on the same page, Nadella and his team streamlined and defined the company’s mission, objectives, and culture. The key message: Microsoft’s mission is “to empower every person and every organization on the planet to achieve more.” By simplifying the message, they energized people and enabled them to see how their work fit into the company, fostering a shared purpose.
4) Encouraging people to learn together as well as work together. Nadella believes that team-building exercises and creating an environment in which constant learning is actively encouraged helps bind a team and encourages employee growth. It also contributes to innovation, as we’ll discuss in the next section.
Theme #3: Innovation
The next key theme in Hit Refresh is the importance of continuous innovation in ensuring a company’s long-term survival.
To Nadella, the three key elements of innovation are:
1) Adopting a Growth Mindset
Microsoft had become stagnant at the time Nadella stepped into the CEO role. He argues that this was due to Microsoft’s “fixed mindset”—it rested on its past successes instead of continuing to take risks and push innovative tech products. With the advent of mobile phones and iPads, its rivals started to pull ahead.
He helped break Microsoft out of its fixed mindset by adopting a “growth mindset,” which enabled the company to regain the initiative instead of falling behind in technological trends. Risk-taking and innovation became the order of the day, leading to new opportunities in AI and cloud computing and changing the general atmosphere at the company.
In addition, Nadella believes a growth mindset means that you learn from your mistakes. While many things had gone wrong at Microsoft in the years before Nadella took over as CEO, having the courage to confront those mistakes and find a way forward was instrumental in the company’s rejuvenation.
2) Creating a Diverse Workforce
Aside from having a growth mindset, Nadella believes that diversity and inclusion contribute to an innovative workplace. Having diverse employees prevents homogeneous thinking, opening up the company to different values and perspectives that lead to better ideas and products.
However, Nadella isn’t without his missteps. At the Grace Hopper Celebration for women in computing in 2014, he fumbled the answer to a question about how women in tech could approach getting a pay raise. He claimed that so long as someone continues to work hard and well, they will eventually be recognized and rewarded accordingly—an assumption that was not at all in keeping with the experience of women in tech.
Nadella recognized and learned from his mistake. He pivoted to stressing that leaders should actively root out biases to create a fair environment where everyone can speak for themselves. Microsoft has since become more transparent about pay equity and increased support for diversity programs.
3) Working Together
Another barrier to innovation that Nadella wanted to address was the bureaucracy and isolation between departments. He asserts that the key to moving forward is collaboration and being open to other people’s ideas. To break down departmental silos and generate fresh ideas, the executive team introduced an annual week-long hackathon, where teams across different groups work together to solve problems creatively.
Theme #4: Healthy Competition and Strategic Partnerships
Aside from paying attention to the internal dynamics at Microsoft, Nadella also sought to improve external relationships with the company’s competitors.
Nadella notes that it’s easy to be bitter that others like Apple and Google have raced ahead in areas like mobile. However, he doesn’t believe that envy and spitefulness are good drivers for success. Instead, he adheres to a lesson about competition that he learned from his cricket days: Be respectful of your rivals, and don’t let intimidation prevent you from taking pride in what you do and performing at your best.
Thus, Nadella changed Microsoft’s approach to competition: Instead of being weighed down by envy, he tried to learn from the successes and failures of Microsoft’s rivals. Importantly, he realized that it was in the customers’ best interest for Microsoft to coexist with its rivals.
To make such strategic partnerships work, Nadella writes that companies should:
1) Be open. Nadella believes respectful dialogue opens you up to exciting new opportunities for collaboration. For example, Microsoft agreed to work with Apple so that Office would run seamlessly on the iPad Pro.
2) Think of the customer. Consider how you can create additional value for your market. If you have a strong product but aren’t in the position to reach a big audience, it’s best to partner with companies whose platforms have a wider reach. For example, Microsoft works with Facebook to ensure that its applications run on Windows products.
3) Look at the long-term impact. Nadella acknowledges that it’s not always easy to work with other companies. When issues arise, he recommends remembering your long-term goals and letting them help you get through disagreements.
Theme #5: Ethical Development
We’ve discussed Nadella’s approach when it comes to internal management at Microsoft as well as external relationships with competitors and partners. In this final section, we’ll discuss his thoughts on technology’s impact on the wider world.
Nadella believes that companies should be driven not just by profit but by their potential to make the world a better place for the greatest possible number of people. He reveals that one of the things that first attracted him to a career at Microsoft was the “democratizing” tech mission of Microsoft: Bill Gates had dreamed of making a PC a reality in every home. Nadella insists that technology can and should still be democratic at heart, empowering people all over the planet through its innovations.
The Ethical Responsibilities of Tech Companies
While technology can be a force for good, Nadella emphasizes the need for tech companies to recognize the power that they hold over others, and the impact their products can have—both for better and for worse—on the wider world. In particular, Nadella addresses three key areas in which tech companies have ethical responsibilities:
1) Nurturing entrepreneurs in the developing world. Nadella argues that many political leaders in the developing world become so obsessed with attracting major Western tech companies to their countries that they neglect their homegrown talent and businesses. Ethical tech companies can nurture developing-world talent both by helping to make technology as accessible as possible so that local entrepreneurs can have greater opportunities for pursuing their own innovations.
2) Standing up for moral values. While Nadella discusses the importance of collaboration at various points in Hit Refresh, perhaps its most surprising manifestation is the way in which Microsoft sometimes joined its rivals to form a united front against the US government. Nadella argues that companies have an ethical imperative to stand up for certain moral values, such as safeguarding freedom of information and customer privacy.
3) Using technology to empower, not harm. Nadella also emphasizes the need to develop AI and other automation in a way that does not disempower people or bring too much hardship or unemployment. He says that the three core principles that shape Microsoft’s approach to AI are:
- First, AI should augment human capabilities, not replace them.
- Second, AI must be designed for intelligent privacy to protect consumers and retain trust.
- Third, AI must be sensitive to the needs of people across ethnic, racial, and gender categories.
———End of Preview———
Like what you just read? Read the rest of the world's best book summary and analysis of Satya Nadella's "Hit Refresh" at Shortform.
Here's what you'll find in our full Hit Refresh summary:
- How Satya Nadella brought Microsoft back from its decline
- Actionable advice to help you reinvigorate your company
- A look at the ethical responsibilities of tech companies