This article is an excerpt from the Shortform book guide to "Hit Refresh" by Satya Nadella. Shortform has the world's best summaries and analyses of books you should be reading.
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As a leader, should you think short-term or long-term? What leadership principle is essential to innovation and competitiveness?
For Satya Nadella, leadership involves six key principles. Much of his book Hit Refresh focuses on how he defines good leadership. His advice is helpful to anyone who wishes to become an effective and inspiring leader, regardless of their industry.
Keep reading to learn Nadella’s leadership principles and his priorities as CEO.
Principle #1: Show Empathy to Others
According to Satya Nadella, leadership must center on empathy. Empathy is about understanding where others are coming from and addressing their needs, whether they’re an employee, a customer, or even a competitor or business partner you may have disagreements with from time to time. Nadella asserts that empathy is rooted in direct engagement and that it should be the cornerstone of all of a CEO’s relationships.
Principle #2: Put Your Team Ahead of Yourself
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. He also writes about the importance of creating a “shared context” when leading a team. This means being able to get your team on board with your decisions.
Principle #3: Have Conviction and Believe in What You and Your Company Can Do
Nadella insists that his loyalty to Microsoft stemmed more from a belief in the company’s mission than in his own personal ambition: He believed that Microsoft could 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 helped to give employees a sense of direction and a renewed sense of purpose.
(Shortform note: It’s important to find a common purpose as Nadella did because, according to the authors of Tribal Leadership, doing so encourages people to come together and work effectively. To find a worthy purpose, the authors recommend asking four questions: 1) What’s working well? 2) What’s not working? 3) What can we do to make the things that aren’t working work? 4) Is there anything else?)
Principle #4: Think Long-Term and Short-Term
In order to spot opportunities and take smart risks, a company must always be considering 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 at Microsoft 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 in the workforce. He argues that companies must plan ahead to help avoid inflicting hardship upon workers and find ways to make AI something that can boost efficiency while also avoiding making humans permanently unemployed. (We discuss this in more detail under Theme #5.)
(Shortform note: Part of the reason behind Microsoft’s decline was that it fell into the trap of short-term thinking, but this isn’t uncommon—it has become a serious problem for many American companies. To avoid the pitfalls of short-term thinking, experts recommend that companies decouple executive compensation from quarterly gains and prioritize long-term investors over short-term investors in a company.)
Principle #5: Don’t Be Complacent
While Microsoft helped to pioneer the personal computer revolution in the 1980s and ’90s, it missed out on several other important technological trends, such as search engines (an area in which Google soon dominated), mobile phones, and—for a while—cloud computing. Nadella realized that Microsoft had grown too fixated on doing what it had always done and that the key to remaining competitive as a business was to take risks and seek new opportunities for growth and product development. Armed with this realization, Nadella poured his energy into encouraging the development of Microsoft’s cloud computing and AI systems.
(Shortform note: Microsoft isn’t the first innovative company to be lulled into complacency by its success. In Business Adventures, John Brooks describes how Xerox found massive success with its first copier, but new competitors were soon eating into its market share. This reminded Xerox leaders that they had to explore other fields and led to the establishment of the Xerox Palo Alto Research Center (PARC) which developed some groundbreaking tech—including the graphical interface that led to the development of Windows. Unfortunately, Xerox executives missed out on capitalizing on PARC’s innovations. They remained hyperfocused on copiers, much like Microsoft execs relied heavily on Windows and Office.)
Principle #6: Prioritize Corporate Culture
Nadella believes that as CEO, his first and most important job is to foster a good corporate culture. Thus, refreshing corporate culture was at the top of his priority list. When he took over as CEO of Microsoft in 2014, he believed that the company had lost its soul and was no longer representative of its original core values. Nadella thus sought to transform the culture into one that would lead to a positive, rejuvenated work environment for all employees.
Nadella transformed Microsoft’s corporate culture by:
- Speaking and listening to employees
- Engaging with senior managers—and beyond
- Clearly and succinctly defining Microsoft’s mission
- Encouraging people to learn together as well as work together
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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