PDF Summary:Hit Refresh, by Satya Nadella

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”: He articulated the company’s mission, transformed the corporate culture, and formed strategic partnerships with Microsoft’s fiercest competitors.

In this guide, we discuss the principles and practices that helped Nadella “hit refresh” on Microsoft, which he connects to his experiences of growing up in India, immigrating to the US, and being a father to a child with special needs. We include actionable advice based on Nadella’s principles that can help you reinvigorate your own organization or career. We also explore his thoughts about the future and how we can—and must—ensure that technology isn’t just a means for economic growth but, above all, a force for good that is grounded on empathy.

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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.

(Shortform note: Nadella practices one of John Maxwell’s 21 Irrefutable Laws of Leadership: Leaders connect with others. Maxwell asserts that leading is more than just giving instructions. It means becoming emotionally engaged with followers so that they’ll be moved to follow you and work hard. He adds that leaders shouldn’t expect their followers to come to them; instead, leaders should initiate contact.)

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.

(Shortform note: Nadella writes that he received hundreds of positive responses from employees who thought the new mission was inspiring and energizing. However, it wasn’t without its critics: One writer for the Financial Times took aim at the vagueness of the mission, writing, “Achieve more of what?” She argues that Microsoft’s old mission under Bill Gates—”a computer on every desk in every home”—was much more concrete and precise.)

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. (Shortform note: Team-building exercises help employees build other valuable workplace skills, including better communication and interpersonal awareness, problem solving, effective planning, adaptability, and trust.)

Theme #3: Innovation

The next key theme in Hit Refresh is the importance of continuous innovation in ensuring a company’s long-term survival. (Shortform note: Nadella references the toxic culture at Microsoft before he took over as CEO, but he doesn’t go into detail about how this stifled innovation. Reports describe the two main factors that kept the company from innovating: 1) Executives refused to see beyond the company’s tried-and-tested products, Windows and Office, and 2) the days of dotcom millionaires were over, so employees were more intent on climbing the corporate ladder—this meant more power plays, more managers, and a bloated organization where everything moved at a snail’s pace.)

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. (Shortform note: In The Infinite Game, Simon Sinek cites Microsoft as an example of a company that practiced “finite” thinking—a fixed mindset that leads to short-lived companies. He argues that Microsoft under Steve Ballmer was focused on how it could beat Apple and thus based its decisions on Apple’s moves. In contrast, he writes that Apple practiced “infinite” thinking—it was focused on improving customer experience.)

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. (Shortform note: Having a growth mindset is just as important in your personal life as it is in a company. In Grit, Angela Duckworth writes that people who have a growth mindset believe that they can get smarter or more talented over time if they put in the work and are given the right opportunities. They’re more likely to persevere despite obstacles and failure.)

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. (Shortform note: Nadella’s approach to mistakes is similar to Pixar co-founder Ed Catmull’s. In Creativity, Inc., Catmull writes that Pixar sees failure as an inevitable result of innovation. To take the stigma out of failure, he recommends taking the pressure off managers to perform perfectly and encouraging them to create an environment where employees can fail and recover.)

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.

Women and Tech: Recognizing Common Obstacles

In spite of the advancements women have made in recent years, women still face significant barriers when pursuing careers in tech. These barriers include:

1) Sexism around women’s professional roles. Tech is still a male-dominated field, and traditional ideas around which roles and careers women “should” prefer can act as a hindrance. A lack of visibility of women in tech also means that women rarely get exposure to potential mentors, and they remain ignorant of the opportunities available.

2) Social conditioning. While men are often encouraged to be confident go-getters in the workplace, many women struggle to assert themselves when it comes to promotions, pay raises, and having their ideas heard. This means that—as Nadella himself discovered—even deserving women are frequently overlooked while working in the tech field.

3) Lack of support. Tech cultures are not always family-friendly or sensitive to the needs of women, many of whom may prefer more flexible work options and a more supportive work culture. Balancing professional and family obligations remains an issue for many.

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.

(Shortform note: If hosting a hackathon isn’t feasible, you can try other ways to build effective cross-departmental communication: 1) Streamline meetings by having a clear agenda, 2) make sure leaders from different departments stay abreast of what’s happening in the company, 3) try out different communication channels and encourage informal communication, and 4) choose managers who have a good interpersonal fit with other leaders.)

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.

(Shortform note: Nadella leaves out details of Microsoft’s rivalries, including its most famous rivalry with Apple. This rivalry stems from the complicated relationship between Bill Gates and Steve Jobs who, at turns, worked together and criticized each other through the years. By 2015, the two companies seemed to bury the hatchet as Apple optimized Microsoft’s apps on the iPad. However, these friendly relations may be coming to an end: In 2021, Microsoft took aim at Apple for its gatekeeping of the App Store.)

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.

The Art of Competitor Collaboration

Aside from Nadella’s advice of being open, considering your customers’ needs, and having a long-term view, keep these factors in mind when collaborating with your competitors:

1) Maintain clarity of purpose. Know what you hope to get out of the collaboration, and never lose sight of what your competitor is hoping to gain from the collaboration as well. Note that your objectives will sometimes differ.

2) Set boundaries. Have a firm idea of what is and isn’t off limits to share with your competitor, and make sure your employees know what information, strategies, or resources need to remain confidential or for the company’s exclusive use.

3) Learn from your competitors. Pay close attention to opportunities for learning and growth based on what your competitors reveal about their own strengths, weaknesses, and approaches to your collaboration. You may learn valuable lessons that will help you refine your business strategies.

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.

(Shortform note: Staying true to Nadella’s philosophy of making the world a better place, Microsoft announced the creation of a $1 billion Climate Innovation Fund and a plan to be carbon negative by 2030. In an interview, Nadella stressed that a corporation’s purpose is to find “profitable solutions to the problems of the people and the planet,” arguing that profits won’t matter in the long run if it means creating more problems for the planet.)

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.

(Shortform note: If tech companies are at a loss as to how to partner with developing countries, they can consider working with the United Nations Technology Bank for Least Developed Countries. Established in 2018, the organization is helping the 46 least developed countries—including places like Afghanistan, Burkina Faso, and Rwanda—gain access to technology, in part by matching them with partners in the private sector. The end goal is sustainable development through local skills development and economic self-reliance.)

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.

(Shortform note: While Nadella argues against government overreach, he is silent when it comes to acknowledging the serious privacy violations of tech companies in terms of advertising and the collection of consumer data. The increasing power private companies and advertisers are gaining through the mass collection of data has led to efforts by the European Union to ensure greater consumer protection through a policy known as GDPR (General Data Protection Regulation), with hefty fines imposed on companies—such as Google—found in violation of these rules.)

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.
• And third, AI must be sensitive to the needs of people across ethnic, racial, and gender categories.

(Shortform note: Nadella is optimistic that AI won’t lead to widespread unemployment, but Yuval Noah Harari argues otherwise in 21 Lessons for the 21st Century. He writes that, despite the possibility of humans and AI working together, it’s likely that there will still be a net loss in employment due to AI. He recommends that governments prepare for a “post-work society” by: 1) implementing a universal basic income, which taxes corporations and billionaires and distributes the money to the rest of the population, 2) broadening the definition of work to include unpaid “jobs” like people who take care of elderly relatives, and 3) providing free basic services—education, transportation, health care—instead of basic income.)