Nadella to Microsoft rank-and-file: It's time to question orthodoxy (Q&A)

Nearing the half-year mark as CEO, Satya Nadella issues a call for change. But he tells CNET News, one thing that won't change is the future of Xbox at Microsoft.

Charles Cooper Former Executive Editor / News
Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.
Charles Cooper
5 min read

Microsoft CEO Satya Nadella James Martin/CNET

In case you still had any doubt, it's no longer Steve Ballmer's Microsoft.

Nearly six months into his tenure, CEO Satya Nadella issued a broad-brushed call for change at Microsoft in a 3,100-word note he sent to employees Thursday morning urging the rank-and-file to improve the corporate culture and "obsess" over customers.

Although his memo did not offer specifics, Nadella also promised that Microsoft would "flatten the organization" while creating "leaner business processes."

That's for another day. More immediately, think of this as Nadella's most visible attempt to publicly stamp the direction of the company he began leading last February.

"I used this as a good opportunity for me to just mark the passing of one fiscal year into the next and make sense of the changes," Nadella said in an interview with CNET, during which he described the need for Microsoft to redefine, if not expand, the concept of user productivity.

"The real emphasis for us is what's our soul and contribution in this mobile-first, cloud-first world. And that's where redefining productivity and rethinking platforms is a core sensibility we have," he said, adding that he wants Microsoft to think about it more ambitiously.

"At the end of the day, it's all about culture -- you kind of eat your strategy for lunch if you don't have a culture that reinforces what you want to have done," he said.

The following is an edited transcript of the interview.

Q: I think you missed your true profession. You wrote one hell of a lead, as we say in journalism.
Satya Nadella: I want the least number of decision makers. We want to empower people to get more things done and also give permission to question orthodoxy. So it's not about being static, or here are a few changes and that's it. I want us to be able to say, "Look we can change. And we should change and don't be beholden to any of our past." Because the nature of work is changing.

At the core of the products we build, I want to think about productivity centered around people. I don't want to think about OneDrive and OneDrive for Business as two things. I want the system to think about it on behalf of me. There are some documents that are my personal documents that should go to OneDrive; there are documents that are Word documents that should go to OneDrive for Business. That should all be quote-unquote, auto-magic. That's the kind of innovation we should be able to contribute to, and that's what we're pursuing

Your note also seems to be a declaration that Xbox isn't going anywhere, that it's staying with Microsoft?
Nadella: I wanted to be very, very explicit about how a large company -- and a successful, large company -- like ourselves can have a core and should, in fact, have a core and also have ambition to do a few other things where we can have high impact. And to me, I'm so glad to have Xbox as a franchise, especially at a time when gaming is becoming even more important -- as a digital life category and in the mobile world. The most time spent? Games. The most money spent? Games. Xbox is one of the most revered, loved brands in games. I look at that and say I want that team to be super ambitious about gaming...It doesn't matter that it's not core to productivity. In fact, there's so much technology transfer that actually happens. Take all the speech recognition that we have in Skype. It came because of Kinect on Xbox. But that's not the reason that I'm in Xbox. We're in Xbox because we want to win in gaming, delight customers in gaming, and want to grow that fan base. I wanted to make that explicit because I think it's OK for a large company like ours to be proud of things where we are having a high impact outside of the core.

Are you still thinking over whether to keep Bing?
Nadella: Bing to me is a core part of task completion and productivity...A lot has happened underneath Bing where a lot of Bing technology is now a significant part of a lot of what we do in Azure and Office 365, so that's what I wanted to reference (talking about it) as part of the core.

You're coming up on six months on the job. I think a lot of people would be curious to know: What's been your biggest surprise so far?
Nadella: The thing that I've found is this hunger for being clear on what is it that is our soul, our core, and that unique contribution and sense of purpose that we can make -- and have a bold ambition around it. There were a lot of things. It's not as if we're suddenly doing things completely differently. But the cool thing is, I love the fact that people are getting galvanized and much more clear about "Oh wow, yeah that's right; we can think about platforms and productivity differently." We should not, in fact, think about our own efforts in fractured ways, but let's put the user in the center and bring things together so that we harmonize it for the user.

We have a lot of work ahead of us. At the end of the day, I'm not a believer in memos but a believer, obviously, in products that draw inspiration from what we said we would do. And I see good progress in the last six months about work that was started even before I started as CEO . That's been good, and now I'm feeling great about our pipeline.

What's your sense: Do you think Microsoft's ahead or behind in each of the categories where the company operates?
Nadella: Think about it. We're 39 years old and here we are on Techmeme every day, every week. There's something right about this place. How does one be relevant in such a broad way across digital life and digital work? There are so many new competitors. In my own 22 years at Microsoft, I started competing with Novell and Lotus. It's just different. Now we have new competitors. It's great. I have a lot of respect for these new competitors. Some places we're ahead, some we're behind -- but we're in it. We're in the mix. And we're a profitable company. So I'll take our hand any day of the week. But at the same time, like I always say, this industry has no respect for any past. So I want us to be on our toes and forward-looking and aggressive and ambitious. But I feel it's our time when it comes to thinking broadly and ambitiously about productivity and platforms.