Satya Nadella’s leadership dilemmas at Microsoft begin with Nokia

August 5, 2014

Paul Hinks

Satya Nadella

Satya Nadella

Satya Nadella became Microsoft’s third ever CEO in February 2014. He faces enormous challenges of change to an economic powerhouse

Since its inception 39 years ago, Microsoft has driven change. Its products have shaped and disrupted the IT landscape. Its desktop and server operating systems have become industry standards. Yet, relentless competition demands further changes. The new CEO recognizes the situation.

‘One Microsoft’

A few months into his appointment [10th July 2014], Nadella published an ‘internal memo ‘ in the public domain entitled: ‘One Microsoft’. The document provides insight into the strategic priorities at Microsoft – as well highlighting deeper leadership dilemmas. “The day I took on my new role I said that our industry does not respect tradition – it only respects innovation.” He wrote.

Changing landscapes and Microsoft’s previous success

Cloud Computing and Mobile technologies were focal points in the memo – repeated references to “a mobile-first and cloud-first world” emphasising where he feels Microsoft’s future lies.

A key dilemma and challenge for Nadella is that Microsoft no longer appears to be dominant in shaping the direction of the IT landscape. Microsoft’s desktop and server operating systems provide examples of different franchises that became de facto industry standards. Today we talk about firms such as Apple, Google and Amazon and how their products and services have momentum – the iPad, iPhone, Kindle, Android phones – as well various cloud services.

It isn’t that Microsoft hasn’t tried to succeed in these new marketplaces – it has. It’s just that Microsoft’s success doesn’t mirror the success of its competitors. Microsoft has attempted to break into the tablet market but Apple still leads the way. Windows mobile phones competes against Android phones and iPhones, but they do not enjoy the passionate following that their competition enjoys.

Microsoft Axes 18,000 jobs

The acquisition of Nokia in 2013 provides an example of Microsoft’s efforts. Nokia was itself a market leader in the mobile telecommunications market before suffering a number of setbacks which saw its products fall out of vogue. Some analyst at the time saw merit and synergy in Microsoft’s acquisition. However on Thursday [17th July 2014] the BBC reported that Microsoft was announcing a loss of 18,000 jobs globally – the bulk of the cuts to be at Nokia:

Microsoft pledged to cut $600m (£350.8m) per year in costs within 18 months of closing the acquisition – cuts that were much more severe than the 6,000 initially expected. Is this acknowledgement that the Nokia deal was ultimately a failure? Or is it an example of how knowledge, know-how and patented technology can be bought lieu of ethical leadership and employees’ livelihoods?

The Future direction of Microsoft?

Nadella and Microsoft appear to recognize the challenges ahead. Change is necessary. Cloud Computing infrastructures are maturing; mobile online access is now ubiquitous – Nedella’s memo acknowledges Microsoft’s need to adapt and respond – repeated references to “mobile-first and cloud-first world” provide a clear indication of where he sees Microsoft’s future. Will change at Microsoft result in the progress needed for Microsoft to remain a dominant force?

Bill Gates’ 1990 vision of ‘Information at your fingertips’, and then his keynote speech at Jan 1995 Comdex of ‘information at your fingertips ‘ provide evidence of how Microsoft’s first CEO led the way and helped shape an industry.

Nadella has one of the toughest jobs in the industry, made more challenging by an expectation that Microsoft can remain creative and innovate. Not an easy task.


Not Very Smart Phones: Why George and Ira Gershwin would have foreseen the touch screen

October 22, 2013

George and Ira Gershwin would have foreseen the touch screen, argues LWD blogger William Thompson. They knew the dangers of mocking pioneers for their new ideas

‘They all laughed at Christopher Columbus
When he said the world was round
They all laughed when Edison recorded sound
They all laughed at Wilbur and his brother
When they said that man could fly
They told Marconi
Wireless was a phony…’

How long it is since every up and coming business executive could not be seen without their BlackBerry in hand, with that iconic QWERTY keyboard at the ready to make those all-important calls?
The Canadian-based company that cut 4500 jobs to counter losses has now been bought for £3 billion by a consortium led by Fairfax Financial. The parent company RIM did not see the touch-screen coming. Their CEO Thorsten Heins had made his presentation in Florida to launch new touch screen lifesaving models, but the smart phone community are not convinced, saying the company is too late.
In 2007 they laughed at Apple’s iPhone, asking the question who would pay $500 for a phone without a keyboard? The answer came back – everyone.

Nokia

Nokia, the one-time brand leader in the smart phone business was bought by Microsoft [September 2013] for 5.44 billion euros. Nokia employs over 100,000 people in 120 countries, so the fortunes of Nokia matter to many people. The Nokia operating system Symbian was allowed to become obsolete and outdated compared to Apple’s IOS 6 and now 7 and Google’s Android operating system. Nokia’s place in the smart phone market slumped as the company lost 40% of their share of the market in just over 12 months.

Apple

Steve Jobs resigned in 2011 as CEO of Apple after a period of serious illness. He handed over to Tim Cook. Sadly Jobs later died. As he left the company, iPhone 4 was their top phone; it has now been discontinued. A year is a long time in the smart phone business.

Apple launched their new operating system IOS 7 stating that it was their most secure system to date, yet within twenty four hours it was discovered that their lock screen pin code could be easily by passed. They were forced to issue IOS 7.2 to correct this security issue. Apple sold nine million of its new iPhone models in three days.

Smart Phone CEOs

The CEOs of the smart phone companies are high profile international figures. Steve Jobs’ keynote presentations were viewed worldwide: he was the messiah of the smart phone world community. Anonymous leaders they are not. Most of all they need to be seen as leaders who can see the ship heading for the rocks and make a change of course before collision. They need to see the touch-screen coming and the keyboard going, an operating system dying and another bursting into life, to see the rocks before the collision, to make life and death decisions at the right time in the product life cycle. They need to be chess players who can see three moves ahead.

Editor’s note:

William Thompson writes with insight about the leadership challenges in so-called high velocity environments. Leadership students may wish to ‘road test’ his suggestions, looking for difficulties in “seeing the rocks, and acting decisively”.

See also our earlier blog on GeekSpeak at Blackberry