Microsoft's Satya Nadella is the leader Fortune 500 CEOs admire most. This management philosophy helps explain why
Since joining Microsoft in 1992, Satya Nadella has not only impressed those he’s worked for, landing him promotion after promotion until he took the helm 10 years ago—he’s also attracted the admiration of his peers while doing it.
Now, his fellow CEOs look up to him more than any other Fortune 500 boss, including Doug McMillon of Walmart, which topped the 70th edition of the recently released Fortune 500 list.
It’s not hard to see why.
Nadella has made Microsoft 10 times more valuable in his decade as CEO
Microsoft has featured every year on the Fortune 500 since the list was broadened in 1995—and that’s no easy feat.
Many other legacy businesses on the list have dwindled in relevance and watched their position slowly slide down the rankings.
Microsft has experienced the opposite, however: The tech giant has steadily climbed the rankings, from 34th place to 13th, since Nadella started steering its ship.
Despite continuous disruption in the tech industry, Microsoft’s market cap has ballooned from well under $400 billion when Steve Ballmer stepped down, to over $3.16 trillion today. Meanwhile, the company’s revenue has nearly tripled in the past 10 years.
Why? Because Nadella knows that businesses that don’t adapt die.
Instead of resting on its laurels, Nadella has pushed Microsoft to innovate: Bold acquisitions, including LinkedIn and GitHub, paid off, as did its shift into the cloud. Now, Microsoft is futureproofing by investing big in AI.
As the CEO told Fortune in our latest cover story: “When the paradigm shifts, do you have something to contribute? Because there is no God-given right to exist if you don’t have anything relevant.”
It’s all down to his growth mindset
When Nadella took Microsoft’s reigns, his first order of business was changing (or rather, calming) the company culture.
It’s a far cry from Silicon Valley’s unofficial motto of “move fast and break things”, but encouraging employees to take a breather (even if just mentally) has clearly had a positive impact on Microsoft.
The exec was born in India to a Sanskrit scholar mother, who taught him how to be mindful. Every morning, he reminds himself what he’s thankful for and credits that with helping him stay at his a-game.
Following this mindset, the cool, calm, and collected CEO got his senior leadership team on the zen bandwagon by asking them to read Nonviolent Communication by Marshall Rosenberg, a book about leading using compassion and understanding rather than competition and judgment.
According to an account from the book From Incremental to Exponential, Nadella made it clear that outdated and aggressive top-down behaviors were no longer welcome.
Instead, he strove to create a comfortable environment where even the lowest-ranked employee felt safe to share their concerns or ideas. At the same time, employees who previously operated with a “know-it-all” worldview, were told to become “learn it-alls.”
“If you take two kids at school, one of them has more innate capability but is a know-it-all. The other person has less innate capability but is a learn-it-all. The learn-it-all does better than the know-it-all,” Nadella said back in 2019 on the podcast Hello Monday as he explained his “growth mindset” philosophy. “It’s about each of us confronting our fixed mindset.”
Because of that culture switch, change can be seen in the products themselves.
Now that developers are asked for feedback on what they’d like to see from the company, Microsoft’s cloud is growing at significant pace. Analysts estimate Azure, which was about half as big as Amazon Web Services five years ago, is now three-quarters its size.
“Azure is beholden to [developers]; they are the customer, and they will keep using it if they find it helpful and delightful,” Nadella told Fortune.
