Book Review: Hit Refresh — Satya Nadella

I must confess — I planned to start this blog post writing exclusively about Nadella’s book — Hit Refresh. As I started reading my notes, I realized that the book taken at face value doesn’t describe just how radical Nadella’s impact has been on Microsoft’s vision, culture, attitude, and business.

In the book, Nadella’s describes his personal life, his roles within Microsoft, the mission, values and culture he’s building at Microsoft (to a large degree targeted at Microsoft employees), and where he feels technology is headed — AI, cloud, and empowering humanity.

But there is a huge piece of the story missing, which I feel makes Nadella’s success so much more amazing, interesting, and meaningful: Microsoft’s history. The Microsoft I grew up with. The Microsoft who waged war on Netscape and open source. The Microsoft who called the GPL a “cancer”. The Microsoft who created proprietary extensions in Internet Explorer and abused it’s monopoly position with Windows to stifle competition from competing vendors. You know, that Microsoft.

First, let’s talk about Microsoft

Oh man, where to start? Microsoft. Windows 95, NT, 2000, Vista. Office. Internet Explorer. Bill Gates. Steve Ballmer. .NET. Visual Studio. Active Directory. Exchange. Bing. Halloween Documents. Monopoly. Linux. SQL Server. Anti-trust. So many years, so many thoughts., so many stories.

So. Where should we begin?

First, let’s get business out of the way. Like bloggers who disclose when they own stock in companies they write about, I feel obligated to start by disclosing that I’ve invested well over a decade, almost two, working with Microsoft software. I’ve also worked for Microsoft for a short time — from 2005–2006 — in Microsoft Consulting Services.

With that out of the way, hopefully you realize that Microsoft has had quite an impact, both positively and negatively, across the past 20 years of my career. Let’s take a trip down memory lane to the late 90s where the story began.

When I graduated college in 1999, I began writing software professionally in Visual Basic 6. I personally invested deeply int the MS stack — Visual Basic, C++, COM, ASP, SQL Server. I wanted to learn everything I could about the Microsoft stack. I enjoyed the developer ecosystem around Visual Studio, .NET, and Windows Server platforms like SQL Server. For me, the tools just worked well together. I was able to create ASP.NET sites, Windows apps which tied into Active Directory, SQL Server, and Exchange. I felt I could code circles around friends of mine writing Java and dealing with multiple UI toolkits, middle tier “open” platforms, and various relational databases. I felt a definite competitive advantage working with a single platform. Mastering one platform, one toolchain made me feel more productive and confident than having a cursory understanding of the wide variety of Java based middleware that sprung up in the late 90s.

If you grew up in the mid to late 2000’s on Javascript, Android, and iOS certainly won’t have the same perspective on Microsoft as someone who grew up in the 90s. By 2008, when iOS and Android were coming into their own as software platforms, Microsoft’s dominance had been seriously eroded. Microsoft, from a competitive standpoint, was largely written off as dead.

When I started professionally in 1999 to say Microsoft was dominant was a massive understatement. They were invincible. Microsoft had a 95% operating system market share. 95%. Literally everyone ran a Windows computer (except one of my best friends, Rick Backley, who swore by his Bondi Blue iMac and Mac OS. The OG hipster, trend setter! ). Schools, businesses, and homes all ran Microsoft Office — of which many copies were purchased in physical boxes from Comp USA. Microsoft’s server tools division (SQL Server, Windows Server, Exchange) was beginning to form. Their developer tools were very strong — starting with Visual Studio. Windows 2000 was on the horizon, which would bring with it the much more stable NT kernel. I was excited to be in the Microsoft ecosystem and felt empowered by the tools they created.

We all knew, and saw firsthand, that while Microsoft created ubiquitous software, they did a lot of evil, unethical, things to strengthen and secure their dominance. By 1999, Microsoft was well into the process of deeply integrating Internet Explorer into Windows in attempt to leverage their Windows dominance to dominate the web. They famously created their own web “standards” which worked only on IE, following an “embrace, extend, extinguish” mentality for dealing with web standards. They would “embrace” web standards, “extend” it to work better or only on IE, then “extinguish” other browsers who could not implement Microsoft’s proprietary IE extensions.

In the early rise of Linux, I would say around 1997–2000, Microsoft publicly denounced anything that would even threaten the Windows ecosystem. They developed strategies and media responses to Linux, Open Source, and the Free Software Movement which were ultimately leaked to the Open Source community and published online as the Halloween Documents. They wrote protocols with the intention of locking out non-Microsoft operating systems. They aggressively spread fear, uncertainty, doubt about the “cancerous” nature of the GPL, Linux and open source.

Microsoft, Bill Gates, Steve Ballmer, and their corporate culture were a really toxic combination of extreme arrogance, pride, and ruthlessness.

I kept developing with Microsoft tools. Why, you ask? Honestly, I rationalized much of it away as “big business”. I had years invested into Microsoft at the time — knowledge, certifications, and project experience. Back then, even somewhat now but to a *much* lesser extent, “years of experience” in a particular tech stack was important to land new projects. I didn’t want to start over from scratch in Java / JBoss / Oracle, the other dominant “enterprise” platform at the time.

Looking outside of Microsoft during that era, there were definitely seeds being planted in the industry which, when looking back, would prove to challenge their dominance in the long term. For example, Google was founded in 1998. Amazon had IPO’d in 1997 and were in hyper growth mode. Apple was working on integrating NeXT into what would become Mac OS X and eventually iOS. But those would take 5–10 years to truly disrupt the industry. In the late 90’s Bill Gates was comfortably in control of his Titanic — and it was “full steam ahead” for Microsoft. The icebergs were nowhere in Microsoft’s sight.

Over time, from 2000 until today, we saw Microsoft’s dominance attacked on multiple fronts — both external and internal. Rumors of internal politics grew. Linux grew and dominated web and cloud infrastructure. Open Source, both the software and the development process, became dominant. The web made the underlying OS less relevant. Microsoft, while early into mobile, lost horribly to iOS and Android. These are gross generalizations, and we could be here all day rehashing many more, but over time all these paradigm and industry shifts taken together have dramatically marginalized Microsoft. Today, Windows market share is less than 40%. Other markets — like mobile and search — are dominated by Google and Apple.

It’s astonishing. Here we are, 20+ years after the height of Windows dominance, and Windows has literally no presence in the largest OS market ever seen — mobile. That’s unbelievable.

Executive transitions

Gates -> Ballmer

I respect the success Bill Gates had with Microsoft. I admire his ambition, drive, and hard work he put into Microsoft. I deeply respect his late focus on philanthropy. Given how ruthless he ran Microsoft, I really didn’t see his shift into philanthropy coming. He’s doing amazing work. A completely different trajectory than I would have imagined.

I personally feel Bill Gates made both the best and worst decisions of his career dealing with CEO transitions at Microsoft.

Let’s start with Ballmer in 2000. I realize that Bill and Steve go way back. Bill was the brains, Steve drove sales. They were a team. But why Bill put Steve in charge of Microsoft I never understood. Bill is smart enough to know what happens when sales or finance people are put in charge of engineering organizations. They focus on deals, on sales, on the current quarter or year.

Long term, you don’t create quality products or advance into new markets with sales people running the company. Companies with deep product mindsets (i.e., Amazon, Google) focus on the long term. Sales people focus on the short term. And new markets are long term bets. Sales people do not invest well in long term bets — it goes against their core values. Like it or not, Steve Jobs called it when he said:

When sales people run tech giants, it’s over.

When Ballmer was titled CEO, Gates was still there. So in theory, Gates was behind the scenes focused on engineering and innovation while Steve was the face of Microsoft. Perhaps Gates thought he could focus on products and drive the engineering organization and let Steve deal with the mundane, non-technical business CEOs have to deal with.

But Gates left Microsoft entirely in 2007. What I never understood is why he kept Ballmer in charge of Microsoft when he left to start his foundation. Perhaps Gates felt Ballmer’s economic success was good enough to carry the company into new markets. After all, Microsoft’s revenues were climbing solely on inertia. Revenues were up and to the right! Short term investors rejoice!

Why didn’t Gates see mobile, cloud, or AI coming and know that Ballmer didn’t have vision or engineering prowess to pivot the company? It’s all speculative, and hindsight is perfect, but I certainly thought Gates would have seen Microsoft’s dominance slipping with Amazon, Apple, Google’s growing influence and instill a strong engineering focused CEO to compete against them. Why, Bill, why? There *has* to be a great story there.

At any rate, Gates was out. Ballmer grew revenues largely on Windows, Office, and Server Tools inertia. Meanwhile, he missed three industry defining trends of the 2000s — mobile, cloud, and AI. Those misses cannot be understated. Each of those industries are much larger than Microsoft. You can’t just miss *all* of them.

Ballmer -> Nadella

Enter Nadella. Empathy. Community. Collaboration. Open source. Cross platform. That is Nadella’s Microsoft. Literally the exact opposite of what the Gates / Ballmer era stood for.

Ok, calm down. I hear you screaming at me. Of course these are broad generalizations. I completely realize that Microsoft had open source projects under Ballmer. That Ballmer invested in new technology and had many wins. (Xbox, Skype). But you can’t deny the degree to which Nadella’s Microsoft completely changed their corporate mission, values, and product focus.

I have no idea what pushed the Microsoft board to promote Nadella. Certainly they saw how many employees felt the corporate culture could not be transformed by an insider. Insiders felt the only way serious change would happen from outside.

Yet, somehow, they did it. Nadella became CEO. I want to believe that deep down Gates and the Microsoft board saw two things in Nadella. First, his values. He’s a human’s human. Personable, kind, and empathetic. Second, he’s technical. He’s an engineer. Both traits — empathy and engineering — are what Microsoft sorely needed at the top.

The decision to go with Nadella as CEO was one of the best decisions I’ve ever seen the company make. For all the Ballmer bashing I do, I sincerely tip my cap to him, Gates, and the Microsoft board.

Hit Refresh

Now, with that out of the way, let’s get to the meat of this post. My review of Satya Nadella’s book: Hit Refresh — The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone.

Let’s rewind to the start of the Nadella era as CEO. When Nadella took over CEO role from Ballmer in 2014, Microsoft was, on paper, growing. Revenues were strong. But it was clear they were riding inertia of products past. From a competitive standpoint, they were not a threat.

Today, in 2018, we’re witnessing the fruits from one of the most massive cultural shifts ever made in a corporation. Microsoft has gone from closed to open. From desktop to cloud. From license to subscription. From aggressive to empathetic. The entire soul of Microsoft has been transformed at the hands of Satya Nadella.

Microsoft has changed. They’ve made big bets — buying LinkedIn for $26.2 billion (a full marathon!) and Github for $7.5 billion. But more importantly than acquisitions, their culture has literally transformed.

Culture is extremely difficult to change in large companies. I couldn’t imaging the amount of cultural change Nadella had to spearhead at Microsoft. Could you imagine having to tell leaders of billion dollar proprietary software empires like Windows and Office they are going cloud first? To tell the Visual Studio team they were going to open source Visual Studio Code? That the future of the company was in AI and cloud computing? That Microsoft was to build upon Android, iOS, and the web as equals to Windows? .

I imagine that many within Microsoft clearly saw the writing on the wall. Who would target Windows as a platform? Who would pay $1500 for Visual Studio? Who would spend $10,000s on SQL Server licenses? The web, iOS, Android, Docker, Elastic, Node, everything was open. Open source won.

But still — after *so* many years of building “Windows Everywhere” — it had to be a paradigm change to the executive mentality. As the old saying goes from Jeremiah 13:23 — a leopard doesn’t change it’s spots.

Well, Microsoft is doing exactly that.

Nadella the Person

The book began with a forward from Bill Gates. Gates recognized the industry has moved past a PC centric, Windows centric world and credits Nadella with the ability to transition Microsoft into this new world. In Gates fashion, he describes the future he sees in computing — how we are at the beginning of an AI revolution. That AI and applications will reinvent medicine, education, and personal productivity. He closes by acknowledging ethical issues we’ll have to address — like worker displacement, trusting AI.

Nadella started the book by describing what he saw in Microsoft when he took over. How the culture became combatant and political. He saw early his primary job was to renew the company’s culture. He brought in a psychologist to encourage the leadership team to let down their guards, to talk about their lives. Nadella believes work must have deep meaning, that Microsoft needed to be empathetic to each other, to partners, customers, and employees.

Nadella wants passion from Microsoft employees. I got the sense he sincerely wants Microsoft employees to pursue their personal passions and build empathy into their products. I don’t know if that is real or not, but judging by the work and attitude coming out of Microsoft I have to believe it’s sincere.

After the brief intro about Microsoft, certainly foreshadowing the pages to come, Nadella talked about his childhood, family, growing up, school, moving to the US (Wisconsin — go midwest tech!), working for Sun, then Microsoft, having a family, and raising a son, Zain, with severe Cerebral Palsy.

Nadella’s father was a government employee in India, who worked hard and pushed Satya to become curious, professional and successful. Nadella was closest to his mother, a literature teacher, who wanted Satya to live a happy life. He loved cricket, dreamed about being a professional cricket player, and learned leadership lessons he would take with him through his career.

Satya went to Hyderabad Public School — very prestigious and reserved for elites (Satya’s father qualified). He failed the famous Indian Institute of Technology’s entrance exam and went to an EE program in India. He came to the US to master in EE from Wisconsin of Milwaukee.

After his masters, in 1990, Nadella worked for Sun writing GUI software. He recognized Sun didn’t have a great software strategy. He joined Microsoft in 1992 to be an NT evangelist. He worked with an advanced technology group with what turned out to be key Microsoft leadership. The software he wrote failed, but the personal connections he made most certainly set him up for future success.
 
The real story of “Nadella the person” is the values and principles he lives by. He is an emotional and human leader, focusing on empathy, empowerment, collaboration, openness, and honesty. He leads from the heart, believing everyone should follow their passion and wants Microsoft to provide opportunities for employees to thrive.

He credits cricket with building the leadership principles he believes in:

  • Compete vigorously with passion in the face of uncertainty and intimidation.Respect your competition but go and compete.
  • Put your team first, above your personal recognition.
  • Leadership is critical. Make your team confident.

Nadella’s Microsoft: The Soul of a New Machine

Nadella realized, probably well before becoming CEO, that Microsoft was in a difficult position. In 2008, Microsoft missed mobile and cloud. Ballmer asked Nadella to run both. HIs team launched Bing in 2009, which both helped them compete with Google and provide the foundation for Azure. In 2010, Nadella was asked to run Microsoft server and tools business, which became Azure.

So in 2014, when Nadella became CEO, he was a big part of the cloud / AI work that Microsoft had been doing. But the biggest challenge Nadella faced wasn’t engineering — it was Microsoft itself.

When Nadella took over, his primary job was to fix the ailing culture. Employees were disheartened. Sales were down. They missed mobile. Their cloud strategy, “Windows Azure”, was growing but not a priority. Internal politics ruled. Job one on day one was to build hope and positive cultural momentum.

His 2015 global summit speech laid the foundation for his vision and priorities for Microsoft. Most importantly, Nadella described the culture he envisioned for Microsoft. How empathy and individual empowerment was Microsoft’s soul. He challenged Microsoft employees to question their purpose, their life’s goals. To think deeply and become passionate about their lives and work. He wants Microsoft to be a place where people are encouraged to do their life’s best work.

Sounds mushy, doesn’t it? But deep down, that is what Microsoft needed. Microsoft had a culture of “know it alls”. People were stack ranked against each other, encouraging everyone to be the “smartest in the room”. I can tell you from experience, that culture was both entrenched within Microsoft and extremely toxic. It tuned Microsoft against itself.

Nadella pushes for, essentially requires, employees to have a growth mindset. Growth mindset is critical. Nadella believes all employees should:

  • Obsess about customers.
  • Actively seek diversity.
  • Be One Microsoft.
  • Bring clarity to those you work with.
  • Generate energy, not only for their team but all teams.
  • Find a way to deliver success, to make things happen.

After culture, Nadella had to lay out the vision and priorities for Microsoft. Now keep in mind he was running straight into the Microsoft “old guard” who were protecting their entrenched business units.

Vision: To empower every person and every organization on the planet to achieve more.

Priorities:

  • Reinvent productivity and business process.
  • Cloud
  • Make Windows an ecosystem people want to use.
  • Growth mindset, customer focused.

Nadella realized that the world has moved on from Windows. In order for Microsoft tools to empower people, they must work everywhere. Nadella partnered with traditional “enemies” — Apple, Google, and Red Hat to name a few — to improve and run Microsoft’s software on their platforms.

Microsoft’s new “open” strategy is paying off. Their developer platforms and tools, built on cross platform frameworks like Electron, are truly making the industry take note. Engineers who were deeply against everything Microsoft stood for are taking note. They built TypeScript, Visual Studio Code, they own Github (and aren’t planning to “ruin” it), their cloud platform is open to Linux, Kubernetes, and a host of open source software. It’s easy to see Nadella’s influence and the cultural change that has happened within Microsoft.

The question we must ask is this: How is an empathetic, growth mindset culture and a focus on open source tooling going to grow Microsoft? The answer is cloud, AI, and empowering people.

Nadella’s Vision: Cloud, AI, and beyond

Nadella has transitioned Microsoft into a cloud and AI first company. Azure is growing tremendously, as is the amount of AI products and tools that Microsoft provides. How are they doing it?

While open source tooling and Nadella’s vision for Microsoft grab headlines and appeal to emotions, Microsoft’s more hidden strengths lie in enterprise software.

Microsoft creates great developer tools and server products. The .NET CLR and SQL Server teams were among the best teams I’ve personally ever worked with. Millions of businesses rely on Microsoft’s tooling and server products. These companies who grew up on Windows software in the 90s and 00s all need to move to the cloud. That is the opportunity Microsoft is going after.

By offering tools, services, and Azure, Microsoft wants to help companies transform. Nadella laid out four principles he feels each company must adopt.

  • Use data to improve the customer experience.
  • Use tech to enable employee collaboration.
  • Automated and simplify process.
  • Transform their products, services, business models.

I personally feel Microsoft’s strategy is part obvious, part brilliant. The obvious part is that “Windows First” was obviously dead. Continuing to survive on Windows and Office inertia is not sustainable. The cloud and AI is clearly today’s and tomorrow’s world. The brilliant part is it plays to Microsoft’s enterprise strengths so well. Microsoft will be pushing to democratize cloud and AI, bringing tools to help companies transform.

Nadella’s Values in an AI first world

Nadella ended the book talking about the work they are doing in AI, mixed reality, and quantum computing. This felt like a marketing pitch. Microsoft Research is a fabulous organization, no doubt they and other teams at Microsoft are doing great work. I feel like Nadella wrote this section for two reasons:

  1. To give examples and a sense of depth to Microsoft’s research.
  2. To tie research into Nadella’s broader vision of human empowerment.

Nadella made it a point to explain the principles behind the research — that the goal is not research in itself, but for advancing and empowering people.

Which leads us into Nadella’s values in this “new world”.

Tech companies walk a fine line between engineering principles — like collecting data — and human rights — like security, privacy, and justice. These are complex, politically charged cases which all companies need to sweat the details on.

Nadella values free speech, transparency, and trust in complex cases. He’s pushing Microsoft to become more transparent about Government actions, take down requests, and the politics Microsoft has to deal with. When faced with moral dilemmas like public safety vs. privacy, he aims for trust from both parties.

Nadella also is pushing for a “Digital Geneva Convention”. A set of humanitarian standards to govern today’s digital world. I agree with him completely — the laws as written today are antiquated and not meant to deal with modern digital issues.

AI is truly the next frontier. With it comes ethical and moral questions. What will AI do to humans? How do we know AI is working to advance humanity, not harm it? That AI is not being built to increase digital addiction or have unhealthy bias?

Nadella questions the success of technology. If technology is transforming industries, why is inequality rising? Why is GDP growing at a low 1% a year? Why are people not happier?

Nadella feels that economic growth is achieved by education, innovation, and intensely adopting new technology. He points to small countries of the world which have advanced by following these principles. He calls on Government to adopt policy to promote technology, innovation and entrepreneurship, even more so in the face of AI and robots.

If you look at today’s Facebook, Instagram, Candy Crush world, we see it’s all about consumption. Nadella calls for companies to focus on building creativity, productivity, and empowerment.

Conclusion

Satya Nadella is in the process of one of the greatest business transformations I’ve ever seen. Microsoft is truly a new company, culturally transformed from proprietary to open, playing to it’s strengths in enterprise and transforming it’s business model from client to cloud.

Companies are judged by profits. Nadella believes they also have a humanitarian responsibility. It’s refreshing to hear about companies who truly care about helping people and push humanity forward.

I applaud Nadella for the person he is, the values and vision he holds, and the impact he’s having both at Microsoft and in the world.