Microsoft and Satya Nadella: understanding transformation

Enrique Dans
Apr 2, 2018 · 3 min read

Microsoft CEO Satya Nadella has issued a memo to all employees of the company announcing a major restructuring focusing on two strategic areas: artificial intelligence and the cloud. The move, which takes into account changing times, attempts to increase the value of a company that no longer owns the world’s most popular operating system, but which can still make a major contribution to the technology. Morgan Stanley says Microsoft’s valuation could reach $1 trillion this year, stealing the limelight from the other usual suspects, Apple and Google.

To redefine itself in a world where Windows and operating systems are no longer as important as they were, the company has downgraded the strategic position of the operating system that, along with the original MS-DOS, made most of its fortune: Windows boss Terry Myerson is leaving the company after 21 years, and his replacement in the senior leadership team, Rajesh Jha, until now in charge of Office, will run a new division now called Experiences & Devices, whose remit will include Windows, now clearly demoted to a secondary level.

Among Microsoft’s priorities will be to understand the new role of its operating system in a world in which people use multiple devices, many of which do not have Windows. Which means creating an open and cloud-oriented architecture in which compatibility with iOS and Android is fundamental: it doesn’t matter what device you are using and with what operating system, you can still connect with Microsoft’s cloud and work with its algorithms. As we know, open is better than closed.

Microsoft enjoys a privileged reach into the corporate market and a very respectable second position behind Amazon but ahead of Google, in the cloud computing market, in addition to benefitting from a culture reinforced under the baton of a Satya Nadella that is rolling out what may well be one of the most ambitious and important reorganizations and transformations in the history of technology following the disastrous years under his nefarious predecessor, Steve Ballmer, who managed to miss just about every revolution: search engines, smartphones, open source and social networks, and thus significantly reducing its opportunities.

In 2012, The Economist depicted Microsoft as an also-ran in a technology race led by Google, Apple, Facebook and Amazon: six years later, the company is back in the running, correcting its mistakes and implementing a transformation through the sale of licenses (and previously, cellophane-wrapped disc boxes), and now looks set to play a key role in the most important technological tendencies. Regular readers will know I tend not to be lavish in my praise of corporate giants, but reading Nadella’s memorandum reaffirms the reasons why, for some time now, growing numbers of analysts see a great future for Microsoft, believing that the better the company does, the better its contribution to evolution of the technology ecosystem in general.


(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

Enrique Dans

Written by

Professor of Innovation at IE Business School and blogger at enriquedans.com

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

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