Introduction
Among global corporations that have been in business for several decades, Microsoft is one of the most well-known companies. The popularization of digital technologies and the introduction of computer equipment into everyday life was largely due to the efforts of this organization’s employees and, in particular, Bill Gates, its founder. However, at the beginning of the 21st century, Microsoft faced difficulties that led to a 14-year stagnation. The appointment of a new CEO, Satya Nadella, in 2014 was a decisive step in overcoming the challenges and allowed the corporation to return to the leading position in its sector.
Microsoft Early Success
Throughout its development, Microsoft has introduced valuable approaches to business growth. In particular, according to Ibarra et al. (2018), for the period from 1986 to 2000, the corporation embarked on the innovative development of its technical base and established partnerships with other digital companies. This allowed Microsoft to monopolize the American market, and subsequently, the organization expanded its global sales of software and computer components.
Stagnation Period
In 2000, Microsoft faced significant challenges for its business. As Ibarra et al. (2018) note, after Steve Ballmer was appointed as CEO, the stock market crashed. Within the company, changes were also observed for the worse: the management system destroyed the collaboration. The decline in credibility and the simultaneous growth of competitive companies, for instance, Google, led to the leakage of talented employees. Microsoft’s profit growth was slow, and annual revenues increased weakly. According to the official data, the revenue in 2005 was $39,788 million, in 2006 – $44,282 million, and in 2014, the indicator of $86,833 million was achieved (“Microsoft revenue,” 2020). Nevertheless, this result meant slower development compared to other companies, and the corporation could not compete, which was largely the fault of the current leadership of Microsoft.
Satya Nadella’s Appointment
When Satya Nadella was named CEO in 2014, he faced significant obstacles caused by the crisis. According to Ibarra et al. (2018), the heads of individual departments promoted authoritarian management practices and focused on intermediate outcomes rather than long-term goals. To change the situation for the better, the new CEO made a number of significant decisions. As Ibarra et al. (2018) remark, Mr. Nadella promoted the idea of building a cohesive team to form a productive community, and the result of these changes was the layoff of individual managers who did not agree with the new approach.
During his first year as the CEO, Mr. Nadella created an environment that assumed “preparing Microsoft for a mobile- and cloud-first world” (Ibarra et al., 2018, p. 5). He strove to establish a work regime based on active listening and learning, and ultimately, he developed a system called “learn-it-alls” that replaced the “know-it-alls” approach (Ibarra et al., 2018, p. 6). All these interventions were productive measures that enabled Microsoft to realize its long-term vision successfully and regain the leading position in the digital realm.
Analysis of the Changes
One of the main advantages of the approach promoted by Nadella is the building of the Microsoft team, given the severely fragmented collective in the past. In addition, the emphasis on improving the competitive position was the CEO’s significant decision, and, according to Sehgal et al. (2020), in 2018, out of the top 500 American corporations, Microsoft was ranked 30th.
At the same time, Nadella’s confident position regarding the high learning ability of all subordinates may be considered a flaw in his approach. Ibarra et al. (2018) note that some employees were not ready for the transition to a learning phase in a role-modeling environment. However, as a result of the work done, the corporation’s team overcame temporary difficulties and reached a high market position.
The very process of changes promoted by Mr. Nadella can be analyzed from the perspective of the corresponding model. In particular, the framework proposed by Kotter (1995) is based on an 8-step transition to an updated operating model.
Applying the case of Microsoft to this model, one can note that not all the steps were taken by the CEO. Mr. Nadella managed to create a sense of urgency for change, build a team, and form a strategic vision. At the same time, although he was able to sustain acceleration and institute the changes offered, the list of involved participants was incomplete due to the inability of individual subordinates to adapt to new conditions. Nevertheless, the team overcame existing barriers and achieved its goals due to a number of valuable interventions that fit into Kotter’s model.
In general, the change management process was successful, and the current outcomes of Microsoft’s development process prove this. In 2020, the corporation’s annual revenue has reached $143,015 million, which became the largest indicator ever (“Microsoft revenue,” 2020). According to Protalinski (2020), the growth of the estimated profit for the fourth fiscal quarter is 13% and reaches $38 billion (para. 1). Moreover, due to the CEO’s efforts, the corporation has become more involved in corporate social responsibility.
As Sehgal et al. (2020) state, in 2018, Microsoft donated approximately $3 billion to vulnerable populations and weakened businesses (p. 66). The results prove that the emphasis on teamwork and promoting learning are valuable approaches to development both locally and globally. The case of Microsoft confirms that the principle-based on innovation engagement is effective and may be applied to public sector change management.
Conclusion
The change management plan introduced by Satya Nadella, the CEO of Microsoft appointed in 2014, became a valuable contribution to the development of the corporation and its transition from stagnation to growth. The current financial results prove the success of the business and the demand for Microsoft products globally. The proposed solutions fit into Kotter’s change model and allow ensuring the sustainability of activities and the productivity of team interventions.
References
Ibarra, H., Rattan, A., & Johnston, A. (2018). Satya Nadella at Microsoft: Instilling a growth mindset. London Business School.
Kotter, J. P. (1995). Leading change: Why transformation efforts fail. Harvard Business Review, 59-67.
Microsoft revenue 2006-2020. Macrotrends. Web.
Protalinski, E. (2020). Microsoft reports $38 billion in Q4 2020 revenue: Azure up 47%, Surface up 28%, and LinkedIn up 10%. VentureBeat. Web.
Sehgal, G., Kee, D. M. H., Low, A. R., Chin, Y. S., Woo, E. M. Y., Lee, P. F., & Almutairi, F. (2020). Corporate social responsibility: A case study of Microsoft Corporation. Asia Pacific Journal of Management and Education, 3(1), 63-71. Web.