The Antidote to Toxic Leadership

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Back when dinosaurs roamed the Earth, I ran one of the first mail-order computer hardware companies in the U.S. Back then, the most amazing innovation in the history of the industry was migrating from MS-DOS to Microsoft Windows. I remember how customers marveled, awe-struck, at the mouse.

Over the course of my next few companies, I watched—and usually profited from—the rise of Microsoft’s operating system and the utter transformation of society that it helped create.

And I remember when things started to go south for Microsoft. A lot of the business leaders who have been attending my Inspired Management webinars have brought up problems they are facing that are similar, in some ways, to what Microsoft went through about ten years ago. There’s a great deal we can learn about leadership by thinking about what happened to them—and how they recovered.

Things That Are Brittle, Break

Satya Nadella

Satya Nadella

Then-CEO Steve Balmer often takes a lot of the blame for Microsoft’s floundering at that time, but that’s really not fair. He made some amazing moves. He started the Azure cloud business, for one thing, which is the platform ResultsBI runs on today. He also oversaw the creation of the Dynamics suite, now called Dynamics 365. The XBox also came from the Balmer era.

But outside forces that he could not possibly have seen coming battered his company. Google took over massive swaths of the Internet so forcefully they made it seem like Microsoft wasn’t even there. The iPhone appeared, seemingly out of nowhere, and completely changed the computing industry overnight, again leaving Microsoft standing flat-footed.

Meanwhile Balmer had locked himself into a vision of Microsoft that was too brittle. He was still coming from the company’s historical “Windows is the universe and everything must come from Microsoft” attitude. He couldn’t find a new way to look at things so he could cope. Neither could his employees, who were notoriously stuck in turf wars and ego battles and who took the company’s misfortunes as reasons to snipe at each other rather than to band together.

You can see in the chart above that the massive company basically ran on inertia from the introduction of the iPhone in 2009 to the moment Balmer stepped down.

Leave Behind Toxic Assumptions

Balmer knew he wasn’t the man to handle the situation, and so he and Bill Gates looked for new blood. They found the man they needed in their own executive ranks. Satya Nadella took over as CEO in 2014, and, as you can see from the chart, he has led the company on a meteoric tear ever since.

There are two big lessons readers of this blog can take from his leadership.

The first one is that he left behind the toxic assumptions that seem to have stymied Balmer. Windows isn’t everything; in fact, Azure is a perfect place to run Linux, and Nadella threw open those doors early on, vastly expanding Azure’s adoption rates. Not everything has to come from Microsoft; in fact, an iPad is a great place to work in Microsoft Office. He blew minds in 2015 when, at a major press conference, he pulled out an iPhone to demonstrate how awesomely Outlook worked on it.

Our lesson here is to learn how to be fearless when we look at our strategic planning. Nadella wasn’t afraid of the world’s most popular server OS, and he wasn’t afraid of the iPhone, either. He saw both as opportunities, not threats.

We want to ferret out any assumptions that we’re making that might actually be crippling us. We want to think boldly, and openly, about what is happening in our market. We want to embrace what is actually happening, and find our path to success. We’ll go over this in more detail in the webinar.

Create Teamwork Through Understanding and Positive Thinking

The second thing Nadella did is that he changed Microsoft’s culture.

This was hugely important and extremely difficult. There was no way Microsoft could replace its employees; it already had on staff a significant percentage of the best and brightest in the world. He had to get them to work together again.

So he complimented what they did. Famously, he compared coding to writing poetry: while anyone can ploddingly describe something in a hundred pages, only a poet can bring the same thing to life in a couple lines. Elegant coding does the same thing. He gave his programmers this beautiful perspective, and then he set them free to build in the iOS and Android environments.

And that, of course, enabled them to create exactly the products that Microsoft’s customers really wanted.

He also shifted employee’s perspectives. He broke down the power struggles. He reminded people that the love of learning, and curiosity, and a willingness to make mistakes, is where innovation and ideas come from. Rather than pounce on a mistake to advance your own power, you work together to learn from it and to find the lesson in it.

Leadership Matters

Besides just stock performance, which at one point made Microsoft the most valuable company in the world, Nadella has also made Microsoft much more resilient.

It’s no longer trying to attain some rigid ideal of what it should be. It is now strategically applying what it does best to the market that it serves.

Every business leader should learn to think in these terms. See you online: