For the third year, Microsoft’s CEO Satya Nadella was named Fortune’s Most Underrated CEO. And for the fifth year since he was named CEO, Microsoft has posted record year-end earnings. What’s wrong with this picture?
Good question. Underrated means to be undervalued, diminished, or downgraded. But it also means under the radar. Under Nadella’s leadership, Microsoft’s market value has increased by a quarter of a trillion. In fact, for a while last November, Microsoft even outranked Apple as the world’s most valuable company.
Perhaps Nadella is underrated because he joined Microsoft in 1992 and didn’t come riding in on a white horse to save the company from irrelevance. He rose through the ranks. When a board member asked if he was hungry to become CEO, Nadella politely replied, “If the board wanted him, he would accept the job.” They wanted him.
Nadella’s talent for technology and leadership was evident in his leadership of the effort to build Azure, Microsoft’s cloud business. Azure competes aggressively with Amazon’s cloud business from a virtual cold start.
In 2014, after taking over from CEO Steve Ballmer, Nadella laid out a three-point plan. Microsoft would:
Reset the Microsoft culture so employees would get Windows to run with everything, not get everything to run on Windows
Focus on becoming a cloud-first and mobile-first company
Invest in innovative, future growth areas like AI, Quantum Computing and Mixed Reality
However, before Microsoft could realize these plans, the company needed to redefine its mission in the world. Working with various teams, Nadella landed on a purpose-driven mantra: “to empower every person and every organization on the planet to achieve more”. In other words, Microsoft would shift its focus from products to people.
Looking to inspire both bottom-up and top-down innovation, Microsoft sponsored its first Hackathon in 2014. It attracted over 11,000 coders, computer experts, and Microsoft people with organizational skills to design systems and structures that would ensure solutions reached the people who needed them most.
Innovations spawned in early Hackathons included Learning Tools for Microsoft OneNote, which assisted students with reading challenges like dyslexia. Another team created Ability EyeGaze, an app that gives voice to people with ALS and other paralytic conditions by allowing them to engage with computers using only their eye movements.
In 2018, over 18,000 employees and project sponsors attended Hackathon Week. New traditions like these attract committed, smart people to work at Microsoft. Nadella wants people to join the company not so they can be cool “but to make others cool.”
I noticed this last year when I shopped for a new PC. At a busy Best Buy, I was encouraged to try out Microsoft’s Surface Pro and was introduced to its cool features. As I talked with other customers, I realized they were all former Apple addicts abandoning their Macs to work in a Surface Pro world. I joined them.
I noticed this when I read Satya’s 2018 letter to shareholders. It was full of stories about innovative products and ventures helping customers solve difficult problems. In this letter, Nadella wrote about creating “trusted” technology that “benefits people and society more broadly”. He wrote about paying attention to the unintended consequences of technological innovation. Rather than expecting employees to know everything, he wants them to learn everything.
So why does Fortune magazine continue to rank Nadella as the most underrated CEO by Fortune magazine three years in a row? Is it because he doesn’t rank high on executive compensation? Or is it because he represents a new breed of CEO? Not only is Microsoft’s Chief Executive Officer, but he is also the Chief Infuser. He infuses the culture with new beliefs, vocabulary, and expectations, then sets aspirations for achieving collective goals and dreams.
But maybe what sets Nadella apart from other CEOs is that he inspires employees to view work through empathy.
The word “empathy” was created in 1908 but didn’t appear in Google Book searches until the 1950s. It means to understand the feelings of others and to walk in their shoes. Empathy differs from “sympathy”, which goes back to the late 1500s. Sympathy means sharing the feelings of others to feel what they are feeling. Nadella believes empathy is “an existential priority of a business”.” It is core to innovation.
In his autobiography Hit Refresh, Satya tells how he learned about empathy. He was 29 years old and had been at Microsoft for four years. His wife Anu and he were expecting their first child. They shared happy visions of their child’s possible future. During the thirty-sixth week of her pregnancy, Anu experienced pain. She was rushed to the hospital, where their son was delivered at 3 pounds with severe brain damage and cerebral palsy.
Nadella recalls asking: Why did this happen to us? Why did this happen to me? With time, he began to see that nothing had happened to him. It had happened to his son. He wrote, “It was time for me to step up and see life through his eyes and do what I should do as a parent and father.”
Perhaps Nadella is the most underrated CEO because he puts others ahead of himself. Or maybe he represents a new breed of CEO needed in the 21st century. In the future, Fortune could ask its audiences to rank CEOs based on who is “Most Empathetic”.”
