For the third year in a row, 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, downgraded. But it also means under the radar. Under Nadella’s leadership, Microsoft’s market value has increased a quarter of a trillion dollars. 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 up through the ranks. When a board member asked if he was hungry to become CEO, Nadella replied politely, If the board wanted him, he would accept the job. They wanted him.
Nadella’s talent for technology and leadership was evident in how he led the effort to build Azure, Microsoft’s cloud business. From a virtual cold start, Azure now competes aggressively with Amazon’s cloud business.
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
But 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 bottom-up innovation as well as top-down, Microsoft sponsored it first Hackathon in 2014. It attracted over 11,000 coders and computer experts as well as Microsoft people with organizational skills to design systems and structures that would ensure solutions got to the people who needed them most.
Innovations spawned in early Hackathons included Learning Tools for Microsoft OneNote, which provided assistance to students who have reading challenges like dyslexia. Another team created Ability EyeGaze. This app 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 showed up for Hackathon week. New traditions like these are attracting committed, smart people to line up 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 got introduced to its cool features. As I talked with other customers around me, I realized they were all former Apple-addicts who were 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 that were 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 it all, he wants them to learn it all.
So why does Nadella continue to be ranked the most underrated CEO three years in a row by Fortune magazine? 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 the Microsoft’s Chief Executive Officer, but he is also the Chief Infuser. He infuses the culture with new beliefs, vocabulary, expectations, and 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 the lens of empathy.
The word “empathy” was created in 1908 but doesn’t show up in Google Book searches until the 1950s. It means to understand the feelings of others, to walk in their shoes. Empathy is different from “sympathy” which goes back to the late 1500s. Sympathy means to share the feelings of others; to feel what they are feeling. Nadella believes that 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 pains. 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 as a father.”
Perhaps Nadella is ranked most underrated because he puts others ahead of himself. Or perhaps he represents a new breed of CEO needed in the 21st century. Perhaps in the future, Fortune could start asking its audiences to rank CEOs based on who is “Most Empathetic”.