THE TRANSFORMATION

OF

“Microsoft is not about greed. It’s about innovation and fairness”

~ Bill Gates
Introduction: Need/Reasons for the
transformation
Although Microsoft’s Windows operating system and Office
products catapulted it to the top of the tech world, it was struggling
to forge a new identity as Google dominated online searches and
Apple and Samsung overtook the smartphone market. Microsoft's
true problems were:-
• Lack of effective implementation of their strategy
• Understanding their competitive environment
• Festering under the surface
• Internal turf wars that made internal divisions behave more like
separate companies rather than colleagues on the same team.

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There is a need of digital transformation :-

• It helps businesses embrace their existing technological

constraints as opportunity for innovation and as a reason to
grow creatively rather than be intimidated
• Organizations can become agile and access unprecedented
amounts of data on their customers, their industry, and
themselves
• Leading digital change requires leaders to have a vision of
how to transform their company for a digital world.

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Changes in the structure of the organization

To achieve their objectives they formulated a business structure-:

• Gave a stronger sense in of his plans for memo management
• Made the engineering organization more nimble
• Flatter organization, and leaner business processes
• Fewer people involved in decisions and increased emphasis on
accountability.
• The nature of how we work and even the workplace itself have
changed.
• Microsoft sees remote work and mobile technologies as key
solutions to today's business challenges.
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To help drive the strategy and cultural changes:-
• It managed employee performance and development
• HR - lead role in designing and implementing the same
• Delivered a new vision called HR Reimagined
• HR Reimagined focused on delivering a cloud-based, self-
service HR portal, accessible from anywhere at any time, as
well as new applications to attract, develop, and retain talent.
The above changes helped the firm to become a more diverse
and inclusive organization.

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 Changes in Culture

Before Transformation After Transformation

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Before Changes in Culture After Changes in Culture

• Bureaucracy • Innovation
• Internal Politics • Team Work
• Fixed Mindset • Growth Mindset
• Know-it-alls • Learn-it-all
• Focus on Actions • Focus on Impact
• Stack Ranking • Rewards Collaboration
• Us vs them • Us with them

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Culture shift at Microsoft is an ongoing process

• Beginning of Microsoft's culture shift was rocky

• Company culture is still far from perfect

• Diversity is an opportunity for improvement

• Class-action lawsuit over gender discrimination and
workplace sexual harassment
• Tech Giant finally hired a law firm to review its
policy in January 2022.

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Role of Leadership

“Companies don’t transform, leaders do”

~ Peter Sheahan

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• CEO Satya Nadella and his team achieved impossible.
• He emphasized on continuous learning and risk-taking
• Reinforced Company’s values
• Every employee played the role of leadership
• Create clarity, Generate Energy, Deliver success
• Promoted culture of espirit de corps
• Kept the company responsive to Changing conditions, alert for
new opportunities
• Monitored progress and had taken corrective actions

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Type of Leader

Nandini Madrey_A024_45203200017
 Transformational Leader

Transformational leadership is the ability to inspire, co-

create, and guide organizational change for a positive
business and employee impact.

Nadella joined in 2014 and changed Microsoft’s mission to

“empower every person and every organization on the planet to
achieve more.” He orchestrated a transformation of Microsoft’s
culture from a closely guarded traditional IT organization to an
empathic and collaborative company.

Transformational leaders don’t just drive organizational change – they foster human transition. Nandini Madrey_A024_45203200017
 Authentic Leader
A pattern of leader behaviour that draws upon and
promotes both positive psychological capacities and a
positive ethical climate, to foster greater self-
awareness, an internalized moral perspective,
balanced processing of information, and relational
transparency on the part of leaders working with
followers, fostering positive self-development”

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Components of Authentic Leadership

• Self-awareness
• Internalized moral perspective
• Relational transparency
• Balanced processing

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Decision Making Process
• Making hard choices
• Establishing priorities that support
our vision
• Turning vision into a practical reality
• Using a customer-zero feedback
cycle

Nandini Madrey_A024_45203200017
Pichault's Five Forces Model

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 Incremental approach

• Learning from the past mistakes

• Windows 8 OS was critisised
• Windows Phone failed
• Search engine – Bing couldn’t gain leadership

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Planning approach

• Email to employees – describing mobile and cloud

as two dimensions of growth
• Rebranding from Windows Azure to Microsoft
Azure
• “Our industry does not respect tradition – it only
respects innovation”

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 Political approach

• Strategic alliances – Collaboration over competition

• Windows owned apps onto mobile OS like Android and iOS
• Linux's distribution available in Window's store
• Acquisitions – GitHub and LinkedIn
• Partnerships - Dropbox, Red Hat, Salesforce and even IBM

• Trusts of the customers – no data privacy issues as opposed to

other tech giants
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 Interpretivist approach

• 2006 - Ray Ozzie, Chief Software Architect of the team –

change initiator
• Bill Gates involvement
• First version – 2010
• Satya Nadella took over the Server & Tools department in
2011 and CEO in 2014
• Scott Guthrie, engineering manager at Microsoft, as in-
charge of Azure Team
• Testing the cloud themselves for their operations before
giving it to the customers

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 Contingent approach
• Removed negative feedback system
• Annual Microsoft Hackathon – collaboration and innovation

• Closing down loss making units and diverting resources to

strategically important areas
• products available under open-source licenses
• Greater adoption by the enterprises of the cloud – Azure (2nd)
• Commercial cloud = Microsoft Azure + Office 365 productivity
tools + commercial LinkedIn revenue + Dynamics 365 business
software MEHARSH BAJAJ_A007_45203200047
Resistance to change

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 Resistance to change

• How Leaders reacted

• How employees reacted
• Layoffs in huge numbers and from Nokia's acquired
division also
• Belief in the vision and Leadership of Satya Nadella
• Change in processes, rules, and room for innovation
needed by high growth areas
• Short term benefits

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The Future outllook – Metaverse &
Gaming?

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 Financials of the Company

Before Transformation (2011-14) After Transformation (2015-21)

• Windows First Approach • Mobile, cloud servers and windows

• Revenue- $70,000M to $87,000M
• Net Inc.-$23,150M to $22,074M
• EPS- $2.73 to $2.66
• Stock price ranged from $30-$37
• ROE reduced from 40% to 25%
• Revenue- $93,500M to $1,68,088M
• Net Inc.- $25,000M to $61.271M
• EPS- $2.15 to $8.05
• Stock price around $300
• ROE increased to 44%

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The Management of the Transformation

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• Satya Nadella managed in different perspective
• Didn't emphasized on losing models
• Creation of customers and empower people
• Looked on the opportunities- mobility and cloud
• Conversating with employees
• Collaborative and mutual working
• Described the need of empathy
• Agile workforce strategy

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 The Result of Transformation
• Performance improved in rapid manner
• Market capitalization has increased from $300M to above $2T.
• Successful in introducing new business model, new culture
• Played rightly with government and regulators
• An inspiration for other companies to manage

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 Conclusion
• The most valuable company in the world
• Considered as Giant of digital world
• With offering everything from tasks, documents,
entertainment and communication, providing work and
productivity experiences, remains the most advanced
company
• The ability of Microsoft in the market remains
unchallenged.

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A004_Kanha Agrawal
A006_Palak Bagaria
A007_Meharsh Bajaj
A024_Nandini Madrey
A038_Yuvraj Singh Saluja