Challenges Faced by Nadella at Microsoft company

Challenges Faced by Nadella When He Took Charge

The case clearly illustrates that Microsoft was facing substantial challenges related to management, leadership, teamwork, and, thus, general performances at the time Nadella took over from his predecessor. In particular, the company was described by its workers as steered by internal knife fights, inertia, and bickering. Teamwork was never apparent, and every individual applied all means to win and fail the other, even if it meant compromising morality and the mission of the organization. The internal competition and conflicts focused workers on a narrow vision of performance over clients and the expanding market opportunities at the time. Nadella’s analysis of the company performance indicated that the company productivity started to decline when Bill Gates handed leadership to Steve Ballmer in 2000. For instance, the stock market crashed, and a culture that saw innovation plunge at Microsoft. The downfall was escalated by the company’s notorious stack-ranking performance management framework that incited employees against each other after every six months. Therefore, the stacking system discouraged teamwork, collaboration, and innovation. Nadella was tasked with a great responsibility to turn around the company before its performance plummeted (Ibarra, Rattan, & Johstone, 2018).

Lencioni’s Five Areas of Dysfunction in Teams Present at Microsoft

The case study demonstrates that Microsoft teams were ineffective, considering that they had rigid group norms and processes. The terms were attributed to a climate of blame, fear, and defensiveness. Moreover, the groups focused on providing uncreative alternatives to issues rather than offering genuine opinions that would be innovative and helpful to the team. Lencioni’s five areas of dysfunction in units have manifested in the case. The areas comprise the absence of trust, fear of conflict, lack of commitment, avoidance of team accountability, and inattention to team objectives. For example, lack of confidence and responsibility within teams spurned internal fights, competition, and inertia. Moreover, the former CEO, Steve Ballmer, discouraged innovation and somehow reinforced domestic competition by implementing stack ranking. He aimed to ensure that teams avoid accountability, and become inattentive to team goals as most individuals focused on individual performance based on high performance rather than team collaboration and quality of work (Zartler, 2017).

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Goals Set by Nadella for Transforming the Organization

Nadella redirected his energy on making changes to the company’s processes and procedures in addition to culture. The primary objectives of Nadella that aimed at transforming the organization encompassed preparing Microsoft for a mobileand cloud-first world, new and surprising partnerships, and working to ensure the organization could substantially empower every individual on the planet as depicted by its original mission statement. Nadella goes ahead to achieve the original objectives by partnering with Apple, whereby the firm made Office available on all iOS devices, including iPad and iPhone. Moreover, Nadella made changes in the leadership structure composed of leaders who would lean on each other’s issues, be productive, and foster open communication. Nadella also focused on changing the culture from the Know it all to learn-it-all. The approach allowed the company to learn and identify its strengths and weaknesses (Ibarra, Rattan, & Johstone, 2018).

Nadella’s Styles and Approaches to Change Management at Microsoft

Nadella’s attempt to transform Microsoft saw him integrate various leadership styles and processes to achieve his pre-set goals. It is evident from the case that the CEO implemented differenttechniques attributed to Goleman’s methods of leadership. In particular, Nadella managed to apply four of six styles affirmed by Goleman. For instance, the leader integrated the authoritative leadership approach by focusing the company on its core values through the use of a different lens. In particular, the leader shifted the attention of the company’s mission from a computer on every desk in every home to empowering users and organizations to do more in their endeavors. The leader also implemented a democratic leadership style when he emphasized communication, team leadership, and participation. The approach was evident when he focused on listening and learning from others. Microsoft’s CEO used an affiliative leadership framework when he reinforced the formation of remarkable partnerships, especially with the company’s rivals such as Apple and Google. The leader also influenced healing relationships and building trust within teams in organizations and external partners. The approach led to the creation of harmony, thereby creating emotional bonds (Goleman, 2000).

Changes in Specific Systems and Processes

Nadella made a massive transformation concerning the company’s culture of performance and engagement. The previous literature had focused performance processes on stack ranking that encouraged individual performance, making workers shun from collaboration and teamwork. Moreover, Nadella changed the leadership structure from bureaucratic to participation and leaders who would share their problems, demonstrate the effectiveness, and promote dialogue rather than bickering, internal flights, and inertia. The leader also focused on effective communication through productive debates and arguments. The new work systems and processes fostered collaboration and respect for one another. The notion was evident when Nadella selected Jill Tracie Nichols based on her positive interaction and working with others, as well as her respect for the team members during work projects. The new organizational culture was defined by various pillars developed by the new leadership team. The components comprised customer obsession, diversity and inclusion, and One Microsoft indicating unity. The pillars were based on a new ideology of growth mindset. Therefore, the company abolished the notorious stack-ranking performance framework replacing it with continual feedback and coaching in addition to the compensation process that was more influenced by managers rather than the executives (Prentiss, 2017).

The Concept of Growth Mindset

A growth mindset describes an understanding ofone’s beliefs and attitude towards learning and intelligence. Employees with a growth mindset believe they have the potentials to do more through hard work, commitment, and talent. People with a growth mindset believe that their necessary abilities can be developed through hard work and dedication, affirming that talent and brains are just fundamental factors that reinforce one to love learning and resilience.  The approach is contrary to the fixed mindset that describes individuals who believe their abilities are limited. Nadella fostered the growth mindset in his attempt to transform Microsoft. For example, he changed the firm’s culture to know it all to learn it all. The previous culture of the firm demonstrated a fixed mindset considering that Microsoft believed it had all the strategies and potential to become the giant in the tech industry, which influenced them to shun from innovation, teamwork, and research and development. Nadella fostered teamwork, collaboration, effective communication, and a desire to learn from one another. He coached the employees to change their perception from high performance to participation, teamwork, and emotional intelligence, employees, had the desire to learn and listen (Ibarra, Rattan, & Johstone, 2018).

Performance Metrics

Nadella was successful in transforming his organizational culture from the “know-it-all to learn it all.” The leader focused on applying what he learned from his reading culture to propel Microsoft into the future. Therefore, one can conclude from relevant research about the company and the case provided that Nadella’s effort influenced the company’s continuous growth and sustainability into the industry. Various metrics can be used to demonstrate the success of the leader in transforming Microsoft. In particular, specific ones comprise return on capital employed, productivity, cost-effectiveness, customer satisfaction, and quality. The firm’s productivity improved from window’s centric company to a cloud-first organization. The variance and quality of its products are clearly demonstrated in its surprise partnership with its rivals in the industry. Moreover, the quality and growth of the company have been fueled by the firm’s highly committed teams that emphasize innovation, collaboration, and effectiveness. Consequently, the firm had witnessed an increase in revenue since 2014 when Nadella took over leadership from Ballmer (Looy & Shafagatova, 2016).

Strategies to Maintain Sustainability and Competitiveness

It is clear that Microsoft, under the leadership of Nadella, has demonstrated growth and enhanced competitive advantage. The company has successfully managed to save itself from the brink of failure and demonstrated efficiency in the last few years. However, with the increased rate of advance in technology and many startups in the tech industry, Microsoft ought to invest more in research and development to keep abreast of the current dynamics of technology and globalization. Moreover, the firm should seek to integrate policies that address the stiff competition from its rivals, encompassing Microsoft, Apple, and Samsung. The company must engage in talent management by developing training and development programs for employees,thereby developing and retaining a pool of competent workers to manage robust advances in technology (Goleman, 2000).

Future Challenges for Microsoft

The increasing shift from computing to cloud, Microsoft is likely to experience in revenue from its windows. Uncertainty in competitive advantage and sustainability of the company is evident as the competitive space in the cloud sector increases;companies like Google and Apple might get services from other computing providers as an alternative to Microsoft services. Other challenges might comprise the firm’s vulnerability to cybercrimes considering that Windows operating system has been the target for various cybercrimes attacks worldwide. The problems pose a risk to the company losing the attractiveness and uniqueness of its products. Furthermore, imitability from new entrants might be a potential challenge for the firm,a significant threat to its competitive advantage and sustainability. Nadella must consider investing substantially in research and development to develop strategies that aim to curb the evident challenges (Prentiss, 2017).


Goleman, D. (2000). Leadership that Gets Results. Retrieved 2020, from uk/documents/leadership-that-gets-results.pdf”>

Ibarra, H., Rattan, A., & Johstone, A. (2018, June). Satya Nadella at Microsoft: Instilling a Growth Mindset. Retrieved from London Business Review.

Looy, A., & Shafagatova, A. (2016). Business Process Performance Measurement: A Structured Literature Review of Indicators, Measures, and Metrics. SpringerPlus, 5(1), December. doi:10.1186/s40064-016-3498-1

Prentiss, B. (2017, May 31). Lateral Leadership: Tips for Leading Colleagues Even if They Don’t Report to You. Retrieved 2020, from Medium:

Zartler, J. (2017, September 8). Lencioni’s 5 Dysfunctions of a Team. Retrieved 2020, from Medium:


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