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July 10, 2014 at 7:06 AM

Microsoft CEO Satya Nadella talks about memo that hints at big changes to come

Microsoft CEO Satya Nadella, who ascended to the top position in February, today outlined his “productivity and platforms” direction for the company and hinting at changes to come.

In an interview this morning, Nadella talked about the thinking that led to the vision outlined in the memo to employees.

Microsoft CEO Satya Nadella (Photo from Microsoft)

Microsoft CEO Satya Nadella (Photo from Microsoft)

In the nearly six months he’s been on the job, he said, “the main thing I’ve been obsessed about is: ‘What is Microsoft’s unique contribution in a mobile first, cloud first world.’ That’s what led to the focus on productivity and platforms.”

Nadella emphasized that his definition of productivity was far broader than what people typically think of the term. Beyond just the production of documents, spreadsheets and slides, Nadella thinks of productivity as the ability to save people time and to allow them to do things better, with tools that can predict things and work on people’s personal behalf.

And while Microsoft offers those productivity services and tools, Nadella also sees the company’s platforms as allowing access to competitors’ offerings, such as those of or Dropbox.

While the direction Nadella outlined might seem to focus more on business customers, he said he doesn’t think in terms of there being a business/consumer divide among users.

“I fundamentally believe that everybody on the planet is a dual user” — whether a parent with a professional job or a student who wants their technology to work for both school and for play or life in general, he said. “The question is: How are you able to organize your information, your tasks, and get stuff done spanning those different roles. Nobody lives in isolation.”

The task for Microsoft is to “build applications and platforms that understands that rich context” — that understands automatically, for example, when the user to working on something related to their family life or to their work life.

He emphasized his support for Xbox — “one of the greatest consumer franchises out there,” he called it, adding that Xbox Live is “an amazing service for us, in terms of fan base.”

He said he would talk more about Microsoft’s recently-closed acquisition of Nokia during the company’s quarterly earnings call Tuesday. “We’re not in hardware for hardware’s sake,” he said. “We’re in hardware to be able to express all our platform and productivity software in a way that’s unique.”

Nadella declined to talk about rumors of pending layoffs.

He did talk about the need for cultural change at Microsoft to align with his vision for the company.

“Any strategy gets eaten for lunch if you don’t have culture that backs it up,” he said. “The main call here is: ‘Let’s not get caught up in any past dogmas in terms of how work gets done. I want us to be as innovative about processes as we are about the innovations themselves.”

His memo comes at the beginning of Microsoft’s fiscal year 2015 and ahead of several company events including its Worldwide Partner Conference next week; and the MGX internal global sales meeting and a series of employee events (including the annual employees meeting), called “oneweek,” happening at the end of this month.

From earlier:

Microsoft CEO Satya Nadella honed his vision for the company today in an email sent to all employees in which he talked about Microsoft as a “productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

The email, sent as the company begins its fiscal year this month, also hinted at changes to come that will be announced later this month.

From the day he was appointed to succeed former CEO Steve Ballmer in February, Nadella has emphasized his vision of a “mobile first, cloud first” world. He later added to that, talking about “ubiquitous computing” and “ambient intelligence” in which computing devices are all embedded all around us, taking in reams of data and using it to learn about us in order to operate on our behalf.

He also talked then about focusing intently on what Microsoft could uniquely do.

Today, he clarified and expanded on all that in the email he sent.

During the last months of his tenure, Ballmer had  set a direction for the company as a “devices and services” one.

Nadella said today that “while the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy.”

He said:

At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more. …

Productivity for us goes well beyond documents, spreadsheets and slides. We will reinvent productivity for people who are swimming in a growing sea of devices, apps, data and social networks. We will build the solutions that address the productivity needs of groups and entire organizations as well as individuals by putting them at the center of their computing experiences. We will shift the meaning of productivity beyond solely producing something to include empowering people with new insights. We will build tools to be more predictivepersonaland helpful. We will enable organizations to move from automated business processes to intelligent business processes. Every experience Microsoft builds will understand the rich context of an individual at work and in life to help them organize and accomplish things with ease.

Though Nadella has been emphasizing a “mobile first, cloud first” world from Day 1, Microsoft’s operating systems still hold only a tiny share of the world’s current mobile devices such as smartphones and tablets.

Nadella addressed that obliquely, saying that; “Microsoft has a unique ability to harmonize the world’s devices, apps, docs, data and social networks in digital work and life experiences so that people are at the center and are empowered to do more and achieve more with what is becoming an increasingly scarce commodity – time!”

He also said the company would think of every technology user as a potential “dual user” — one who uses technology at both work and/or school, as well as in their personal life.

“Across Microsoft, we will obsess over reinventing productivity and platforms. We will relentlessly focus on and build great digital work and life experiences with specific focus on dual use.,” Nadella wrote.

Nadella said in the email that he would talk more about what the company will be doing to focus on the core on July 22, when the company will be announcing its fiscal fourth-quarter earnings.

Nadella also hinted at more sweeping change to come: “Over the course of July, the Senior Leadership Team and I will share more on the engineering and organization changes we believe are needed,” he wrote.

There have been rumors that employees are bracing for layoffs, related to Microsoft’s completion of its Nokia acquisition earlier this year. That acquisition brought some 25,000 Nokia employees onto Microsoft’s payroll.

Nadella did not address those rumors in the email he sent today.

He did, however, talk about some changes that he believes will enable the company to be more nimble and driven by customer needs and measurable outcomes. He wrote:

Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving. …
In order to deliver the experiences our customers need for the mobile-first and cloud-first world, we will modernize our engineering processes to be customer-obsessed, data-driven, speed-oriented and quality-focused. We will be more effective in predicting and understanding what our customers need and more nimble in adjusting to information we get from the market. We will streamline the engineering process and reduce the amount of time and energy it takes to get things done. You can expect to have fewer processes but more focused and measurable outcomes. 

He also said the company would be investing in “enhanced training and development and more opportunities to test new ideas and incubate new projects” as part of the larger changes.

Though there’s been speculation (as there always is) that Microsoft might spin off Xbox, Nadella made a point of emphasizing the Xbox’s importance to the company.

Though the Xbox doesn’t necessarily fit into Nadella’s vision of Microsoft’s core purpose, “as a large company, … it’s important to make smart choices on other businesses in which we can have fundamental impact and success,” he wrote.

His view is that technologies that emerge from working on Xbox efforts — such as core graphics and speech recognition — also benefit the company’s productivity focus. “Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft,” he wrote.

Read the whole email here.

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