Analysis: 5 first moves Satya Nadella might make as Microsoft CEO

Analysis: 5 first moves Satya Nadella might make as Microsoft CEO

Satya Nadella, if you haven’t heard, has succeeded Steve Ballmer as Microsoft CEO.

A one-time Sun Microsystems employee and Microsoft veteran of 22 years, Nadella is only the third man to head up the Redmond giant in its 38-year history. No pressure, then.

Nadella has outlined his vision for the company’s future in a passionate email to its workforce. In his own words, here are some potential first moves he might make as leader of the world’s biggest devices and services company in 2014 and beyond.

1. Tackle internet of things, big data and cognitive computing

Internet of thigns devices

Early on in the email, Nadella writes that he joined Microsoft back in 1992 to "change the world through technology that empowers people to do amazing things." There are arguably fewer developments in tech with the potential to do that than the so-called "Internet of Things" (IoT), so it’s unsurprising to find it given a prominent nod. And no – it’s not just about fancy kettles and toasters.

He writes: "The co-evolution of software and new hardware form factors will intermediate and digitize – many of the things we do and experience in business, life and our world. This will be made possible by an ever-growing network of connected devices, incredible computing capacity from the cloud, insights from big data, and intelligence from machine learning."

Of course, Nadella will also be keen to avoid ballsing things up when it comes to major tech trends during his tenure, as his predecessor Steve Ballmer did during the early days of the smartphone (remember when he laughed off the iPhone’s chances?).

He needn’t worry – Microsoft has been making noises around IoT for some time. It released Windows Embedded 8.1, its operating system designed to power the potentially billions of internet-connected "things," back in October 2013. The company is also positioning its Bing platform as a backbone for third-party developers to build a multitude of IoT apps and services upon using its APIs.

It’s possible that Nadella will be looking toward big data solutions to glean insights from internet-connected devices to shape new products and services for businesses and consumers.

It’s all entwined with machine learning, another area the company could feasibly tackle on the back of its massive R&D budget. According to Booz & Company, Microsoft ranked fifth in the world for R&D spend in 2013 at $9.8 billion, above IBM (16), Google (12) and General Motors (11).

2. Place Nokia at the heart of its mobile strategy


Mobile will play a huge role for Microsoft on its journey to becoming a cloud-centric company, something that was hammered home when the company splashed out $7.17 billion on Nokia’s devices and services division back in September 2013.

The acquisition led to the Finnish company’s then-CEO Stephen Elop being touted as Ballmer’s successor all the way up to the confirmation of Nadella’s appointment.

Nadella writes: "In our early history, our mission was about the PC on every desk and home, a goal we have mostly achieved in the developed world. Today we’re focused on a broader range of devices. While the deal is not yet complete, we will welcome to our family Nokia devices and services and the new mobile capabilities they bring us."

It wouldn’t be crazy to suggest that the survival of Nokia’s handsets (and by extension Microsoft’s own Windows Phone OS) was a key motivator behind the move, but that’s not the whole story. Cloud-based apps and services are served to millions of smartphones and tablets owned by consumers and business users on a daily basis. In that sense, the acquisition was a key move in the company’s battle for the virtual skies.

He continued: "As we look forward, we must zero in on what Microsoft can uniquely contribute to the world. The opportunity ahead will require us to re-imagine a lot of what we have done in the past for a mobile and cloud-first world, and do new things.

"We are the only ones who can harness the power of software and deliver it through devices and services that truly empower every individual and every organization. We are the only company with history and continued focus in building platforms and ecosystems that create broad opportunity."

3. Make innovation a priority

Xbox One

Nadella has been described as a "safe choice" in some circles, but his language indicates that he sees himself as anything but – particularly when it comes to innovation.

"Our industry does not respect tradition – it only respects innovation," he’s quoted as saying in a separate post on Microsoft’s website. "The opportunity ahead for Microsoft is vast, but to seize it, we have to move faster, focus and continue to transform. I see a big part of my job as accelerating our ability to bring innovative products to our customers more quickly."

It should be pointed out that Nadella’s vision and actions will be heavily influenced by Gates, who has returned to the company as Founder and Technology Advisor following his resignation as chairman. Back in February 2013, Gates lamented Microsoft’s innovation strategy (or lack of one) in an interview with CBS and he will be keen to avoid past mistakes.

"What do we do next?," Nadella writes. "To paraphrase a quote from Oscar Wilde – we need to believe in the impossible and remove the improbable. This starts with clarity of purpose and sense of mission that will lead us to imagine the impossible and deliver it. We need to prioritize innovation that is centered on our core value of empowering users and organizations to "do more."

4. Plan ahead to see ‘One Microsoft’ through

Office 365 screenshot

When Steve Ballmer announced the "One Microsoft" strategy back in July 2013, Nadella was appointed head of one of the company’s fastest-moving divisions. As leader of its newly-formed Cloud and Enterprise Engineering Group, he was tasked with realigning some of the company’s biggest money spinners including Office 365 and enterprise-centric endeavors such as its Azure cloud platform.

Nadella has made it clear from the beginning that he isn’t about to ditch that strategy, which revolves around repackaging software as services and making it available on internet-connected mobile devices as well as desktops. In other words, it’s about the company making the transition to the cloud.

He writes: "We have picked a set of high-value activities as part of our One Microsoft strategy. And with every service and device launch going forward we need to bring more innovation to bear around these scenarios."

Taking its existing offerings to the cloud is something Nadella has proven himself capable of. Office 365 Home Premium, which launched in February 2013, has attracted 3.5 million subscribers in its first year. Meanwhile, its Azure cloud platform achieved triple-digit growth in the company’s most recent financial quarter.

5. Foster cultural change from the inside

Satya Nadella

While not necessarily concerning a move around a product, service or "thing," Nadella makes a sustained plea throughout the email to reboot the company’s corporate culture from the inside. If you’re a glum Microsoft employee that’s felt constrained by the company’s reportedly fail-safe methods of doing things, Nadella’s remarks will come across as something of a call to arms.

"I know it can sound hyperbolic," he writes. "I am here for the same reason I think most people join Microsoft – to change the world through technology that empowers people to do amazing things … we have done it, we’re doing it today, and we are the team that will do it again."

However, Nadella warns that cultural change will only come if employees do their "best work" to lead and help drive it. "We sometimes underestimate what each other can do to make things happen and overestimate what others need to do to move us forward. We must change this," he writes.