Decoding the hidden messages in Satya Nadella's letter to Microsoft employees

Decoding the hidden messages in Satya Nadella's letter to Microsoft employees

Summary: Microsoft's CEO posted a public letter aimed only incidentally at employees. When you get past the corporate rah-rah, here are five key messages to take away.


In a public letter today marking the start of his first full fiscal year as Microsoft CEO, Satya Nadella laid out what he calls a “bold ambition” for the company.

Although the letter is nominally addressed to All Employees, it’s clearly aimed at a much wider audience, including the press and the investment community.

(Image: Microsoft)

Much of what’s in this 3000-word-plus missive is corporate rah-rah and a no-doubt-genuine attempt to rally the troops to head in a new direction.

But when the CEO makes a big speech, even if it’s delivered on a Snowfall-style web page, it’s carefully vetted by the company’s brain trust (and by its lawyers). And you don’t have to play Kremlinologist to discern major themes for the next year or two.

Just as it pays to read annual reports carefully, it’s also worth picking out the substance buried beneath the yadda-yadda in a presentation like this one.

Here are five small but meaningful details that caught my attention.

1. Microsoft isn’t doing things Mr. Ballmer’s way anymore.

Nadella introduces the section on Microsoft’s core with a pointed reference to Ballmer’s “devices and services” strategy:

While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy.

That’s a very direct, almost blunt distancing from Steve Ballmer’s vision. It’s also an implicit criticism that echoes some outsiders’ complaints about Ballmer’s leadership (some of which were clearly shared by Microsoft’s board), specifically a lack of vision and long-term strategy.

A later section also feels, despite the passive voice, like a shot at the previous regime: “Tired traditions will be questioned. Our priorities will be adjusted.”

Ballmer the poker player, who made billion-dollar bets and occasionally took billion-dollar write-downs, is gone. Nadella is trying to portray himself as the chess player, thinking three moves ahead and making strategic moves, not big bets. It's still too early to tell whether the cerebral approach will work where Ballmer's bluster sometimes didn't.

2. Microsoft’s future is about experiences, not products or services.

The two most commonly used words in this long missive are work and experience, often in combination: the phrase “digital work and life experiences” appears no fewer than 10 times. That’s roughly the point when a theme turns to a mantra.

“We help people get stuff done” is the folksy version of that vision. That casual phrasing is much more likely to resonate with consumers, than the dry, MBA-approved productivity. In fact, the word “stuff” is repeated throughout that paragraph with great rhetorical effect, using examples ranging from the purely personal (“chatting with friends and family”) to creative (painting and poetry) to very big business (“keeping an entire city running”) and world-changing achievements (“helping build a vaccine for HIV”).

From a marketing point of view, this is clearly an attempt to connect with the company’s core constituency in the enterprise. Microsoft’s products and services—sorry, experiences—aren’t just for while you’re on the clock. They’re also for the stuff that goes on when you’re not at work or school.

We will think of every user as a potential "dual user" – people who will use technology for their work or school and also deeply use it in their personal digital life.

The vision, ambitious to be sure, is for apps to help us achieve that elusive work-life balance, “to partition data between work and life and with the respect for each person's privacy choices.”

3. Windows 13, Office 2.

If you’re keeping score at home, Nadella mentions Windows 13 times in this roadmap. Windows on the desktop, Windows the device OS, Windows Server, Windows Phone, with Windows Universal Apps tying all those screens together in the Windows ecosystem. It's the single most-mentioned Microsoft brand, which is at least partial evidence that Windows is not scheduled for retirement anytime soon.

By contrast, Azure and Skype each get three mentions, with Skype Translator getting a shout-out as a product that will “change the world.”

Xbox gets six mentions in a longish paragraph containing “thoughts on Xbox and its importance to Microsoft.” The remarks are clearly intended to silence critics who say the company should spin it off:

The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming. We are fortunate to have Xbox in our family to go after this opportunity… We also benefit from many technologies flowing from our gaming efforts into our productivity efforts….

Meanwhile Office and Office 365 are dismissed in a single sentence. That’s probably just a tribute to a smooth-running division that’s generating billions of dollars in revenue, but in this context it’s also an admission that Office will never deliver “a raving fan base” like that of Xbox.

4. If you’re an engineer, prepare for some changes.

Every Microsoft employee is used to frequent reorganizations, usually built around changes in management as executives rise and fall in the corporate power structure. But the next reorg, hinted at in this memo, might be more radical than political. “Over the course of July,” Nadella says, “the Senior Leadership Team and I will share more on the engineering and organization changes we believe are needed.”

That means an even faster pace:

In order to deliver the experiences [there’s that word again] 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 streamline the engineering process and reduce the amount of time and energy it takes to get things done.

That all sounds very Google-y to me, even down to the notion that every engineering group will have its own set of big data resources to help predict market trends.

And there’s also a tacit admission that political infighting is sucking the life out of the company. “You will see fewer people get involved in decisions and more emphasis on accountability.”

A flatter organization and leaner business processes? Good luck with that.

5. Microsoft increasingly plays on a global stage.

The word world appears in Nadella’s letter two dozen times. It’s a new world, a changing and evolving world, and, repeatedly, a “mobile-first and cloud-first world,” which appears under the bold heading, “Our Worldview.”

It’s a fairly candid recognition that the growth of technology, and opportunities for Microsoft and its shareholders, will come by providing products and services—sorry, experiences—for that next billion devices in emerging markets.

There’s no question that Microsoft expects to continue making profits from its enterprise customers, especially by moving them from on-premises software to the cloud, specifically Azure.

But the biggest opportunities for growth are in the rest of the world, with consumers and small businesses that don’t have enterprise budgets. And this section suggests that Microsoft is perfectly willing to embrace Android:

All of these apps will be explicitly engineered so anybody can find, try and then buy them in friction-free ways. They will be built for other ecosystems so as people move from device to device, so will their content and the richness of their services – it's one way we keep people, not devices, at the center. [emphasis added]

That’s a clear (albeit indirect) shot at Google, which is banking on its dominant search and Gmail services to be at the hub of people’s lives.

As manifestos go, this one isn’t bad. The challenge now is turning the lofty thoughts into concrete actions.

Topics: Microsoft, Cloud, Mobility

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  • Play nicely

    I'm definitely interested in your thoughts on Microsoft's future and whether you think Satya Nadella's vision can succeed.

    Please try to keep the personal sniping down, though, OK?
    Ed Bott
    • ForeverCookie
      • Sometimes, I hate this comment system...

        But yeah, I'll get some popcorn.
        • Satya deserves time, but...

          Satya deserves some time to bring his strategy to fruition, but... the reality is that a lot of us who come to these boards would finally like to start seeing some "successes" and less "blah blah blah."

          Microsoft has a lot of great products (superior products by some accounts)--Windows Phone, Surface, etc.--but Microsoft is also its own worst enemy.

          Windows Phone is just a big debacle (a nice word for cluster f***). They announce phones way too early... only to have the devices delayed... and not released everywhere... or shackled by exclusivity deals with carriers. It's like a big ball of Christmas lights tangled together. Someone needs to figure this out. There are a lot of us who are true believers in Windows Phone... and we've been supporting it since the beginning... but when we see the best apps (from Microsoft) going to iOS and Android before Windows Phone... what message does that send to us?
          • +1

            I had the amazing photosynth app on my iPhone 3G. When I switched to a lumia 720, no app (it's there now).

            I totally share your frustration - even down to the surface. When that announced I was blown away, yet I still feel it's being hampered by the ill fated windows rt and slow slow cellular release.

            I'm really hopeful for some change. There's a lot of talk about the customer experience and new direction here. Let's hope they mean it - take windows 8.1 - all people wanted was an option to have their old start menu back. Stubbornly refusing what your core demographic wants is hopefully going to be what changes.

            Windows 8 is a rock solid OS, their hardware is top notch. I really hope this leadership can avoid all of that success being lost under really short sighted errors.
          • Photosynt

            That app have existed since Windows Phone 7.5 like 3 years ago (photosynt) ... everything else, Yes, you're correct :) I think the same
          • Windows Phone & Surface Pro

            I have been a computer geek since 1987 and a 20,000.00 IT Education and MCP for years and years and a huge Technology and Windows fan since MS-DOS, 3.1, 3.11, 95, 98, 98SE, 2000, XP, Vista, Win7, 8.0, 8.1.

            I went all out at Christmas and bought a Surface Pro 2 with all the additions up to around 1800.00 and a HTC 8X and can honestly say I should have waited a few more months like my better judgement for Surface Pro 3.

            As for Windows Phone I can not go into any Mobile Carrier here in Nova Scotia and even look at a Windows Phone, just tried as of 2 weeks ago.

            I had to search for weeks to buy a HTC 8X that use to be a Rogers Phone, unlock it online for 30.00 and add it to a BELL Account. I have to re-boot the phone all the time like it's an old Compaq Laptop running Win98.

            I Would like to say ok Microsoft, I will give you another chance but why should I?

            I spend my hard earned Cash and still not be really happy with what is the product? Starting to get confused with what is the product?devices and services? hardware?software? Just don't know anymore???

            Just think what it is like for the non tech person? They are all switching to IOS or Android because it is everywhere and all looks the same. But at least they can buy it.

            Up frustrated Microsoft Windows Fan who actually typed this on a iPhone 5C because my HTC 8X with 8.1 had to reboot again....
          • HTC8X problems?

            You should have purchased a Nokia phone, both of mine have been trouble free.
          • Should Have Purchased Nokia

            I agree. Try the Nokia X. It's got a much larger App Store and ecosystem.
          • RE: HTC8X Problems?....

            @rollguy said"

            You should have purchased a Nokia phone, both of mine have been trouble free."

            I don't know about that. I have a friend, that has the nokia 920? (not positive), and in his words, after the 8.1 update, his phone keeps rebooting, even while trying to use it.

            He's talking about going to Android or IOS, and even though I love my Ipad, I told him my android phone has been mostly trouble free.
          • Lumia 925

            I've had a lumia 925 with no problems, good thing in Costa Rica, the phone is sold Unlocked and Unbranded :) Installed windows phone 8.1 dev preview on Lumia black firmware ... way much better than the old lumias,,, nothing beats anyway the camera I had with my old Samsung Focus with Windows 7.5 (and upgraded to 7.8 with some hacks!)
          • Windows Phone & Surface Pro ...

            Sounds like your frustration is with your mobile carrier, not Microsoft.
            Woned B. Fooldagan
          • HTC 8X reboot?

            Didn't have to do it since it's early incarnation 18 months ago. I don't have yet the 8.1 upgrade (HTC and/or Bell didn't release yet) but on the latest update of Windows Phone 8 I have no issue at all.

            Got my phone from Bell in the early days of the HTC 8X release and always loved it since the first two updates resolved most reboot and battery life issues.
          • Microsoft Windows...

            where Powershell can't run a .bat file without help. Where the app you just wrote for WP8 must be ported to WP81 because all the namespaces changed for no reason. Every technology team seems unduly isolated. Every group has their own goals and there seems to be unwillingness to compromise for the benefit of the customer. Who is the chef that's letting this crap go out of the kitchen? This is what Microsoft must fix... or die trying.
    • I'm not sure

      what his "vision" is after this missive. I guess the focus will be on services, but didn't they just drop some serious money for a device manufacturer? Is there no plan for that investment or is that considered part of the "Tired traditions" that will be "adjusted"?
      • Still Confused but Starting to Focus

        I read the letter this article is base on. In general I am confused about where Microsoft is heading. It seems to me like more of a pep talk than anything containing the usual rallying cries. It also contains the current emphasis of the market in general of mobile and cloud (yawn).

        I guess I am looking for a single slogan where I can find focus and get excited about. Could it be “digital work and life experiences”? Maybe simpler "work and life"? Could it be "dual user"? These are all basically the same. Maybe Microsoft has become to big for single slogan.

        There is one slogan I did get from this "I am not Ballmer". This does not give MS focus but kind of gives Satya Nadella a moratorium. I wonder how long it will last?
        • yep - nadella is a fraud

          that doesnt belong to any place really. A do-nothing that has been dragging for months, before its years, he ll be kicked out.
          • So...

            What giant change has ever happened to any already hugely profitable company by bringing in a new CEO?
            What is it that you are expecting exactly that Nadella has failed to deliver?
            Ehsan Irani
    • An example of experience ...

      Standard Windows version (Windows 7 home and Windows 8 not Pro or above) do not include RDP hosting capabilities for free. As a result, if I want to remote control my Windows PC, I either have to hunt down a third party product (that is compatible with the platform I want to remove control from , ie. Android, Windows Phone, etc...) OR I have to pay more money to upgrade my home OS to a Pro or higher version to do something that pretty much everyone has taken for granted for a number of years (I know not everyone wants to remote their PC, but this is BASIC stuff that should be in the OS and Free). Hopefully that is what Nadella is at least partially talking about when he talks about experience (make people want to use or products and make it easier for them to use them how they want to use them).
      • "Money for nothin' and your chicks for free"

        You should have been a professional musician.

        P.S. It's called product differentiation. The vast majority of consumers don't need business features.

        P.P.S. There's a free (as in both freedom and free beer) OS called GNU/Linux (there's also BSD) that you should check out if you're tired of writing checks.
        Rabid Howler Monkey