Effective Organizational Change in the Microsoft Company

Summary

The paper aims to investigate the implementation of new principles in the company and analyze how they met changes and global demands. Big corporations are pursuing new goals and objectives due to differences in market environments according to innovations. Companies should stay current with trends and be competitive. The most prominent example is Microsoft, which began to lose its popularity among citizens in the past decade and the ability to continue its activity on the previous levels. For understanding the outcomes, it is necessary to analyze the new CEO’s leadership style, organizational culture, employee engagement and support, resistance to change, and communication effectiveness.

A Detailed Case Discussion

Description of the Company

Microsoft is a world leader in the information market, delivering a wide range of devices, IT services, and software. It is one of the largest corporations in the world, operating in more than 190 countries. Microsoft’s portfolio of products and services includes desktop and network operating systems, devices such as Xbox 360, Xbox One, Kinect, Surface, server applications (Chao & Kavadias, 2017). It provides desktop business and office applications for end-users, cloud solutions, interactive programs, services and games, web tools, development tools (Chao & Kavadias, 2017). Cloud and mobility are becoming top priorities for Microsoft in line with the strategy announced by Satya Nadella, the company’s new CEO (Chao & Kavadias, 2017). These days, Microsoft offers customers and partners the unique and most comprehensive range of cloud capabilities to produce private, public, or hybrid clouds.

Reason For the Strategy Change

Microsoft used to be the most valuable organization in the late 1990s through the Windows operating system, MS Office, and Bill Gates’ management model. However, the isolationist and conservative business model and its reliance on selling software licenses became a hindrance to growth. The licensing model hindered the development of cloud services and other modern technologies. Microsoft shares have hardly gained in value for more than ten years.

New company’s CEO Nadella inherited Microsoft in a deplorable state. Wall Street and Silicon Valley did not perceive the company as a strong player – the tech industry moved from desktop computers to smartphones, from Windows to iPhone and Android (McCracken, 2017). At the same time, the mobile Windows market share fell below 4% (McCracken, 2017). McCracken (2017) notes that while Apple and Google were both rallying, Microsoft’s share price remained unchanged – even as the company’s revenues tripled from 2000 to 2014, and profits doubled. After Nadella’s appointment, who has been at Microsoft since 1992 and developing the cloud business in recent years, critics described it as a step backward. Nevertheless, these days, Microsoft is valued at over $ 1 trillion, making it one of the world’s most valuable companies (Fortune 500). The rise of Microsoft is a merit of the company’s CEO, Satya Nadella, appointed in February 2014.

New Strategy

There were three cultural transformation goals; firstly, to make customer needs the top priority and predict what people would like. The second was to achieve overall employee engagement and, finally, end the departments’ fragmentation and turn them into a unified company. Nadella (2018) recalls that immediately after his appointment, he told the board of directors that the first issues on the agenda would be to change the corporate culture and search for a new meaning for Microsoft’s existence. He advised senior executives to know the methods of friendly communication and empathy (Nadella, 2018). Nadella changed the company’s organizational structure, creating three enlarged segments: modern workplaces and business processes, intelligent clouds, and the segment of personal products (Singh, 2020). Besides, before Satya Nadella’s reforms, the company’s primary resources were directed toward developing Windows and all areas associated with this operating system.

Leadership

Satya Nadella has redirected the company’s core resources to the development of cloud services. The entire point of his efforts was to transform the company from a boxed software provider into a global online computing service. McCracken (2017) also drew attention to the phenomenon of a new cultural policy within the company and found out how Satya Nadella managed to re-create Microsoft. Microsoft CEO believes that every entrepreneur in their work should follow the principles of ESG, that is, strive for environmental, social, and corporate responsibility.

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