Lessons in Cultural Change from Microsoft

We are on the cusp of the most exciting and disruptive wave of technology humankind has experienced, and with it comes the need for cultural change. How will HR leaders drive and enable progressive company culture in a climate of transformation, persistent quests for new ideas, and urgent need for continued relevance?

ChapmanCG and Microsoft hosted an insightful HR leaders’ roundtable recently in Munich alongside Microsoft, focused around culture change driving business success in the current HR climate. Acknowledging that culture is the key building block of an organization, as Inc: stated “CEO, Nadella, changed Microsoft’s culture in a way that made current and potential customers feel that Microsoft cared about their success”, the roundtable discussed the importance of managing cultural change, using inspiring examples from Microsoft. Below are some of the key points discussed.

Making a Difference

Nadella being only one of only five CEOs to take the helm of Microsoft since it’s beginnings, renewed the company culture, which was continued and transformed from the Gates and Ballmer eras. It’s a culture anchored around openness, making big bold decisions, doing good, and making a difference. The Microsoft company culture truly embraces the growth mindset at its core, with the vision to empower every person and every organization on the planet to achieve more. The growth mindset focuses on being ‘customer obsessed’, and aims to be more inclusive and diverse, and foster a ‘one Microsoft’ approach. This has been a conscious evolution from the inherited culture where there were elements of the fixed mindset, an attitude of ‘knowing it all’, a legacy of hierarchical structure (as was the norm across industries) and internal focus when it came to learning, nurturing and risk taking.

Customer Obsessed

“The new Microsoft Culture understands that the core of the business must be curiosity and desire to meet a customer’s unarticulated and unmet needs with great technology. And that having a deep sense of customers’ unmet and unarticulated needs must drive company innovation…This is why a growth mindset culture matters.” Forbes

The customer-centricity and external focus became increasingly important to Microsoft. This was implemented with a wholesale shift in the mindset of employees, through powerful communication, training and the necessary people changes, particularly in the sales organizations who are at the coal face of the organization. Customer feedback was listened to early and often throughout the lifecycle and customer groups were included in product planning, which in turn helped to drive a more inclusive culture. Inclusive attitudes and behaviors were anchored at the core and D&I became a commitment, a key business priority.

“We don’t just value differences, we seek them out, we invite them in. And as a result, our ideas are better, our products are better and our customers are better served.”

From a diversity perspective Microsoft have a drive to represent the outside world. Some of the ways they did this included e-lessons on unconscious bias, the ‘one week hackathon’ initiative (a week where employees and interns from across the company come together to create, innovate, and hack on ideas that light them up), and most impactful was a strategy to ask new recruits with MBAs to run the company meeting. The leadership put ‘trust in the energy of the organization’ and were more in observational mode.  This generated some interesting social impact projects within the organization.

One Microsoft

The concept of ‘one Microsoft’ is focuses on moving away from siloes and instead allowing employees to become more connected, sharing information, celebrating success a team and building innovation through cross-segment ideas. Having consistent physical offices globally to foster the concept of working without boundaries has been particularly successful. All offices are consistently designed as open workspaces with cross-functional industry spaces to drive collaboration, designed to put the solution in the middle.

“Empowering the employees to work self-determinedly and flexibly increases motivation and creativity, and in doing so creates benefits for everyone involved, especially our customers and partners.” states Markus Koehler, HR Director Microsoft Germany.

Overhauling the new reward system was key to driving new behavior. Moving from a ‘one hero’ culture to working as a team, with the customer in the middle was fundamental to this shift. Reward and performance was also linked more to business impact versus activity, looking at what employees were achieving and how they work with others. As Satya Nadella put it: “You join here, not to be cool, but to make others cool.” Fostering this ethos by embedding an agile, open feedback process where employees are measuring success against themselves versus others, regular discussions with their manager rather than an annual discussion has created an inclusive meritocracy.

Microsoft has been able to measure and understand the state of the culture through broad employee listening, utilizing a daily pulse survey on the employee experience assessing how they were doing on cultural experience.

Leading from the front

The top down leadership buy-in to change at Microsoft has been critical to their success with strong leadership principles, outlined below, and a visionary CEO.

• Creating clarity

Synthesize the complex, ensure shared understanding and defining course of action

• Generating energy

Inspiring optimism, creativity and growth, creating environments where everyone does their best work, building organisations that are stronger tomorrow than today

• Delivering success

Drive innovation that people love, be boundary-less in seeking solutions, Tenaciously pursue the right outcomes.

This genuine and authentic embodiment of the culture by leaders is critical when trying to drive change, and often a reason that other organizations struggle to change. HR can play a role in driving successful culture change. As an example shared at the roundtable, one organization delivered 360 feedback to their leadership team three times a year and mandated that these leaders share this feedback with their team. Individual coaches can be utilized to bridge gaps, and is most successful when a mindful leadership approach of open communication and a trust, already in place.

When driving cultural change, fostering a dialogue between the old and the new, particularly when faced with resistance, is the best way to address ‘red-flagged’ leaders. We need to give people a chance to change attitudes and mindsets, and ultimately trust them to have the courage to make those changes.

For Microsoft this cultural change has been an ongoing journey and one that will never end. It’s important for organizations to acknowledge that their cultural change journey won’t have a delineated timeframe or a defined end point but is an ongoing journey and HR has a key role to play in helping to shape this journey.

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