When Microsoft CEO Steve Ballmer announced in 2013 that he was stepping down, the board faced a fundamental choice about his successor. Was it going to go for a radical change in strategy to chase Apple, Google, Amazon, Facebook, and some of the other technology companies that had challenged or even eclipsed Microsoft during Ballmer’s 14 years at the helm? Or was the board going to bet that a new style of leadership could unlock the talent that still clearly resided at Microsoft?
The board bet on a new leader and has reaped the benefits.
That new leader, Satya Nadella, stepped into a fraught situation. The computing world had passed Microsoft by as users moved away from desktops and laptops to tablets and smartphones and away from software packages to apps and the cloud—Microsoft’s share of all computing devices had been 90 percent in 2009, but that number had plunged to 20 percent by the time Nadella took the CEO job in 2014.1 And in the world of technology, there is almost never a second act. Look at what happened when Digital Equipment Corporation missed the move to personal computers; when Compaq, Gateway, and others didn’t react quickly enough to online ordering of PCs; and when Motorola and Nokia were slow about smartphones and then BlackBerry missed the move to smarter, sleeker phones.
In addition, Nadella was stepping into a war zone in the executive suite and boardroom. Ballmer and Microsoft cofounder Bill Gates, ...