40 REAL-LEADERS.COM / WINTER 2022 What Nadella did next catapultedMicrosoft into huge profitability. Within four years, by 2018, Microsoft stock had tripled and showed a 27% annual growth rate. Nadella set out on an acquisition trail to support this idea of collaboration, which includedMicrosoft’s biggest acquisition ever — the purchase of professional network LinkedIn in 2016 for $26.2 billion. At the time, people couldn’t see the reasoning for this considerable investment. What did Microsoft, a software company, have to do with an online networking platform? “At the time, we had 1 billion users of Windows and Office,” Nadella told Rubenstein in a 2017 interview. “The common thread between all these users was that they are professionals, people trying to get things done. We had professional cloud software and devices. Our vision was to connect that with a professional network that brought content and people together to become a big driver of productivity.” A game-changer for Microsoft was the realization that LinkedIn is where many people make business-tobusiness sales. IntegratingMicrosoft tools and LinkedIn has revolutionized howmany companies target and reach customers. Collaboration through acquisition can sometimes benefit both parties andmove away from the loose, noncommittal arrangements many collaborations can fall into. In the five years since Microsoft acquired LinkedIn, revenue has nearly tripled, and growth has accelerated. The next big step in collaboration is harnessing big data's power. Microsoft is creating the Planetary Computer, which combines a multi-petabyte catalog of global environmental data with intuitive APIs, allowing users to answer global questions about that data and putting answers in the hands of conservation stakeholders. The global environmental organization, The Nature Conservancy, is already using the Planetary Computer to protect andmanage land, oceans, and freshwater biodiversity. His One Big Mistake High-level leadership is not always about praise and big wins; sometimes, you hit a bump. Nadella’s big bump happened at the very beginning, in 2014, shortly after becoming CEO. Nadella was asked about pay equity at the Grace Hopper Celebration of Women in Computing conference in Phoenix by Harvey Mudd College president Maria Klawe, who was on Microsoft’s board of directors at the time. Nadella replied that women should trust "karma" instead of asking for pay raises and suggested that the “system” would reward their work. He apologized the next day, saying he was “completely wrong.” “I gave a nonsensical answer, andMaria was kind enough to correct me,” Nadella told Rubenstein. “I answered the question using my own experience, without understanding the broader context and the depth of that question, which was: What was a person like me, the CEO of a company, doing to make sure that women can fully participate in our companies and economies? It wasn’t about what worked for me inmy life.” It was a great learning moment for Nadella, and the gravity of the issue was amplified when he spoke with high-level female executives at Microsoft, who made him aware that investing in gender and ethnic diversity at Microsoft would filter through to their diverse customer base and build greater loyalty. “I’m glad I messed up so publicly because I internalized the lessons from it,” says Nadella. In his latest shareholder letter, Nadella expressed this sentiment further: “We know that as we become more representative of the communities where we live and work, and the people around the world whomwe aspire to serve, we become better at helping everyone on the planet achieve more. Leading with Empathy Nadella's son, Zain, was born with cerebral palsy and died in February, at age 26. The experience has made Nadella more empathetic and given depth to his leadership. In 2020, in a conversation with Klaus Schwab at theWorld Economic Forum, Nadella explained his initial confusion about why this had happened to him. “For the first two years, I wondered, ‘why me?’” recalls Nadella. “My wife Anu had a natural love for Zain, and the commitment she made by giving up her job as an architect to care for him taught me something. It schooledme, and I realized that nothing had actually happened to me; it had happened to my son. It was time to see his life throughmy eyes and to do my duty as a father.” It changed who Nadella was and gave him the quality of empathy, whichmade him a better CEO and person. “Most people think that empathy is something you reserve for friends and family,” says Nadella. “Yet, it’s an existential reality for business. Our business is to meet the unmet, unarticulated needs of customers. There is no way this will come about if we don’t listen — not just the words but the needs behind the words. Empathy is core to innovation. Life’s experiences, if you listen and learn from them, teach you. My pursuit is to ask myself each year if there’s a growing sense of empathy for the people aroundme.” Thoughts on Leadership As Nadella moved through his journey as CEO, he had to adjust his expectations and abilities to others in the company. In a discussion with David Rubenstein in 2019, he expressed a realization that a holistic awareness is key. “I had to grapple with what only I could do versus what others in the team could do. Getting better at it was the most helpful.” The most significant adjustment Nadella faced as CEOwas realizing howmulti-constituent the job was. “It's about customers, partners, employees, investors, even governments. It’s about all of them, all the time.” How you think about this world is the biggest adjustment you canmake as you grow an organization, and the faster you grapple with it, the better off you’ll be.” n COVER STORY
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