Hit Refresh: Microsoft CEO Satya Nadella on building partnerships

In his book, Nadella talks about the importance of building partnerships before you need them

In his book chronicling the inside story of Microsoft’s continuing transformation, CEO Satya Nadella talks about the importance of building partnerships before you need them. An edited excerpt:

There was an audible gasp and more than a smattering of chuckles in the auditorium when I reached into my suit jacket and pulled out an iPhone. No one in recent memory had seen a Microsoft CEO showing off an Apple product. Especially not at a competitor’s sales conference. 

“This is a pretty unique iPhone,” I told attendees at Salesforce’s annual marketing event as the crowd quieted down. Salesforce both competes and partners with Microsoft in online services. “I like to call it the iPhone Pro because it’s got all the Microsoft software and applications on it.” 

On the giant screen behind me, a close-up of the phone appeared. One by one, the app icons flashed into view — iPhone versions of Microsoft classics like Outlook, Skype, Word, Excel, and PowerPoint as well as newer mobile applications like Dynamics, OneNote, OneDrive, Sway, and Power BI. The crowd erupted in applause.

Seeing me demo Microsoft software on an iPhone designed and built by Apple, one of our toughest, longest-standing competitors, was surprising and even refreshing. Microsoft versus Apple has been such a prominent and even contentious rivalry that people forget we’ve been building software for the Mac since 1982. Today one of my top priorities is to make sure that our billion customers, no matter which phone or platform they choose to use, have their needs met so that we continue to grow. To do that, sometimes we have to bury the hatchet with old rivals, pursue surprising new partnerships, and revive longstanding relationships. Over the years we’ve developed the maturity to become more obsessed with customer needs, thereby learning to coexist and compete….

A few years back, Apple had a concept they felt would benefit from a renewed partnership with our capabilities and culture. Shortly after becoming CEO I decided we needed to get Office everywhere, including iOS and Android. We had these versions in the works for some time, just waiting for the right moment to launch. I wanted unambiguously to declare, both internally and externally, that the strategy would be to center our innovation agenda around users’ needs and not simply their device. We announced that we would bring Office to iOS in March 2014, two months into my new role.

Soon Apple sent a cryptic note to our Office team asking for an engineer to sign a nondisclosure agreement and come to Cupertino for a meeting. This is standard operating procedure in our secretive industry where intellectual property must be guarded. After a few meetings, it became clear that what Apple wanted was for Microsoft to work with them to optimize Office 365 for their new iPad Pro. Apple told us that they felt there was a new openness at Microsoft. They trusted us and wanted us to be part of their launch event.

Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone; Author: Satya Nadella; Publisher: HarperCollins; Pages: 288; Price: Rs599

There was passionate debate internally about whether this was a good idea. At first some product-line leaders within Microsoft felt uneasy about partnering with their competitor; I definitely heard some resistance behind closed doors. One way to explain the logic is by turning to game theory, which uses mathematical models to explain cooperation and conflict. Partnering is too often seen as a zero-sum game — whatever is gained by one participant is lost by another. I don’t see it that way. When done right, partnering grows the pie for everyone — for customers, yes, but also for each of the partners. Ultimately the consensus was that this partnership with Apple would help to ensure Office’s value was available to everyone, and Apple was committing to make its iOS really show off the great things Office can do, which would further solidify Microsoft as the top developer for Apple.

On launch day, Apple’s Senior Vice President for Worldwide Marketing, Phil Schiller, teased the audience as he set up the next demo at the iPad Pro launch. “We’ve been lucky to have some developers come in to work with us on professional productivity. 

Who knows productivity more than Microsoft?”

Nervous laughter filled the room.

“Yeah, these guys know productivity.”

Kirk Koenigsbauer, the head of Office marketing, took the stage to proclaim that more than ever we are doing great work for the iPad.

But the publicity value of working with old rivals was far down on my list of motivations for pursuing them…. For me, partnerships — particularly with competitors — have to be about strengthening a company’s core businesses, which ultimately centers on creating additional value for the customer…

Sometimes that means working with old rivals and sometimes it means forging surprising new partnerships. We work with Google, for example, to make it possible for Office to work on their Android platform. We partner with Facebook to make all of their applications work universally across Windows products and, likewise, to help them make our Minecraft gaming applications work on their Oculus Rift, a virtual reality device that competes for attention with our own HoloLens. Similarly, we’re working with Apple to enable customers to better manage their iPhones within an enterprise. And we’re working with Red Hat, a Linux platform that competes with Windows, so that enterprises built on Red Hat can use our Azure cloud to scale up globally by taking advantage of investments we’ve made in local data centers around the world. Our partnership with Red Hat may not be as surprising to some as our work with Apple and Google, but when I stood onstage with a slide just over my shoulder proclaiming “Microsoft HEART LOGO Linux,” one analyst concluded that hell must have frozen over….

Every company is becoming a digital company, and that process begins with infusing their products with intelligence. Experts estimate between 20–50 billion “connected things” will be in use by 2020, presenting a significant opportunity for companies to drive their own digital transformation. GE has become a full-blown digital company with its Predix platform, which partners with Microsoft to connect industrial equipment, analyze data from those machines, and deliver real-time insights. Toyota has a connected auto division that has transformed their cars and trucks into next-generation digital-era vehicles — moving digital platforms that enable cars to communicate with other cars and even with the city’s infrastructure. Rolls-Royce is designing their engines as big-data platforms to predict failures and minimize breakdowns.
 

Reproduced with permission from HarperCollins