Microsoft Corporation (Microsoft), the multinational computer technology company, has undergone change management since early 2014, when Satya Nadella became CEO of the company. He was the third leader to take the helm in the software behemoth’s 40-year history, following founder Bill Gates and Steve Ballmer.

Since its inception, Microsoft had been appreciated for its innovation and employee-friendly HR practices. However, during the late 1990s, as the company was growing rapidly in size, some of the popular elements of its corporate culture gave way to a rigid culture marked by unhealthy competition, bureaucracy, and a lack of innovative thinking. When Nadella took over the reins of the company, Microsoft had fallen behind companies such as Apple, Inc. in the mobile-phone market. Not only that, industry experts were of the opinion that, the company had missed almost every significant technology trend of the 2000s – be it mobile phones, or search engines, or social networking – while letting its main source of revenue, Windows, stagnate. Microsoft generated a licensing fee for Windows on desktops and laptops sold, but consumers had started replacing PCs with iPhones and Android devices.

Faced with the challenge of executing a strategy that would transform the company from a software behemoth to a devices and service company, Nadella pushed for a cultural shift at Microsoft. He along with newly-appointed Chief People Officer, Kathleen Hogan, drove change to incorporate empathy and a growth mindset at Microsoft. This was supported through complementing HR practices. Analysts felt that a cultural shift of such scale had never been seen before in a company the size of Microsoft, nor had they ever seen a company that had struggled so hard recover so well.

Human Resource and Organization Behavior Case Studies | Case Study in Management, Operations, Strategies, Business Environment, Case Studies

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Issues

The case is structured to achieve the following teaching objectives:

	Understand the issues and challenges in change management, and in managing a cultural transformation.
	Understand the link between strategy and culture.
	Evaluate the various aspects of Microsoft’s culture and understand how it can lead to building new strategic capabilities and be a source of competitive advantage.
	Understand the leadership and management style of Satya Nadella.
	Evaluate the challenges Microsoft could face going forward, and explore strategies it can adopt to overcome them.

Contents

INTRODUCTION

ABOUT MICROSOFT

CHALLENGE BEFORE NADELLA

THE CULTURAL TRANSFORMATION

CHALLENGES

LOOKING AHEAD

EXHIBITS

Keywords

Change management; Organizational culture; Cultural shift; Cultural transformation; Strategy-culture relationship; Growth mindset; Empathy; Collaboration; Strategic human resource management; Leadership; Management style; Innovation; Strategic capability; Competitive advantage"

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