Welcome to the Room – A lesson in leadership by Satya Nadella
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"Outsized success" is always in relation to the value of the allocated resources. "Conventional success" is making slightly more than liquidating those resources and following a passive investment strategy, like index funds yielding 8% APR.
So what "Satya" is saying here is "I want higher risk, higher reward strategies", but "don't be unlucky" (don't "make a habit of" failure).
I'm no exec, but I'm my opinion, this is a poor strategy in the consumer and especially enterprise software and services space.
"Satya" is wrong: there are 3 knobs. The missing knob is risk allocation. This works in two ways: some areas are intrinsically risky, and some areas you choose to take risk in. Either way, you allocate that risk with strategy and resource allocation (the other two knobs). If an area can't fail, you may spend more resources to de-risk or hedge, or strategically avoid change or the area. If an area has outsized opportunity, the strategy and allocation takes more risk there.
"Satya" is telling the whole room that their area should favor high-risk, high reward strategy and allocation, when he should be telling them that they must determine if their area should favor or avoid risk to maximize the entire company's return on investment.
The real estate team should not be a risk center. It should not fire 90% of the janitors in favor of "AI first" robot vacuums. It should not decide that real estate as a service (WeWork) is a good strategy over buying real estate in advance of need. It should avoid capacity crunches while putting holdings in LLCs to reduce downside risk. It should vertically integrate the data centers (land, connectivity, power, water, regulation/politics/PR).
Lots of Microsoft failures look like risk misallocation to me. Windows phone was allocated risk too late in moving away from Windows CE. Windows Vista took too much risk and failed to release until features were rolled back. Windows 11 (financialization of the OS) seems like they are betting the farm to secure some ad and subscription revenue, and keep their low margin PC maker partners happy, while they make the platform the least attractive it's ever been.
"The real estate team should not be a risk center." - Why not? Sure, I agree with you it doesn't make a ton of sense _to me_ to fire 90% of the janitors.
Satya said he wants his team to be "Intellectually honest".
I'd argue that a plan to fire 90% of the janitors today is not that realistic, but if some real estate exec thinks they honestly have a plan that could be successful, are tracking data, and change their plan if they're wrong - what's the problem?
Maybe they're crazy enough to have figured something out we don't know....or not in which case Satya says you'll be gone if you make it a habit.
How does the rest of Microsoft perform if there's not enough office space or DC capacity is far below needs?
Risk is much more tolerable in the last mile than the first one, much more tolerable in the leaves of a dependency graph than the root.
Is that objectively true? I think you could also make the argument the other way that things compound when you innovate at the root.
I think it's your opinion that that's the case, and it generally makes sense to me as well, but I'm still saying it's a judgement call.
There are a lot of things / decisions at a company that don't strictly matter for the customer immediately but they still eventually matter for the customer - because they have a downstream impact. In this case, maybe you save that money and spend it somewhere else.
Now you'd think that would just be normal practice but I have witnessed a disturbing number of leaders who either never got this talk or lack the empathy to realise that you have to explain to people what they should be doing. I will single out "leaders" who demand people get vague (or even specific) results and they have to figure it out. That is the extent of the leader's communication. All too common a practice, that can work with the right people but it is bad management.
Nadella isn't doing that here. He is still asking for vague (or specific) results, but he is including a "with these tools and by doing these things" part that is quite important and makes the whole talk actionable.
> > Congratulations …. your days of whining are over .
> > In this room, we deliver success, we don’t whine.
> > Look, I’m not confused, I know you walk through fields of shit every day.
> > Your job is to find the rose petals.
> > Don’t come whining that you don’t have the resources you need.
> > We’ve done our homework.
> > We’ve evaluated the portfolio, considered the opportunities and allocated our available resources to those opportunities.
> > That is what you have to work with.
> > Your job is to manufacture success with the resources you’ve been allocated.
> > And yes – you have a hard job.
Not concise: he could've said "Your job is to manufacture success with the resources you’ve been allocated. No ifs, ands, or buts."
Precise: what does he mean by "success"? Maximizing profit?
Actionable: yes. The rest of the lesson is "you control how resources are allocated within your team, and of course also the attitude and instructions you present to them. Set a goal for 'outsized' success (e.g. increase growth), have a plausible plan to that goal, follow the plan, and if the plan becomes no longer plausible have a new one. If you do that, you can occasionally fail and not be kicked out."
> Satya was not giving us a pep talk, he was giving us an architecture for success.
Maybe it was also an "architecture for success" but it was a pep talk. Also, this entire post sounds like typical AI, and like typical AI has lots of filler and vapidity. It would really benefit by having concrete examples of great leadership.
What a moron.
But sir, that’s four controls.
“Four! You only have 4 controls: 1) The clarity, culture, and energy you give your teams; 2) Resource allocation. And a fanatical devotion to mandatory OneDrive storage!”
- - -
Jokes aside, I think the key to the piece is the hackneyed Navy Seals line: the speech describes little more than command-and-control, chain-of-command, classical militaristic mission assignment plus the scientific method. So there is a kernel of truth even if one disagrees with the cultural model and rejection of any hope for managing up.
Yup, Navy Seals and all that..
Seems like Satya may have over allocated his “success” there
Sure, they’re a successful organization but they’ve built their success on the backs of a ruthless layoff of thousands of they’re own loyal employees, and the transition of the American information economy to Indian offshore workers
Microsoft (and anyone's) success is probably a function of strategy + execution + luck.
So I think it's hard to solely judge this philosophy by Microsoft's success or not.
He's basically saying: "You must take calculated, strategic risks. But don't be wrong too much."
What's a better strategy?
For enterprise customers, that means security and stability which may mean a complete re-architecture of our software and our organization. For price conscious consumers, that doesn’t mean they don’t value security and stability; it just means they can’t pay for it. However it is important to support these customer in a non adversarial way. Warn them, yes, there is another zero day exploit that is trying to steal all your data and use your machine to mine shitcoin. Long term, we need to create a product development pipeline that will make customers beg us to take their money. Many of those ideas will never see daylight; but if we don’t have new products to sell we don’t have a company.
Stop posting human slop
Nope, this is the Super Bowl, period. I guess at those levels real life does not matter anymore, just _success_.
Perhaps it’s the use of general terms like success and value what irks me about corporate culture. Making millions in place of making the world better is ok, but idealizing it this way is another matter.
I personally feel like it's best to a) hold on to that ethics/values based perspective, b) simultaneously hold on to the idea that at some fundamental level, companies and buyers are not a-priori stupid, and may see some value (even if that value is dealing with a monopoly they hate) and therefore the money generated, while not proof of real value add, is at least a sort of strong nod and eyebrow wiggle toward "you should probably assume by default this adds value for the people buying it as your first prior".
Anyway, I guess my point is, many people felt Sharepoint improved their lives measurably, and paid billions for that over the years. I try to stay open to the idea that's useful information, rather than be like "blecccch".
also creating monopolies.
they also use shitty scammy business practices
> Re-read it again and again until you get it.
OK, now I get it.
"This is my room. This isn't your room. I'm the most important person here. You should be honoured to be standing in the same room as me. But you're not here to help make decisions. I already made the decisions. Good luck"
To be more clear: Failure can happen due to both internal and external forces. This advice enshrines internal power structures and ensures their systemic faults are permanent. It's not a seat at the table if you don't have a say.
are you including Oracle in that?
Azure is a failure once you factor in the concentration risk of their customer portfolio. Most of the revenue comes from maybe 10 companies. OpenAI alone is ~50% of future commitments.
A bunch of corporate political types at a company that's too big to fail all acting important.
I'd listen to any entrepreneur over these guys.