When Satya Nadella became chief executive of Microsoft on February 4, 2014, the company was not failing in the usual sense. It was enormously profitable. But it had missed the shift to smartphones, its stock had gone roughly nowhere for more than a decade, and it had a reputation inside and outside the company for internal rivalry. Its market value was around $300 billion, a fraction of what its size and talent seemed to justify. Microsoft was rich, and it was stuck.
Much of the problem was cultural. For years Microsoft had used a review system known as stack ranking, which forced managers to sort employees along a curve so that a set share of every team was labeled top performers and a set share was labeled poor ones, no matter how good the team actually was. People learned that helping a colleague could hurt their own rating. Information got hoarded. The company formally dropped the system in late 2013, a few months before Nadella took over, but a policy change does not erase the habits people built under it.
Nadella was only the third CEO in Microsoft's history, after Bill Gates and Steve Ballmer. He was an engineer who had come up through the company and had most recently run its cloud and enterprise group. He has said that his life as a father, especially raising his son Zain, who was born with cerebral palsy, shaped his belief in empathy as something practical rather than soft. He did not treat culture as a side project for human resources. He treated it as the main work.
He started by giving the company a clearer reason to exist. Microsoft's mission became to “empower every person and every organization on the planet to achieve more.” Then he described the culture he wanted using an idea from psychology research called a growth mindset: the belief that ability can be developed through effort and learning. He boiled it down to a phrase people could remember, contrasting a know-it-all with a learn-it-all. As he put it, “The learn-it-all does better than the know-it-all.”
The words would have meant little if he had not behaved that way himself. In leadership meetings he was known for asking questions before offering answers. He made it acceptable to admit what you did not know. He also broke with old rivalries that had been treated as sacred. Within weeks of taking over, Microsoft released Office for Apple's iPad. The company built partnerships with competitors like Apple and Salesforce, and in 2016 it joined the Linux Foundation, a striking reversal for a company that had once treated open-source software as an enemy.
His most public test came in October 2014. At a conference celebrating women in computing, Nadella was asked what advice he would give women uncomfortable asking for a raise. He suggested that trusting the system and good karma would pay off. The backlash was immediate and deserved. Within hours he admitted on Twitter that he had been inarticulate, and in a company-wide email he wrote, “I answered that question completely wrong,” adding that men and women should get equal pay for equal work and that anyone who believed they deserved a raise should ask.
Culture change did not mean avoiding hard decisions. In 2014 Microsoft announced it would cut about 18,000 jobs, its largest layoff ever, many of them in the phone business it had bought from Nokia. In July 2015 it wrote down $7.6 billion of that acquisition and cut about 7,800 more jobs. Nadella was, in effect, admitting that a costly bet made before his time had failed and moving the company's focus to where it could win: cloud computing, with its Azure platform at the center.
The results became one of the largest turnarounds in business history. Microsoft's cloud business grew into a giant, and the company bought LinkedIn and GitHub and folded them in successfully. Its market value rose from about $300 billion when Nadella started to more than $3 trillion by late 2024, roughly a tenfold increase. Observers pointed out that the strategy and the culture were tied together. Partnerships, cross-company products, and big acquisitions only work when people are willing to cooperate instead of compete with each other.
For a manager, the lesson is that culture is not what you announce. It is what people see you do, especially when you are wrong. Nadella could have issued a statement of values and gone back to business. Instead he modeled the behavior he was asking for, in meetings and in public, including on the worst day of his first year. People watched how he handled his own mistake, and they learned more from that than from any memo.
On Monday, try three things. In your next meeting, ask two genuine questions before you give your own opinion. The next time you get something wrong, say so plainly in front of the team, and say what you will do differently. And look at what you praise and reward: are you recognizing the people who help others succeed, or only the ones who look best on their own? Your team will build whatever culture you actually reward.
Culture starts with the leader, whether the leader wants it to or not. Your team is already learning from you every day. The only question is what they are learning. If you want people who keep getting better, go first. Be the learn-it-all in the room, and let them watch you do it.