5 issues Elon Musk may be taught from Microsoft CEO Satya Nadella
The manner Satya Nadella circled Microsoft when he turned CEO couldn’t be extra totally different than how Elon Musk has handled Twitter since taking on.
Brian Smale / Microsoft
(CC BY-SA 4.0)
Back in April, two days after Elon Musk introduced his plan to purchase Twitter, Musk had a personal cellphone name with Microsoft CEO Satya Nadella. One might need anticipated Musk to ask Nadella for recommendation on the best way to flip across the flailing Twitter — in spite of everything, Nadella had engineered maybe essentially the most profitable tech turnaround in historical past.
In 2014 he took the helm of a directionless Microsoft riven by discord and stagnation and whose inventory value had dropped by greater than half throughout what is mostly known as Microsoft’s misplaced decade. Today, because of Nadella’s steering, Microsoft has the third-biggest market cap on the planet and, as a pacesetter in a number of cutting-edge applied sciences, is well-placed for the long run.
Apparently, although, Musk wasn’t on the lookout for recommendation. He was providing it, as a result of afterwards Nadella texted him, “thx for the call. Will stay in touch. And will for sure follow-up on Teams feedback!”
Musk may have used Nadella’s assist. Instead, after taking on Twitter, he’s completed all the pieces he can to single-handedly destroy it. If Musk had requested for recommendation, listed below are 5 issues Nadella might need advised him primarily based on his expertise saving Microsoft.
Tip No. 1: Don’t burn down the home as quickly as you get the keys
When Nadella turned CEO, Microsoft was at its lowest level in its historical past. Languishing and adrift, it was full of forms, turf wars and backstabbing. Its inventory value below former CEO Steve Ballmer had plummeted from the higher $50 per share vary when he took over in 2000 to half that value when he introduced in 2013 he would retire. It was nonetheless reeling from the disastrous launch of Windows 8, maybe the worst model of Windows ever created. It was sinking billions of {dollars} in a Windows Phone working system few individuals used, and had spent $7.2 billion to purchase cellphone maker Nokia, which didn’t transfer Windows Phone’s market share a single notch.
Nadella had loads of concepts about the best way to save the corporate: Change firm tradition to one in all collaboration fairly than battle, exit the cell phone enterprise, and guess Microsoft’s future on the cloud fairly than on Windows.
But he didn’t ram his concepts down the individuals’s throats. He launched into a listening tour to search out out what others thought wanted fixing and the way to take action. He listened to Microsoft staff and prospects, took what they stated into consideration, after which slowly, fastidiously, and intentionally turned the corporate round.
Contrast that with Musk, who inside a short while of taking on Twitter, primarily burned the corporate down. In the primary few weeks, he fired half the employees, then threatened the remaining staff, inflicting a major variety of them to give up. He insulted and threatened his advertisers, who took their cash elsewhere. He welcomed again the poisonous conspiracy believers and white nationalists that bedeviled the corporate. And he personally used his Twitter megaphone to unfold lies and conspiracy theories.
The consequence? In his first weeks and months, he broken Twitter so severely it’s possible the corporate won’t ever absolutely get well.
Tip No. 2: Don’t kill your money cow
Nadella’s central dilemma when he took over Microsoft was the necessity to diversify. Windows, Microsoft’s money cow, now not dominated the world, and income from it was headed south, imperiling the corporate.
The future, he believed, was within the cloud — so he set his sights on turning Microsoft right into a cloud-based firm. But to do this, he wanted to proceed milking the money cow, Windows, to maintain the corporate afloat.
His plan labored. He improved Windows with every iteration and used income from it to construct Microsoft’s cloud enterprise. Microsoft is now behind solely Amazon in cloud market share. It’s Microsoft’s largest income supply, bringing in $20.3 billion in the latest quarter, versus Windows and Xbox’s mixed $13.3 billion. And that understates cloud income, as a result of Office and most different Microsoft software program have become primarily cloud-based choices price $16.5 billion income for the quarter. Projections are that cloud income will proceed to climb, whereas Windows income shrinks.
Meanwhile at Twitter, Musk guess his firm’s future can be in for-pay providers fairly than advert gross sales, which now account for about 90% of income. (It’s a debatable guess, by the best way.) He then promptly did all the pieces he may to kill Twitter’s advert enterprise.
Advertisers anxious Musk would decimate content material moderation, permitting in much more hate-filled rhetoric, conspiracy theories, and racist and anti-Semitic rants than have been already there. Musk promised them he wouldn’t permit Twitter to develop into a poisonous hell-hole, writing, “Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences…! Twitter aspires to be the most respected advertising platform in the world.”
Musk lied. He all however killed content material moderation and unbanned lots of the hate-spewers. He adopted that up by tweeting a hyperlink to a right-wing conspiracy principle that Nancy Pelosi’s husband’s was crushed in a drunken battle with a homosexual prostitute.
Unsurprisingly, hate speech spiked to unprecedented ranges. As Imran Ahmed, the chief government of the Center for Countering Digital Hate, advised The New York Times, “Elon Musk sent up the Bat Signal to every kind of racist, misogynist and homophobe that Twitter was open for business. They have reacted accordingly.”
As a consequence, advertisers fled. Half of Twitter’s high 100 advertisers, accounting for nearly $2 billion in advert spending on Twitter since 2020 — and greater than $750 million in 2022 — deserted the platform.
Musk blamed the exodus on “activist groups pressuring advertisers” fairly than on company aversion to Twitter’s poisonous content material. Then he warned advertisers he would “thermonuclear name & shame” them for leaving Twitter.
They haven’t returned, nor have they been shamed – actually, they’re pleased with having left. More are leaving. Twitter’s income is plunging, placing it at risk of chapter. According to The New York Times, Twitter has to pay $1 billion a 12 months in curiosity on the loans Musk incurred shopping for it; final 12 months it had solely $630 million in money circulation. And that was earlier than Musk chased away advertisers.
Tip No. 3: When slicing, use a scalpel, not a meat axe
CEOs usually face robust occasions. The manner they deal with them usually has extra to do with their final success than how they handled issues when occasions have been good. Laying off employees impacts not simply the employees themselves, however the staff who stay in addition to an organization’s tradition and dealing circumstances. When individuals see layoffs dealt with badly, they’re much less prone to stick round long run, realizing they may very well be subsequent.
Nadella has needed to lay off individuals via the years — excess of Musk at Twitter. A very large spherical got here in 2017 when Microsoft culled an estimated 18,000 individuals, 12,500 of whom labored at Nokia. (Microsoft ultimately shut down Nokia and wrote it off for $7.2 billion.)
Nadella fastidiously crafted a layoff plan and gave staff loads of discover and good severance offers. The layoffs didn’t have an effect on the core of the corporate; he focused them fastidiously. He expended a substantial amount of time and effort explaining why the layoffs have been obligatory, so remaining staff knew the place the corporate was going and the way they slot in.
By distinction, Musk took a meat axe to Twitter, gutting whole divisions willy-nilly. There gave the impression to be no rhyme or purpose to who was laid off and who left behind. Often, individuals weren’t even notified they have been laid off; they discovered as a result of they have been shut out of firm methods. Many layoffs have been completed on obvious whims, when Musk fired individuals as a result of they stated issues he didn’t need to hear. The infrastructure workforce was gutted, endangering Twitter’s fundamental capabilities. Content moderation was primarily killed. Many in advert gross sales have been let go.
In all, about half of Twitter’s 7,500 individuals have been ousted. The course of was so chaotic that later Twitter begged some individuals to return again after the corporate realized it wanted them. Some returned; others refused.
After that, Musk warned the remaining staff that they needed to be “extremely hardcore” and quit life past work in the event that they needed to maintain their jobs. More than 1,000 individuals give up, together with invaluable advert staffers who had one of the best relationships with advertisers. Yoel Roth, head of content material moderation, left — a major problem, as a result of he was, within the phrases of The Washington Post, “the public face of the company’s efforts to reassure users and advertisers that Twitter would not descend into a ‘free-for-all.’”
The firm’s CIO, chief privateness officer, and chief compliance officer additionally deserted ship. That set off a warning from the US Federal Trade Commission, as a result of Twitter has to stick to a privateness settlement that included a $150 million wonderful, and the specter of extra if the pact isn’t adopted correctly.
The consequence? It’s not clear Twitter has the precise employees to proceed functioning, a lot much less create the brand new options Musk says are important to a turnaround.
Tip No. 4: Treat your staff effectively
Nadella constructed Microsoft right into a $2 trillion behemoth not on the backs of his staff, however in collaboration with them. He acknowledges that attracting and maintaining tech expertise is probably essentially the most troublesome job an organization faces, and crucial.
As only one instance, take into account what he did in May — greater than doubled the utmost pay for workers and elevated their inventory grants. He despatched out this memo explaining why he did it: “Time and time again, we see that our talent is in high demand, because of the amazing work you do to empower our customers and partners. Across the leadership team, your impact is both recognized and deeply appreciated — and for that I want to say a big thank you. That’s why we’re making long-term investments in each of you.”
He has additionally written and talked in regards to the significance of empathy for workers and prospects. Here’s how he defined that perception to the Harvard Business Review: “What is the most innate in all of us is that ability to be able to put ourselves in other people’s shoes and see the world the way they see it. That’s empathy. That’s at the heart of design thinking. When we say innovation is all about meeting unmet, unarticulated needs of the marketplace, it’s ultimately the unmet and articulated needs of people, and organizations that are made up of people. And you need to have deep empathy.
“So I would say the source of all innovation is what is the most humane quality that we all have, which is empathy.”
Musk, as a substitute, has threatened and belittled his Twitter staff, ruling by concern. His greatest staff have both been laid off or fired. He’s already going through a number of lawsuits about the best way he treats his staff, together with concentrating on girls for cuts, illegally shedding employees, and reneging on guarantees to permit staff to work remotely.
As for empathy, the phrases “empathy” and “Elon Musk” have by no means been utilized in the identical sentence, except that sentence additionally incorporates the phrases “lack of.”
All that can come again to chunk him. He has a employees that despises him. He received’t be capable of get one of the best and brightest to work or keep at Twitter. The individuals he wants most — essentially the most progressive — are both already gone or will go away on the earliest alternative.
Tip No. 5: Don’t slam the door in your manner out
CEOs don’t final ceaselessly; ultimately they go away. When Nadella goes, he’ll actually exit with the fashion and charm with which he ran Microsoft. He would little doubt counsel Musk to do the identical.
Would Musk take heed to that recommendation? Of course not. He’ll exit howling and screaming and slam the door as loudly as he presumably can. That is, if there’s nonetheless a door left at Twitter to slam.