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Nadella says that he’s drawn particular inspiration from these seven works on history, economics, technology, and management strategy:
The Great Transformation, Karl Polanyi:
“My father recommended this book long ago,” says Nadella of the 1944 classic by a Hungarian-American writer who chronicles the development of England’s market economy and argues that society should drive economic change.
Deep Learning, Ian Goodfellow, Yoshua Bengio, and Aaron Courville:
Elon Musk and Facebook AI chief Yann LeCun have praised this textbook on one of software’s most promising frontiers. After its publication, Microsoft signed up coauthor Bengio, a pioneer in machine learning, as an adviser.
The Boys in the Boat, Daniel James Brown:
Nadella calls this tale with a local Seattle connection—it involves an underdog University of Washington crew team and the 1936 Berlin Olympics—”A wonderful illustration of the importance of teamwork, which was a core part of my focus out of the gate as CEO.”
The Great Convergence, Richard Baldwin:
In this look at how telepresence and telerobotics will increasingly let people cross international borders from the comfort of their own homes, Nadella sees analogies to Microsoft’s HoloLens headset, especially as the technology matures and its cost comes down.
Mindset: The New Psychology of Success, Carol Dweck:
Written by a Stanford psychology professor, this book offers advice on retaining an appreciation for the things you don’t yet know and first resonated with Nadella as a father. As Microsoft’s new CEO, he aspired to steer the company toward “a culture that allowed us to constantly refresh and renew,” and incorporated Dweck’s perspective into his blueprint for change. “Now three years into it, I recognize its power a lot more than I did,” he says.
Nonviolent Communication, Marshall Rosenberg:
Upon becoming CEO, Nadella confronted Microsoft’s legendarily combative culture by urging his new reports to read this book, which preaches the power of empathy, self-awareness, and authenticity in collaboration in the workplace, at home, and beyond. Like many of his favorites, it was first recommended to him by his wife, Anu: “I’m heavily influenced by the books she reads more than the books I read.”
The Rise and Fall of American Growth, Robert J. Gordon:
Covering everything from the combustion engine to the flush toilet—and judging recent breakthroughs with a skeptical eye—this work of economic history “concludes that innovation is the ultimate source of dramatic improvements in the human condition,” says Nadella.
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One of Nadella’s first acts after becoming CEO, in February 2014, was to ask the company’s top executives to read Marshall Rosenberg’s Nonviolent Communication, a treatise on empathic collaboration. The gesture signaled that Nadella planned to run the company differently from his well-known predecessors, Bill Gates and Steve Ballmer, and address Microsoft’s long-standing reputation as a hive of intense corporate infighting.
The Microsoft that Nadella inherited was regarded by both Wall Street and Silicon Valley as fading toward irrelevance. Since becoming CEO, Nadella has not only restored Microsoft to relevance; he’s generated more than $250 billion in market value in just three and a half years
How Nadella turned things around comes back to the book he had his top lieutenants read, and the culture that took hold from there. He has inspired the company’s 124,000 employees to embrace what he calls “learn-it-all” curiosity (as opposed to what he describes as Microsoft’s historical know-it-all bent) that in turn has inspired developers and customers—and investors—to engage with the company in new, more modern ways.
Nadella believes human beings are wired to have empathy, and that’s essential not only for creating harmony at work but also for making products that will resonate. “You have to be able to say, ‘Where is this person coming from?'” he says. “‘What makes them tick? Why are they excited or frustrated by something that is happening, whether it’s about computing or beyond computing?'”
Nadella “is bringing Microsoft into [today’s] more open and integrated computing environment,” says Scott McNealy, cofounder and former CEO of Sun Microsystems, one of Microsoft’s principal rivals in the 1990s and Nadella’s first employer. “He’s brought a level of diplomacy to it.”
Nadella also updated Microsoft’s mission statement—once, in Bill Gates’s words, “A PC on every desk and in every home, running Microsoft software”—with a more modern mantra: “To empower every person and every organization on the planet to achieve more.”
Nadella’s management worldview is deeply influenced by Stanford professor Carol Dweck’s book Mindset, which outlines two types of thinking. Those who operate with a fixed mind-set are more likely to stick to activities that utilize skills they’ve already mastered, rather than risk embarrassment by failing at something new. Those focused on growth make it their mission to learn new things, understanding that they won’t succeed at all of them.
Nadella admits that some Microsoft managers have misunderstood the concept of fixed and growth mind-sets, seeing them as unalterable personality traits rather than behaviors. He says that some of his colleagues have even attempted to sort members of their team into these two buckets. Mostly, though, he believes that people get it. “No one at Microsoft is inspired by growth mind-set because of Satya Nadella, the CEO,” he says. “It’s because of what it means to them as a better parent, a better partner, a better colleague.”
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Having a strong pool of talent is critical for success in today’s business environment. Diversity in leadership is a potential key to unlocking high performance within organizations. However, despite significant attention and investment, the top management of the largest U.S. corporations remains not very diverse.
Many executives believe they are good at identifying leadership talent. However, when asked how they make their decisions, they often cite intuition or “gut” instincts. Social science research, on the other hand, suggests that it is difficult for an individual to judge who will become an effective leader.
Despite the influence of biases, there are methods organizations are using today to improve decision-making, make promotions fairer, and increase diversity. We wanted to find a more objective and measurable method of assessing individual leadership potential. To test the differences between leaders with varying degrees of experience and responsibility, we compared two subgroups from our database in 2016: those who were “managers of managers” (in other words, senior managers) and those who were “managers/supervisors” (in other words, midlevel managers).
We found that “managers of managers” differed from “managers/supervisors” on a number of personality, reasoning, and business and leadership dimensions. Specifically, the senior managers were, on average, more driven toward pursuing goals and more capable of managing stress than middle managers. In addition, the senior management group was better at both analytical thinking and creative thinking.
The results highlighted four specific types of potential that predicted how quickly one could lead and take on increasing levels of responsibility.
Four Types of Leadership Potential
Different types of potential are indicators of how quickly a person could lead and assume increasing levels of responsibility.
TYPE OF POTENTIAL
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DEFINITION
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CANDIDATE EXCELS AT
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|---|---|---|
| Intellectual Potential | This describes a leader’s natural ability to make quick sense of complex and ambiguous information while balancing many perspectives and taking action quickly, based on what he or she has determined to be “right.” This is essential for good decision-making and identifying better ways of doing things. | Thinking quickly and flexibly |
| Motivation Potential | This describes how naturally driven and resilient leaders are, as well as how deeply they believe in their own capacity to lead. These traits are essential for leading through difficult times under challenging conditions without faltering. | Managing personal drive to focus and achieve in new and challenging contexts |
| People Potential | This describes how effectively leaders read others’ needs and emotions, as well as build strong relationships with others, and how positively they tend to view others. These qualities are essential for motivating, influencing, and collaborating. | Navigating complex and changing interpersonal demands |
| Change Potential | This describes a leader’s orientation to change, specifically his or her comfort taking necessary risks, experimenting with new ways of doing things, and challenging the status quo. In today’s world of nearly constant change, having leaders who run toward change rather than shy away from it is critical to a company’s long-term health. | Adapting and responding to change, seeing opportunity in uncertainty |
Source: Deloitte
Making workplaces more diverse and inclusive will require more than simply understanding biases. You also need to correct the biases. The best way to do this is to apply consistent definitions of potential and have clear data-driven assessments for identifying future leaders.
How can organizations get started in adopting data-driven methods in the leadership selection process? We offer two recommendations.
First, define leadership potential consistently and carefully across the organization. Too many organizations eliminate talented leaders from consideration because the criteria used to determine potential are subjective and inconsistent. If created carefully, a clear, consistent definition of leadership potential can reduce the potential for bias, increase diversity, and save money by ensuring that the organization invests in high-potential employees early in their careers.
Second, use data from multiple points in time. As long as people are involved, leadership selection will be subjective. However, once you have good data, the focus can change. Rather than evaluating leadership potential with past performance ratings, we recommend using data-based assessment tools that measure talent using the same criteria at multiple points in time. Using data analytics derived from these tools helps reduce bias and changes the conversation. Indeed, having results from multiple assessments has the power to reshape talent planning and alter how talent-development decisions are made.
