The Surprising Secret Of Microsoft's Financial Success
Why does Microsoft continue to be the world’s largest developer of software by annual revenue? Is it because it has highly knowledgeable software engineers? No; all of its competitors do also. Is it because its marketing department is superb? No; that's the case with many of its competitors too. The secret of Microsoft’s continued success is the compassion of its CEO, Satya Nadella.
As Nadella told CBS Sunday Morning’s David Pogue, compassion is a crucial component of business. "We are in the business of basically meeting unmet, unarticulated needs of customers," Nadella said. “And there's no way you're going to be able to get that consistently right if you don't have that deep sense of empathy, or being able to see what others are seeing.”
What Is Compassion?
"Compassion” comes from a Latin word that means “to suffer with.” You show compassion toward those who are compromised in some way. You feel their pain, which is the first step toward eradicating that pain.
You don’t feel compassion towards those who are richer, happier, healthier or better looking than you are, until they suffer a setback. No one says, “I feel terrible about Oprah” or "What a shame about Lin-Manuel Miranda," because they're both at the pinnacle of success. Let's hope that never changes, but if it does, you can bet that millions of people will be feeling compassion for them.
Compassion should not be confused with pity. Microsoft hired product manager Angela Mills not because she’s legally blind but because of her ability to bring to market innovative products like the new Seeing AI app, which helps visually impaired people read text and identify faces.
Nadella recognized that disabled people like Mills were being unfairly discriminated against, and he wisely sought to correct that injustice. This reveals, by the way, that when a leader has one high-character quality (such as compassion), he or she tends to have others as well (in this case, fairness).
The Financial Benefits Of Compassion
Nadella is not a compassionate leader because it makes financial sense. He’s compassionate because that’s who he is. He probably was always like this, but he does say that having a son with cerebral palsy has played a key role in his own moral development. "To be able to see the world through his eyes and then recognize my responsibility towards him,” Nadella says, “that I think has shaped a lot of who I am today.”
But is it just a coincidence that, financially and creatively, Microsoft is doing so well now under a compassionate leader? Not likely. “Since Nadella became CEO, Microsoft's stock has more than doubled,” notes David Pogue. “[I]t's now at an all-time high. And for the first time in a long time, people are calling Microsoft innovative.”
Nadella discusses the relationship between compassionate leadership and success in his new book, Hit Refresh: The Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone.
How Microsoft Can Become Even Better: Closing The Gap
Microsoft is not yet as good as it can be. An opportunity for development that it shares with its competitors, as well as with almost every other company in the world, is closing the gap between what it says it values and what it actually looks for in job candidates.
In a letter to team members, Nadella talks about the supreme importance of ethics:
We are more likely to make ethical choices when integrity, honesty, and compliance guide our decision making. We should always be transparent about our motives, learn from our mistakes, and ask for help when faced with a difficult situation. I expect leaders and managers to foster a culture where employees feel free to ask questions and raise concerns when something doesn’t seem right.
But take a look at one its job descriptions for senior software engineers. It focuses on what the successful candidate needs to know or be able to do. This job description is essentially an extensive list of the knowledge and skills that Microsoft engineers must possess. The words “ethics” or “ethical” are nowhere to be found, however. This, sadly, is the case for all of the company's many job descriptions that I studied.
Innovative leadership is about coming up with cool news products and services that consumers and businesses need or want. But it’s much more than that. The successful corporate leader must also hire and promote only high-character people, and that starts with job descriptions that place the company’s values front and center.
It's not enough that the CEO is a man or woman of high character. Every employee, manager and C-suite executive must be a high-character person too.
But “Ethics” Is Just A Word
I’m not suggesting that merely by including “ethics” and related words that a company is guaranteed to hire ethical people. In my book The Good Ones: Ten Crucial Qualities of High-Character Employees, I present a generous number of key questions you can ask to evaluate the character of job applicants. Then comes the hard work: carefully listening to what the applicant says and how he or she says it.
Publishing job descriptions that are grounded in the company’s values and asking meaningful questions about character during job interviews are two essential components of high-character leadership, which is the best predictor of lasting financial success.
Does Microsoft, and your own company, have the will to do this? The answer to that question will determine how bright its financial future will be.
Call To Action
Review every one of your company's job descriptions immediately. Make sure every description makes it clear that successful job applicants need to embody your company's values and not merely be knowledgable and skilled.
Then ask questions during job interviews to evaluate how committed each applicant is to your company's values.
This takes a lot of time and effort to do effectively, but you cannot afford to hire a single person who doesn't take compassion and other traits of high-character employees seriously.
Thank you for reading my blog post. I hope you're having a good day.
One more thing
Yes, I will give an engaging ethics presentation to your organization. Contact me here and let me know how I can help.
At your service,
Bruce Weinstein, Ph.D., The Ethics Guy
Ethics Trainer and Speaker
P.S. Take my free ethics quiz here. Includes video analysis of each answer. You can also sign up for my free weekly emails on ethics and ethical leadership that will enrich your work in accounting, human resources, engineering, and other essential professions.
P.P.S. Here's my contributor page on LearnFormula / CPD Formula with a description of the courses I offer for CPAs and HR professionals, all of which will earn you one or two continuing education credits in ethics.