C in CEO stands for Culture

Satya Nadella succeeded Steve Ballmer as CEO of Microsoft in 2014. Since then, Microsoft's culture has turned 180°. The leadership is undergoing an intensive transformation along the concept of Growth Mindsets - in other words, following the idea of enabling innovation and continuous change through a consistent learning culture. The starting point for this was Satya Nadella's inaugural speech, in which he summed up his strategy with the sentence "the C in CEO stands for Culture".

Using Microsoft as an example, three patterns in transformation can be identified that result in a kind of recipe for succeeding change:

1. A CEO identifies the strategic necessity of cultural change. But not only that. He or she actively lives that change by identifying personal transformation topics, self developing along these topics, and taking his management team along with him or her. This creates enough momentum to drive change throughout the entire organization.
2. In this way, the CEO follows the insight that organizational culture pundit Ed Schein has been preaching since the 1980s: culture and leadership are two sides of the same coin. With the ability of leadership to role model cultural change, the culture of a company will change. If the leadership remains stuck in its development, the culture is also stuck and inhibits the company from developing its full potential.
3. Digital transformation - in Microsoft's case, innovation in enterprise cloud business - goes hand in hand with corporate cultural transformation. Cultural change is the prerequisite for fostering the innovation and collaborative culture that digital transformation needs. There are many prominent examples of this, and some are well documented: For example, the rapid development at Salesforce as a technology company. Or Google's culture of innovation, which emanated from the growth mindset of its founders.

Of course, these three patterns cannot be applied to every future technology transformation. But as a benchmark, the big technology players provide a good orientation for how strongly culture development and business success are linked. Culture is therefore by no means just a "soft fact" steered by HR. Culture is of central importance for a company's competitiveness and must be role modeled by the top management.

If you want to learn more about the culture change at Microsoft, here is our podcast recommendation (in German):

Dierke & Houbon. Der Führungspodcast

Microsoft’s CEO Nadella – Der Culture Executive Officer