The CEO correctly lays out some of the ways the world is changing, but can the software maker really change? 

Microsoft CEO Satya Nadella recently emailed Microsoft employees a speech that I’ll refer to as his “Satya Manifesto.” In it, he points out that the software maker must make fundamental strategic and cultural changes to deliver on his vision of being “the productivity and platform company for the mobile-first and cloud-first world.” He further states: “We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

I was impressed with his willingness to shift Microsoft’s focus to the mainstream of where the world is moving. Yet, I couldn’t help compare his memo to a 1999 speech by Carly Fiorina after assuming the CEO role at Hewlett Packard. In her speech she said, “…we are a single global ecosystem – wired, connected, overlapping …”

She then summarized the spirit of the HP Way with the Rules of the Garage:

• Believe you can change the world.
• Work quickly, keep the tools unlocked, work whenever.
• Know when to work alone and when to work together.
• Share tools, ideas. Trust your colleagues.
• No politics. No bureaucracy. (These are ridiculous in a garage).
• The customer defines a job well done.
• Radical ideas are not bad ideas.
• Invent different ways of working.
• Make a contribution every day. If it doesn’t contribute, it doesn’t leave the garage.
• Believe that together we can do anything.

Unfortunately, Carly’s noble ambition to have HP return to the principles that had guided it to long-term prior success never was fulfilled. As a venture capitalist, I often see companies that have great vision and a strategy, which if successful, would lead to a leadership position in its arena. The difference between those who achieve this success and those who don’t often comes down to several key factors:

1. Listening to customers and adjusting products to fit current customer needs
2. Recruiting and/or acquiring the best talent and then retaining them
3. Being very flexible and willing to modify basic products and strategies as evidence mounts that this is necessary.

I won’t attempt to analyze why HP failed to re-establish itself as a dominant industry player in areas other than printing. The Satya Manifesto puts down similar rules and, like Carly, correctly identifies some of the ways the world is changing. Now the question becomes how willing is Microsoft to really change? This may depend on whether the following questions are answered positively going forward:

Is Microsoft willing to listen to its customers?

1. If their customers show a preference for Linux as evidenced by it being the dominant use case on the Amazon cloud, will Microsoft support Linux as vigorously as Windows in its own cloud even if it means some losses for Windows?
2. If customers are divided on which operating system they want on their phones, will Microsoft offer Linux-based phones in addition to Windows phones?
3. If Microsoft wants to acquire a new technology, will they be willing to acquire the Best–in-Class company in that space even if it means paying a higher price?
4. If they acquire best in class companies, will they find a way to retain the top people?

All of the above appear logical consequences of Microsoft fully embracing the Satya manifesto but despite the apparent logic, it isn’t obvious that the company will execute against each of these. They represent a significant change to Microsoft culture and therefore will be hard to achieve even if Satya is committed to each. Like Carly Fiorina before him, Satya Nadella has become CEO of a company that needs to embrace change. Like Carly, he has correctly outlined changes in the world that require radical adjustment if his company is to maintain leadership. But, as we saw at Hewlett Packard, identifying the theoretical path is only a first step. The end goal can only be reached if Satya has the will and support to drive radical change within the company.

Soundbytes:

• Speaking of Microsoft, Bill Gates’ review of Business Adventures by John Brooks, his favorite business book, is now live on the Wall Street Journal website. It is also live on Gates’ blog, gatesnotes.com  or access directly through the Wall Street Journal site.
• I have to admire Lebron James who has let his feelings for his home state take priority over bearing a grudge over a less than classy response to his leaving there 4 years ago. Unlike 4 years ago when he was classified as a loser because he couldn’t carry a team (that had the worst record in the league the following year) to a championship, there is now a base that gives him a fighting chance to win without going beyond what is humanly possible.