Microsoft is valued at over $1 trillion, making it one of the most valuable companies in the world. Microsoft reported earnings for the full 2020 fiscal year on Wednesday, beating analyst expectations for overall results. Satya Nadella, Microsoft's CEO, has operated as a transformational leader since he took the helm in 2014. Nadella and his team have emphasized Microsoft's cloud business and a psychological attitude called growth mindset. Visit Business Insider's homepage for more stories.
The coronavirus recession has not threatened Microsoft's central role in the tech industry. The company cut a small number of jobs as it entered the new fiscal year, but the cuts affected less than 1,000 jobs — and Microsoft's reported earnings for the full 2020 fiscal year, released on Wednesday, beat analyst expectations. Microsoft continued to see strong growth in businesses including Office 365, Microsoft Azure, Windows, and Xbox, as stay at home orders lead to heightened demand for video games and remote work tools, Business Insider's Ashley Stewart reported. However, it did miss expectations on the business unit that includes Office 365 cloud productivity suite and its Microsoft Teams communications app, Stewart reported. Microsoft has come a long way since Satya Nadella took over as CEO in 2014, a time when the tech company was known for its internally competitive culture and plateauing shares. By October 2019, Microsoft won a $10 billion cloud-computing contract with the Pentagon over Amazon Web Services. That rolls into a larger question: How did this once stagnant company achieve a trillion-dollar valuation? Over the past six years, Nadella has made a series of sound business decisions after assuming the CEO position. He used his experience running Microsoft's cloud and enterprise group to push the intelligent-cloud effort that's driving Microsoft's over performance in quarterly earnings. He was willing to work with competitors like Oracle and Sony, and supported Linux on the Azure platform. He even walked on stage at Dreamforce in 2015 with an iPhone to demonstrate Outlook. In October 2019, Microsoft secured the contested Joint Enterprise Defense Infrastructure (JEDI) contract with the Pentagon. Industry experts long considered Amazon the front-runner for this contract. Internally, Microsoft employees complained that taking a defense contract would mean being complicit in "increasing the lethality" of the defense department. Nadella heard them out but confirmed that Microsoft "will be engaged" when it comes to the US military. Nadella continues to make bold moves for the company in the wake of the coronavirus recession. Last month, Microsoft announced plans to shut down its video game streaming service and close most of its retail stores. Analysts say that those decisions are part of CEO Satya Nadella's strategy to ruthlessly prioritize Microsoft's strengths while cutting losses in other areas. As a company, Microsoft has visibly grown from where it stood in 2014. For a deeper understanding, consider the influence of Nadella's leadership style and how he has shaped Microsoft's culture. Read more: Microsoft and Sony's surprise game streaming alliance is a shocker, and it raises an uncomfortable truth about the cloud wars Prioritizing growth and transformation Nadella has been very public about his embrace of a growth mindset, a concept that actually grew out of developmental psychology. The Stanford psychologist Carol Dweck was studying what made grade-schoolers succeed or not when she noticed something odd: Some of the kids loved riddles and difficult problems, while others shut down in the face of them. When the riddle-loving children encountered a problem they didn't understand, they didn't think they were failing — they thought they were learning. Hence a growth mindset, in which people jump at challenges and see failure as part of a larger learning process, and a fixed mindset, in which challenges are a turnoff, and failure something to be urgently avoided. Over the decades, Dweck and her colleagues have found that a growth mindset leads to success in both the classroom and the workplace. And Nadella has credited "Mindset," Dweck's popular book, with the tech giant's culture change. Ushering in a growth mindset across a culture Nadella's style of leadership is different from what Microsoft is used to. Bill Gates built a workaholic culture that he has since characterized as intense. Steve Ballmer focused on short-term sales performance over long-term sustainability. In making his many unprecedented moves, Nadella has demonstrated a growth mindset on a large scale. According to the New York University psychologist Jay Van Bavel, acquiring a growth mindset means focusing on how your group is improving over time, as well as getting everyone to work on collective goals. It takes the focus off competitors and moves it to the company's internal strategy for sustainable growth. Crucially, a growth mindset destigmatizes making mistakes and struggling with tough problems — like, for instance, if you were trying to take a software giant and push it into cloud computing. Read more: The rise of Satya Nadella, the CEO who totally turned Microsoft around in 5 years and made it more valuable than Apple Shaping identity To Van Bavel, Nadella is also an example of an identity-based leader. "You get your team to feel like you're all part of a common group," he said — for example, by leading a 38-hour hackathon and bringing together some 10,000 employees, as Nadella did five years ago. It's about getting everyone to buy into a vision, like a growth mindset, and modeling it yourself. Identity-based leadership is a hallmark of executive performance, though it is not without risks. SpaceX CEO Elon Musk is another example of the identity-oriented leader, as is the ousted WeWork CEO Adam Neumann. Microsoft Chairman John Thompson told Business Insider in July that the most important driver of growth was "the cultural transformation that Satya's led." "The attitude that the team has about each other, their engagement with customers and partners, their belief in openness and inclusiveness," he said. "All of those things have changed under his leadership." Sherin Shibu contributed to an earlier version of this post. SEE ALSO: Microsoft blew away Wall Street estimates in its most recent quarter and grew its revenue by 12% from last year Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America
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