Satya Nadella was recently announced as the new CEO of Microsoft with immediate effect. What are his plans to turn the company back into an innovation powerhouse?

PC sales are flagging. What was once the market which made Microsoft one of the most powerful and wealthy companies in the world has fundamentally changes, with people expecting to do more work away from their desk using software over the internet. In fact, a new report just noted that the total number of Apple devices sold in the last Quarter of 2013 was more than the total number of PCs sold across the world.

Microsoft realised they needed to shift their business model to adapt to this trend, lest they be left behind like other old Computing Dinosaurs which couldn’t adapt fast enough (anyone remember 3Com, Sun, Nortel and Altavista?). But their foray into tablet computing with Surface led to $900m of unsold inventory, and Windows 8 was so confusing for customers that many manufacturers blame the PC slowdown on it.

Microsoft knew that they needed a change, and that outgoing CEO Steve Ballmer was no longer the man to lead the innovation. Many candidates were considered, internal and external, but finally on 4th Feb it was announced that Satya Nadella would lead the company.

“Our industry does not respect tradition. It only respects innovation.” – Satya Nadella, 4/2/2014

This announcement is a good indication that the company’s board is focused on driving the company forward through innovation, rather than trying to protect profit margins through efficiency. A 22-year veteran of Microsoft, Nadella has recently headed up Microsoft’s Cloud and Enterprise group, most notably developing and commercialising their cloud platform Azure. Azure not only runs Microsoft’s web applications, including the growing Office 365 delivered over the internet, but much like Amazon Web Services can also be used by other companies to run software and data on the cloud.

This is exactly the direction Microsoft needs to go to keep up with what consumers find valuable. In fact, take a look at this interview with Nadella the first day of his new role.

There is one quote which sticks out:

The first thing I want to focus on is ruthlessly remove any obstacles to allow every individual in our organisation to innovate. Then focus all of that innovation on what Microsoft can uniquely do.

It’s a mantra which anyone leading a team or an organisation should relate to. If you’re heading up a group of other people, you not only need to enable your teams to innovate (and remove any obstacles, whether they are resources or skills), but also to focus your innovation efforts on what is going to make the difference to your customers.

Exactly how this strategy will manifest itself, with the conflicting views of opinionated directors, remains to be seen. But in my opinion, we’re going to see a more open, flexible and customer-focused Microsoft than we have done for years.

What do you think Microsoft’s biggest challenge is? Let us know in the comments below.

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