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Gender diversity drives Satya Nadella's Microsoft resurgence to new levels

Paul Smith
Paul SmithTechnology editor

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The corporate world is still marvelling at the three-year turnaround tale of Microsoft driven by chief executive Satya Nadella, who was interviewed by BOSS this time last year.

The once stumbling tech giant has re-emerged as a big player in cloud computing and AI-related offerings, and has enjoyed a 35 per cent share price gain in the past year.

The company’s commercial cloud business, which includes its Azure product, Office 365 and Dynamics 365, turned over $US5 billion ($6.3 billion) in its last reported quarter, up 56 per cent on the previous year.

From left: chief accessibility officer Jenny Lay-Flurrie, corporate vice-president worldwide public sector and industry Toni Townes-Whitley and corporate vice-president of cloud and security Julia White. Mark Nolan

It is already backing itself to turn over $US20 billion in commercial cloud computing by the end of the year, which is more than major rival Amazon Web Services has ever achieved.

But behind the top line numbers, new tech advances, market-share battles and a visionary CEO is an important facet of Microsoft’s recent success: the increasingly prominent role played by a growing number of influential female executives.

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The tech industry has struggled to counter its well-deserved reputation for under-representation of women. At Microsoft many key executives are female. BOSS spoke with six of them about their key roles in the company’s resurgence.

Symbolically, Nadella’s first hire after becoming CEO was former Qualcomm executive Peggy Johnson, an engineer who had developed a keen eye for a business deal. As executive vice-president of business development, she is in charge of a multibillion-dollar mergers and acquisition strategy.

Johnson helped lead the negotiations on the company’s $US26.2 billion acquisition of LinkedIn, and is also responsible for venture capital arm Microsoft Ventures, which has made more than 40 investments.

She says Microsoft has successfully built teams that tap the benefits of a broad range of personality types – regardless of gender.

The tech industry has struggled to counter its well-deserved reputation for under-representation of women. At Microsoft many key executives are female. BOSS spoke with six of them about their key roles in the company’s resurgence. At Microsoft, the once stumbling tech giant has re-emerged as a big player in cloud computing and AI-related offerings, and has enjoyed a 35 per cent share price gain in the past year. The company’s commercial cloud business, which includes its Azure product, Office 365 and Dynamics 365, turned over $US5 billion ($6.3 billion) in its last reported quarter, up 56 per cent on the previous year. #diversity #women #tech #stemeducation #computer #executive #leadership #boss #business #satyanadella #microsoft 📰: Paul Smith 📷: @microsoft 👨🏻‍🎨: @tara.axford

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“Many times leaders are valued on a specific set of skills that maybe are more closely associated with men – you know, being more aggressive, more assertive – but they can be present in women as well, and to succeed you really need a teamwork view with the people that have the right skills,” she says.

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“In a previous company I was advised that if I didn’t get tougher I wouldn’t advance, but when I tried it was a disaster; I’d come in and hit my fist on the table, but everyone would just look at me as if, ‘What got into her?’

“When I finally relaxed and was just myself, my career really took off.”

Johnson is proud of being Nadella’s first hire and says he runs the company in partnership with a leadership team that embodies the concept of a “growth mindset”.

Left, executive vice-president of business development Peggy Johnson with executive vice-president of human resources Kathleen Hogan. 

Another auspicious first under Nadella was when the company’s corporate vice president for Azure, Julia White, shared the stage with her new boss at his first public outing to launch Office for iPad.

As a symbolic shift from the bombastic public performances of previous chief Steve Ballmer, the sight of the understated Nadella ceding centre-stage to his highly rated female colleague publicly demonstrated the internal cultural shift he wanted to enable.

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Despite having been at the company since 2001, White was touted as the “face of a new Microsoft,”and now regularly opens Microsoft’s major customer conferences, addressing audiences in the tens of thousands and staring down on delegates from billboards.

“It’s awkward to see yourself positioned as that, it’s not something that I was trying to be, but it’s great and people look at the company differently as a result,” White says.

Microsoft CEO Satya Nadella has made Julia White the face of Microsoft.  MICROSOFT

She says Nadella is a values-based leader and says the leadership team spends lots of time talking about developments in terms of the company’s broader mission and ambitions.

“That’s where he spent his time first as a CEO,” she says. “He wasn’t digging in technology and reorganising things, he was asking, ‘What’s our soul?’ Then everything becomes clear.” In his book, Hit Refresh, Nadella says it is up to the CEO of any large company to set the tone for the rest of the organisation to follow.

The concept of the growth mindset from Dr Carol Dweck’s book, Mindset: The New Psychology of Success, features regularly and Nadella speaks frequently about leading by example to enable diversity of people and personalities to flourish.

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Anyone who spends any time at Microsoft’s head office campus in Redmond will see this in practice; the CEO is frequently quoted in reverential tones and the affection among many staff for their boss appears genuine.

Lili Cheng, corporate vice-president of AI and research. Scott Eklund

“The CEO is the curator of an organisation’s culture … anything is possible for a company when its culture is about listening, learning, and harnessing individual passions and talents to the company’s mission,” Nadella writes. “Creating that kind of culture is my chief job as CEO.”

Lest anyone think Nadella has somehow glided to the top of the business tree without ever blotting his copybook, he candidly admits his past failures at promoting equality.

Learning from a blunder

Despite worrying about 2014 figures that showed women in the US held 57 per cent of professional occupations but only 25 per cent of professional computing occupations, he stumbled when discussing related issues at a conference appearance.

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Responding to a question about what advice he had for women seeking a pay rise, who were not comfortable asking, his answer suggested he believed they should keep quiet and wait.

“It’s not really about asking for the raise but knowing and having faith that the system will actually give you the right raises as you go along,” he responded. “And that might be one of the additional superpowers that women who don’t ask for the raise have, because that’s good karma. It’ll come back.”

A wave of criticism followed in the international media and across social media, which Nadella (who quickly apologised for the remarks) says was completely justified.

He wrote a company-wide email admitting his answer had been totally wrong. He said he firmly believed men and women should get equal pay for equal work (and ask for it).

“I was mad at myself for blundering such an important chance to communicate my own commitment and Microsoft’s to increasing the number of women we hire at every level of our industry,” Nadella writes.

“I was frustrated, but I also was determined to use the incident to demonstrate what a growth mindset looks like under pressure … [after emailing staff] in my regular all-employee Q&A, I apologised … Leaders need to act and shape the culture to root out biases and create an environment where everyone can effectively advocate for themselves.”

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Another of Nadella’s female direct reports, executive vice-president of human resources Kathleen Hogan, says Microsoft’s grandiose mission statement of “empowering every person and every organisation on the planet to achieve more” is reflected in a hiring policy that aims to have staff who represent everyone on the planet.

She says the company has programs in place to encourage diverse talent to go into STEM education and has changed its recruiting methods, which previously filtered out talented people who didn’t fit with traditional definitions of successful candidates.

Hogan says that, unlike rival firms such as Yahoo and IBM, Microsoft increasingly supports staff working remotely, and those who are far from head office in Redmond, Seattle. “If you look 10 years ago we were a lot more Redmond-centric, with a notion that everyone had to be together to code, but as you grow and acquire you realise that there is key talent elsewhere that you need to attract and retain,” Hogan says.

Room for risk-taking

She says Nadella’s public persona of humility and approachability, is a genuine reflection of the experience of working with him day to day.

She relates a story of an experience with a candidate for an executive role who Nadella invited, with her family, to his house for dinner.

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There was a kids’ table and an adults’ table but a mix-up on the numbers meant the adults’ table ran out of chairs.

“Satya just goes and sits with the high school kids of the person that we were trying to recruit and has an amazing conversation with them; it just seemed so thoughtful,” Hogan says.

“Then on another occasion my parents were in town at the same time as Satya’s in-laws and he suggested we all have dinner together.

“I was a little worried as my dad is pretty set in his ways, but it was great. Satya listened to my dad talk about muskie fishing, and my dad even learnt a bit about cricket.”

Rather than just being a nice anecdote, she says the events display the attitude within Microsoft that has helped engender the so-called growth mindset.

Nadella has helped ensure that people within the company feel comfortable to be themselves, without feeling that they have to pretend to be superhuman.

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Hogan says the company has been able to make progress in new areas of technology, because staff are confident that they can take risks, without fearing for their reputations if things don’t work out.

“I’ve had my failures, and instead of feeling that he’s going to come down on me like a ton of bricks, or that there’s going to be that shame factor, there’s always that attitude of ‘learn, grow, use this to be stronger’. And that just makes it easy and inspiring,” she says.

Taking responsibility

One such experience of an apparent failure that became a lesson learnt befell Lili Cheng, the highly regarded corporate vice-president of Microsoft’s AI and research division.

She is responsible for working with the company’s developers to create bots that can carry out seemingly human conversations with people. These can then be used by customers for various purposes, such as virtual customer service agents.

An early public experiment with a conversational Twitter bot called Tay went badly awry when its algorithms began to learn from the general internet population it was talking to, and developed some seriously anti-social habits. It had to be pulled down after it began making aggressive and racist remarks.

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“We were surprised by how dark the internet could be; language is personal and different cultures have different ways of speaking,” Cheng says. “But we learnt from our first experience.”

In some organisations, such a public embarrassment would have seen heads rolling, but Nadella’s Microsoft rolled with the punches and viewed the incident as an unfortunate growing pain in the journey towards leading in a rapidly growing and important new area.

Cheng and her team have since continued to thrive and grow in stature within Microsoft.

“The experience around Tay taught us you can’t abdicate [responsibility for the algorithms we create], we need to take more accountability,” Nadella told Microsoft’s Ignite and Envision conference in October.

“We should have designed Tay to be resilient to even human infallibility, so to speak.”

Three-pronged challenge

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Having worked at Microsoft for three years, Microsoft’s vice-president of worldwide public sector and industry, Toni Townes-Whitley, says there is an important distinction to be drawn between diversity and inclusiveness.

She says diversity is adding a huge amount to Microsoft because a genuine culture of inclusivity has grown alongside it. She applies that thinking to her own career and to how she deals with the more than 2000 people who work for her, and then to the broader industry.

Townes-Whitley says big companies face a three-pronged diversity challenge in first recruiting from a diverse background, then retaining those workers and then seeing them progress to the very highest levels of industry.

“I think it is fair to say we still aren’t where we want to be in terms of female diversity. And then, [when it comes to] African-American women the numbers really drop off the cliff,” she says. “At Microsoft, I’ve enjoyed the inclusivity that has been part of the culture since I joined. While the company mission statement can sound corny it is part of why people – myself included – join in the first place.

“Empowering every person means everybody. I lead the blacks and Africans at Microsoft as one of the executive sponsors, and I have been very pleased with the kind of rejuvenation of that group in feeling the inclusiveness of who we are and how respected our opinions are, and the role that we play at Microsoft.”

Addressing the talent waste

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As debate has raged about AI and robotics replacing jobs, she says research shows women are more at risk than men in the new era. UN research in 2015 and 2016 showed organisations’ digital transformations disproportionately removed the kinds of jobs done by women.

“It said by 2020, for every digital job that was created, four traditional jobs would be displaced for a man and yet 20 would be displaced for a woman,” Townes-Whitley says. “With that knowledge, we can design programs and go out into the wider world and show girls that there is a path into the computer science space in a way that they will encourage women globally.”

While Townes-Whitley is as proud as the next Microsoft executive about the ongoing growth in the company’s economic fortunes, she says it is the investment in digital literacy programs in refugee camps and developing growth in countries including Kenya and India that gives her real satisfaction.

Like her executive peer group, she says she has found working with Nadella to be easy on a personal level, and a workout intellectually.

“You definitely want to take some caffeine or something to get yourself intellectually stimulated and ready because he’ll go,” she says. “If you’re uncomfortable getting asked questions, you’re going to be uncomfortable because that’s how he engages, but he is also quite inspiring.

“I’m going to say, as an African-American, to have a brown CEO is interesting.

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“It’s interesting to have the perspective of where he grew up and how much that influenced him, and what it feels like to not be an American-born CEO.”

The push within Microsoft to make the best use of talent within all groups extends to those with disabilities. English expat Jenny Lay-Flurrie is the company’s chief accessibility officer, charged with ensuring that its products work properly for those with disabilities.

However, Lay-Flurrie, who is deaf, is also responsible for a team focused on hiring people with disabilities.

She says the US unemployment rate for people with disabilities is 60 per cent. This represents both a terrible problem for the unemployed but also an unpalatable waste of talent in a skills-hungry industry.

She says her program is nothing to do with affirmative action or giving preferential treatment to hit quotas of disabled employees, rather it is aimed at giving disabled candidates an even playing field to display their attributes.

“Right now we are looking at how we can hire people with autism,” Lay-Flurrie says.

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“With autism there is social awkwardness that makes a classic interview very short and blunt. Previously they weren’t getting through our screening, which was our bad, not theirs.”

She says Microsoft recently hired an autistic candidate with two master’s and a computer science degree. He had been working for three hours a week stocking shelves, because he couldn’t get a foot in the door anywhere.

“We don’t interview that pool any more, we do an academy where we set projects and assess in a different way, because they have to meet the calibre of talent to succeed at Microsoft,” Lay-Flurrie says.

“It’s not bringing people in below a bar, it is actually finding talent that we’ve missed before. We missed them because we didn’t set it up right to identify them, we just weren’t recognising the true nature of who they are.”

The writer travelled to the Ignite conference in Orlando, Florida, as a guest of Microsoft.

Paul Smith edits the technology coverage and has been a leading writer on the sector for 20 years. He covers big tech, business use of tech, the fast-growing Australian tech industry and start-ups, telecommunications and national innovation policy. Connect with Paul on Twitter. Email Paul at psmith@afr.com

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