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AI momentum in Europe: How organizations are creating value with AI transformation

With 67% of businesses in Europe using AI today according to the IDC, there is real momentum in investing in this technology. The infusion of data in all business operations, the availability of pretrained models, investments in AI infrastructure and new expertise on AI implementation are fuelling this growth and creating an abundance of AI […]

Joacim Damgard

President, Microsoft Western Europe

The Leader’s Guide to Creating Business Impact with AI

One year ago, ChatGPT launched and became the fastest growing consumer app in history, with 100 million monthly active users exploring the power of artificial intelligence (AI). This enthusiasm pushed AI into the mainstream of conversation in Europe, and also generated optimism in how we can apply AI to help us solve some of our […]

From data to value: creating meaningful customer engagements

It is hard to predict future trends, opportunities, or challenges. Keeping up with the increasing pace of change is both difficult and crucial for sustainable business. Whatever happens in the future, technology will be a key enabler of resilience and successful transformation.  This is particularly true in the retail sector, where being one step ahead […]

Martina Klenkhart

Go-to-Market Lead for Retail and Consumer Goods Industries, Microsoft Western Europe

Blending the physical and digital retail experience? Add a splash of data!

There is a simple truth at the heart of the retail sector – if you don’t look after your customers, someone else will. The fight for customers has intensified in recent years and shows no sign of cooling down. The retail success stories of the future are expected to be a smart and seamless blend […]

Microsoft Cloud for Retail: Connect your customers, people, and data

Retailers have experienced times of tremendous uncertainty. It’s time to lean into change and thrive by becoming a resilient retailer that drives sustainable profitability and growth. We work closely with our partner ecosystem to offer proven solutions that help retailers in 4 key areas to become resilient and experience sustainable success:  Maximize the value of […]

Creating great experiences for employees and the customers they serve

Retail is experiencing ongoing labor shortages in the aftermath of the pandemic. Many people have retired early, found new jobs, or have simply decided to leave the labor market. As competition for skilled and experienced staff has become fiercer, attracting talent and retaining staff is crucial for survival and success.  While increasing wages and benefits […]

Create flexible retail supply chains that are built to last

In a powerful storm, a tree that does not bend is likely to break. In 2020, the pandemic put storm-like forces on global supply chains – and many of them simply broke. There were shortages of many household items and commercial supplies, with many retailers forced to ration sales of some products.  This showed how […]

The road to business resilience: What it is and why it matters to retailers

I think most of us are familiar with the saying of “fall seven times – rise up eight”. Not only is it applicable to life itself but also to the perseverance and resilience that the last couple of years has brought to all types businesses around the world. Let’s recap some of the challenges the […]

ClimateCamp: decarbonizing supply chains to create a more sustainable future

Meet ClimateCamp: The Belgian start-up helping businesses decarbonize their supply chains to create a better, more sustainable future. Supply chains account for 80% of global greenhouse gas emissions. Businesses will play a major role in reducing these emissions in order to meet global climate goals and will need to set precise goals to make their […]

Kathrine Norrelund

Microsoft, Sustainable Transformation

How to transform banking with Personetics’ revolutionary app

A new generation of customers now expects much more from banking. The customer journey, not the product, needs to be the focus for financial services. And the key to enhancing it is data.   Personetics is responding to this demand with its white label solution that allows any bank to start to maximize the benefits of […]

Leentje Chavatte

Microsoft, Data & AI and Digital Transformation

Sustainability ambitions need diverse talent

As sustainable transformation continues to shape the manufacturing world, more organizations than ever are acknowledging the need to attract diverse talent.      One organization leading the sustainable change is steel manufacturer, Tata Steel. Steel plays a vital role in supporting our society to continue to grow and flourish. In fact, so much of it is […]

Laurence Janssens

Microsoft Manufacturing Lead for Western Europe

How Microsoft is helping to grow a startup planting forests

The idea took root in Spain, in the dusty foothills of the Cantabrian Mountains. Where once there had been just fields and scrub, foresters were now hard at work planting thousands of seedlings, among them oak, walnut, cherry and birch. They named the forest Génesis.   It had all been paid for by startup Reforestum […]

Semina Vagiakou

Integrated Marketing Manager | Microsoft Western Europe

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With Azure, Legal Interact democratizes access to legal services

Trust comes with time.

"My AI Lawyer represents a significant step towards a future where legal aid is a right, not a privilege."

Working toward legal empowerment.

"[Microsoft South Africa's] technical and personal support has provided us with 'light bulb moments' as we work towards democratizing access to justice."

Bridging the gap to justice for all.

• Expand content and resources, including legal collateral and standard letters in multiple languages for a diverse user base.
• Localize for varied African markets, tailoring to different legal systems and languages for global accessibility.
• Improve the accuracy of the AI for handling complex legal scenarios.
• Enhance accessibility features for users with visual or hearing impairments.
• Integrate into telecommunication and employee health platforms.

Meet Legal Interact

Explore more partner success stories.

Case Studies in Cloud Modernization: How five businesses used the cloud to adapt and innovate

See real-world scenarios and hear the successful outcomes of companies that became AI-ready by migrating their data and infrastructure to the cloud. Learn how businesses became more secure and resilient with hybrid and multicloud capabilities from Azure that scale to support all their evolving IT, cybersecurity, and customer needs.

Read Case Studies in Cloud Modernization to learn how five companies:

• Got ready to take advantage of AI by migrating their data and infrastructure to the cloud.
• Enhanced their IT security and compliance across workloads and data with built-in security that enabled them to better adapt to the changing cybersecurity landscape.
• Optimized migration costs and gained competitive advantage with cloud-ready technologies from Azure that provided the ability to scale and grow.

Gayla Sheppard

Corporate Vice President at Microsoft Azure Data

John Macintyre

Director of Product for Microsoft Azure Analytics

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Home / Case Studies / Avanade

Microsoft Viva Topics simplifies knowledge sharing at Avanade

Published on November 3, 2021

Avanade is a leading provider of innovative digital and cloud-enabled services, business solutions, and design-led experiences, and it relies heavily on the power of people. Avanade believes in taking advantage of the knowledge and experiences held by each individual to build and provide the best offerings and services for its customers. Because of this, sharing expertise, project or deliverable examples, templates, and other knowledge among one another is key to the company’s success and the success of the businesses it serves. Looking for a solution that would enable Avanade employees to quickly find the exact expert, example or template required to provide businesses with the right digital offerings, Avanade deployed Microsoft Viva Topics.

As an organization whose services are built on and around Microsoft technologies, Avanade’s workforce of 50,000 professionals are experienced, heavy users of collaboration solutions like Yammer and Microsoft Teams. But even with top-notch approaches to collaboration, finding the right people, the best examples of deliverables, or the best templates often required some digging and building what some employees refer to as a “chain of experts.” Many knowledge experts are familiar with this concept, in which an employee starts a conversation with one expert and is then handed off down a chain of people until the correct team member is identified.

As requests for innovative digital workplace solutions surged, Avanade employees wanted a solution that eliminated the need for extensive email threads or cumbersome searches and aligned with their “Teams as the experience platform” approach. They wanted a solution to quickly provide businesses with the right digital offerings and remove the need to sift through emails, Yammer communities, or Teams sites and chats to find the exact expert, example, or template they required.

Microsoft launched a preview program in January 2020, which was limited to approximately 60 customers around the globe, to test out and provide feedback on powerful new AI-driven knowledge solutions prior to their release. As program participants, Avanade team members were able to attend product demonstrations, get exclusive updates to the roadmap, test products as they were developed and provide feedback, and give key insights on how they felt the solutions would be best utilized.

In testing the capabilities of Microsoft Viva Topics, which uses AI to automatically reason over an organization’s data and then identify, process, and organize it to make knowledge easier to discover and use, Avanade found the tool it needed to help reduce its discovery challenges. “The value of Viva Topics is really about placing information that people need in the places they’re hanging out,” says Marci Jenkins, Workplace IT Executive at Avanade.

Unlike most organizations where new technologies are gradually rolled out from one department to another, Avanade chose to offer Viva Topics to the entire company, enabling all employees to contribute to the curation around topics. “The power of Viva Topics is in bringing together AI and the smartness and experience of our people,” says Jenkins. Crawling the documents in SharePoint, Viva Topics has begun identifying thousands of topics across the company’s Microsoft tenant, including Avanade offerings, Microsoft solutions, industries, customers, and even strategic initiatives.

The value of Viva Topics is really about placing information that people need in the places they’re hanging out…. It’s a way for the user to learn and start to explore in the moment—the moment that matters.

Rather than broadcasting pleas for help on a Yammer site or initiating a chain of experts through Outlook, employees can search in SharePoint or see topics they’re interested in highlighted on the SharePoint page they’re already viewing. And they can quickly find experts or assets for their projects or subject areas without being bombarded with pages of search results.

“I’ve started going to SharePoint and searching on some of the questions that I have or the type of asset that I’m looking for across the organization, and it’s really cool to see what pops up in my search results,” says Hannemann. “Not only is the topic page suggested to me if there’s a match, but it will also present different documents and highlight the presence of the keyword that I’m searching for.”

Over the next few years, Avanade looks forward to the generation of topics for the more than 600 customers it’s worked with. Each will highlight the key account team members as experts and document successful proofs of concept as tagged content, which will further help the company provide the best offerings and services to its customers.

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Microsoft SaaS stories video interviews

• 3 contributors

Microsoft SaaS stories is a collection of insightful interviews featuring Microsoft partners who have embarked on their unique software as a service (SaaS) journey. These interviews delve into the experiences of these partners as they develop and publish their SaaS solutions on the Microsoft commercial marketplace, while also highlighting their growth strategies and successes. By showcasing a diverse range of case studies, this series aims to inspire and inform businesses looking to build and scale their own SaaS offerings within the Azure ecosystem.

Episode 1: Basis Theory

In our first episode, we talk with Basis Theory features CTO Brandon Weber. Basis Theory shares how they built confidence with their customers by creating an easy-to-use SaaS platform that scales while remaining reliable and secure. Learn the challenges they encountered running a 24/7 service while evolving the service and handling customer growth.

Episode 2: Zammo.ai

In our second episode with Zammo’s Stacey Kyler and Nicholas Spagnola, we learn about their significant growth in business and faster time to close based on having their products in the marketplace. They share their experience building for Azure and running a No-Code Conversational AI Software SaaS platform.

Episode 3: Wolfpack

In the third episode with Wolfpack's Koen den Hollander, we learn how they built their SaaS application for retail customers, and how connecting engineers directly to customers enables them to deliver value at scale.

Episode 4: Vocean

In this episode, we're exploring how Vocean built their SaaS application that changes the way organizations make decisions. They share the importance of taking time to plan, learn, and listen to experts around you before rushing to build features.

Episode 5: Access Infinity

In this episode, we talk to Access Infinity's Managing Director, Keshav Nagaraja. We explore how Access Infinity saw an opportunity in their consulting business to create platforms that help their customers at scale, and how they came up with a pricing model that drives positive user behaviors.

Episode 6: Sage

In this episode, we learn how Sage embraced the opportunities to shift their application to SaaS, how they used SaaS as an opportunity to simplify their pricing model, and how they use a simple set of principles to guide complex changes.

Episode 7: CallCabinet

In this episode, we learn how CallCabinet moved from tapes to servers to the cloud, dramatically reducing user costs while focusing on innovative features. We discuss why they adopted a SaaS model and their biggest challenges in doing so, how they built for scale, how they are using artificial intelligence (AI), and more.

Episode 8: Octopai

In this episode, we explore how Octopai embraced a global SaaS model and are providing innovative value to their customers through new AI technologies. We speak with Zinette Ezra, VP of Product at Octopai to learn more about their pricing model, challenges they have overcome, and how they built for scale and security.

• Plan your own journey to SaaS
• Learn about multitenant architectural approaches

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CASE STUDY: How Satya Nadella overhauled Microsoft's cutthroat culture and turned it into a trillion-dollar 'growth mindset' company

Ashley stewart,shana lebowitz   .

Lehtikuva, Markku Ulander/AP Photo; Yuri Gripas/Reuters; Fabrizio Bensch/Reuters; Ruobing Su/Business Insider

Satya Nadella is the CEO of Microsoft. Steve Ballmer and Bill Gates are the former CEOs.

• Microsoft is a trillion-dollar company thanks largely to a culture shift led by Satya Nadella.
• Since Nadella became CEO in 2014, he's encouraged the entire company to adopt a growth mindset, or the belief that skills are developed through hard work and challenges are opportunities to learn.
• Before Nadella took over, Microsoft was characterized by competition between teams and between individual employees.
• Now, in keeping with a growth mindset, Microsoft evaluates employees' performance based partly on how much they helped their colleagues succeed. The company also looks to learn from its former rivals in the tech industry.
• Business Insider spoke with a range of company insiders and organizational researchers to get the inside story on how to change the culture of a 150,000+ employee software giant.
• Microsoft is a case study in how a growth-mindset culture can help companies succeed in the future economy.
• Click here for more BI Prime content.

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A cartoonist once drew an illustration depicting Microsoft's organizational chart as warring factions.

Take a look and you'll see three separate gangs: one blue, one green, one yellow. The gangs are assembled in pyramid-shaped hierarchies, with one leader at the top, two or three deputies at the next level, and so on.

A hand sticks out from each pyramid, pointing a gun directly at one of the others. It's clear. This is war.

And then Satya Nadella became CEO.

Nadella described the era of warring gangs in his 2017 memoir-manifesto, " Hit Refresh :" "Innovation was being replaced by bureaucracy. Teamwork was being replaced by internal politics. We were falling behind."

That particular cartoon - drawn in 2011 by a Google employee named Manu Cornet , no less - made changing Microsoft's culture Nadella's No. 1 goal as CEO.

"As a 24-year veteran of Microsoft, a consummate insider, the caricature really bothered me. But what upset me more was that our own people just accepted it," Nadella wrote. "When I was named Microsoft's third CEO in February 2014, I told employees that renewing our company's culture would be my highest priority."

Since becoming CEO, Nadella has been credited with a grand reinvention of Microsoft, exemplified by its market value exceeding $1 trillion, one of just a handful in history to hit that mark. When Nadella first took over, its market value was around $300 billion. The company has shifted from a has-been to a cloud powerhouse.

One of the keys to this transformation is a psychological concept that's become a mantra at Nadella's Microsoft: growth mindset .

Microsoft has traded a fixed mindset for a growth mindset

Growth mindset describes the belief that skills are developed through hard work and that challenges are opportunities to learn. Fixed mindset, on the other hand, refers to the belief that talent is innate and that struggling is a sign of failure. Research on the difference between growth and fixed mindset - and how they predict success - was pioneered by Stanford's Carol Dweck.

Early on in her career as a developmental psychologist, Dweck visited children at school and presented them with a series of increasingly difficult puzzles. Her goal was to better understand how people cope with failure. Some students, she found, weren't fazed by it.

In her 2006 book, " Mindset ," she recalls one 10-year-old boy who "pulled up his chair, rubbed his hands together, smacked his lips, and cried out, 'I love a challenge!'"

Dweck would spend the next five decades trying to figure out the difference between people who relish a good challenge and those who fear failure. Scores of studies published under her name suggest that people who see intelligence and abilities as learnable are more successful, personally and professionally, than people who think they're static.

Recently, Dweck coauthored a study that drew a link between growth mindset and organizational success . Employees who think their companies have a fixed mindset, the study found, interpret the company's culture as less collaborative, less ethical, and less willing to take risks than employees who think their companies have a growth mindset.

Given the rapid pace of technological change , these research findings are hyper-relevant. Across industries, adopting a growth mindset may be the only way to survive, and certainly the only way to thrive. When neither executives nor rank-and-file employees can predict what their jobs will look like next week, they need to embrace the resulting vulnerability, and get excited about learning.

Plenty of companies, in industries from telecommunications to early education, talk about cultivating a growth mindset , and about looking for job candidates who have it . But Microsoft is perhaps the most powerful example of an organization that has used growth mindset, and the psychology behind it, to rebuild its culture.

In many ways, fixed mindset and growth mindset can describe Microsoft before and after Nadella.

Nadella has encouraged Microsoft employees to be 'learn-it-alls' instead of 'know-it-alls'

Bill Gates is the founder and former CEO of Microsoft. He was famous for his meltdowns.

Gates was famous for meltdowns and browbeating - so much so that Microsoft cofounder Paul Allen once described working with Gates as "being in hell." Gates would only back down if you could convince him you knew what you were talking about, Allen said.

Gates' successor, Steve Ballmer, also known for an explosive temper, later presided over the atmosphere depicted in that cartoon Nadella was determined to address. Ballmer was known for cultivating a culture in which Microsoft teams warred with each other, as previously reported by Business Insider .

Nadella, who joined Microsoft as an engineer in 1992, came up in this culture, before becoming CEO in early 2014.

By that point, the company's bid to compete in the smartphone market through the purchase of Nokia was proving to be a burden and would lead it to write off nearly the entire $7.6 billion acquisition price. The personal computer market was shrinking, leading to declines in Microsoft's flagship Windows operating system business, and the Xbox One console's poorly received launch made it a punchline.

Microsoft's history as a tech-industry pioneer wouldn't help the company compete, Nadella wrote in an email to employees on his first day as CEO. The company needed a change in mindset.

"Our industry does not respect tradition - it only respects innovation," Nadella wrote on Feb. 4, 2014, in a memo to employees days after taking on the CEO role. "Every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this."

Nadella's leadership philosophy evolved into the adoption of a growth mindset. He asked employees to be "learn-it-alls," not "know-it-alls," and promoted collaboration inside and outside the organization. Employees are now evaluated partly on how much they've helped others on their team.

Microsoft introduced a new performance-management framework based on growth mindset

With any company culture shift, executives run the risk of promoting jargon more than action, and of HR representatives being the only ones who know there's a culture change underway.

Microsoft has tried to avoid that fate, not only by training its employees on the psychology of growth mindset, but also by embedding the concept into its daily work flow.

Prompts to adopt a growth mindset appear on posters throughout Microsoft's campuses ( something at which employees sometimes poke fun ). At the start of a meeting, a manager might remind colleagues to approach an issue with a growth mindset.

And in one of the most significant manifestations of growth mindset, Microsoft has eliminated stack ranking .

Stack ranking was famously used by Jack Welch when he was CEO of General Electric. Ballmer used the system at Microsoft to evaluate employees, although he did start phasing it out prior to his departure. Microsoft managers had to rank their employees from one to five in equal measure. Which meant that, no matter how good the employees were, some of them had to get the lowest ranking of a five.

Performance was defined in stack ranking as the quality of individual work, and that emphasis on individual performance was linked to fierce competition among Microsoft employees. It was also a barrier to Microsoft's innovation, since it facilitated a culture that rewarded a few standout team members and even gave employees incentive to hope their colleagues failed.

As Microsoft's chief human resources officer, Kathleen Hogan has overseen the adoption of a growth mindset.

Dweck's research helps explain this trend, too. Her studies suggest that stack ranking's emphasis on "star" employees can leave everyone else afraid to try anything new, for fear of failing. In turn, that means companies are less innovative.

Microsoft leadership says its new system for evaluating employees instead rewards collaboration. Managers and employees meet often to discuss performance , in keeping with the general trend of companies nixing annual reviews and having managers regularly speak with employees about their work.

"What we really value is three dimensions," said Hogan , Microsoft's chief people officer. "One is your own individual impact, the second is how you contributed to others and others' success, and the third is how you leveraged the work of others."

To use Hogan's examples, maybe a more seasoned employee helped someone new to the team, or a software engineer built on another engineer's work instead of reinventing it.

Microsoft recently applied growth mindset to a new framework for managers : model, coach, care. That's a combination of setting a positive example for employees, helping the team adapt and learn, and investing in people's professional growth.

To measure the impact of these initiatives in real time, Microsoft emails employees with a different question every day asking how they're feeling about the company and its culture.

The shift from competition to collaboration might seem like it would be a breath of fresh air. And on the whole, it has been. But employees say it's presented its own challenges, too.

Nadella pushes Microsoft executives to take on stretch assignments

Peter Lee said becoming corporate vice president of Microsoft healthcare was a huge challenge.

It was 2017 and Lee - now corporate vice president of Microsoft healthcare - had long worked on broader technology problems as a key leader in Microsoft Research, the company's research division.

Nadella wanted him to take on a new challenge and lead the company's emerging health care business, using his background in artificial intelligence and cloud computing to find new ways to tune the products to the needs of healthcare companies.

"Taking on healthcare was something that really perplexed me at first," he said. "I joked Satya sent me out into the Pacific Ocean and said, 'Go find land.'"

Adopting a growth mindset can be uncomfortable, he said.

"Growth mindset is a euphemism because it can feel pretty painful, like a jump into the abyss," he said. "You need to be able and willing to confront your own fixed mindset - the things that make you believe something can't work. It's painful to go through personally, but when you get past it, it's tremendously rewarding."

The transition has been edifying, both in terms of his personal growth - Lee was recently named to the National Academy of Medicine - and Microsoft's growth in the industry, as it establishes itself as a meaningful player in healthcare tech.

Microsoft now sees the business case for letting go of its rivalries with other tech giants

Under Ballmer, Microsoft was notorious for prioritizing its Windows operating system and Office productivity applications businesses over the rest of the company - at one point, it even canceled the Courier tablet, which would have been an early, future-looking competitor to Apple's iPad, because it may have undermined Windows.

Likewise, Microsoft once shunned Linux, a free open-source operating system once considered the biggest threat to Windows. Ballmer once called it a "cancer." But early on in Nadella's time as CEO, Microsoft changed tack and proclaimed, " Microsoft loves Linux ."

It wasn't just Microsoft being friendly. There was a strong business case for blurring boundaries. At the time, Microsoft said it realized its customers used both Windows and Linux, and saw providing support to both as a business opportunity on-premise and in the cloud. That would have been unthinkable in the Ballmer years, but it's proven to be a savvy business move: Microsoft recently hinted that Linux is more popular on its Azure cloud platform than Windows itself.

Microsoft's relationship with Salesforce has followed a similar trajectory. Whereas Ballmer had frequent and public bouts with Salesforce CEO Marc Benioff , Microsoft under Nadella put aside its rivalry with Salesforce - which competes directly with Microsoft's customer-relationship-management Dynamics 365 product - in order to ink a big cloud deal that was good for the company overall.

Nadella even invites leaders from companies across industries to Microsoft's CEO Summit so the executives can learn from each other. Ballmer, meanwhile, famously snatched an employee's iPhone at a company meeting and pretended to stomp on it.

Which is not to say Microsoft always plays nice in the Nadella era. The company last summer changed licensing agreements to raise prices - often significantly - when customers choose to run certain Microsoft software on rival clouds including Amazon Web Services or Google Cloud. And it's been trading public barbs with AWS over the still contested $10 billion Pentagon cloud contract.

The Trump administration awarded the contract to Microsoft over AWS, but Amazon is challenging the decision in court, alleging political interference. In February, a judge ruled that Microsoft must stop working on the contract.

The culture shift at Microsoft is an ongoing process

The beginning of Microsoft's culture shift was rocky.

In "Hit Refresh," Nadella recalls a Microsoft manager who announced in the early days, "Hey, Satya, I know these five people who don't have a growth mindset." Nadella writes, "The guy was just using growth mindset to find a new way to complain about others. That is not what we had in mind."

Even today, Microsoft leaders acknowledge that the culture change isn't over . Things have improved under Nadella, but the company culture is still far from perfect.

Diversity is an opportunity for improvement at Microsoft. Much like the larger technology industry , Microsoft still employs relatively few women and people of color in leadership and technical roles.

One of Nadella's biggest gaffes as CEO happened early on in his tenure, when he suggested women should not ask for raises, but rely on "faith" and "karma." After these comments, Nadella sent out an internal memo admitting to his mistake, explaining how he planned to learn from it, and stating his belief in "equal pay for equal work."

Nadella writes in "Hit Refresh" that in some ways he's glad to have belly-flopped in public. "It helped me confront an unconscious bias I didn't know I had," Nadella writes, "and it helped me find a new sense of empathy for the great women in my life and at my company."

Kevin Oakes, who runs a human-resources research company that helped Microsoft with its shift toward growth mindset, sees Nadella as an exemplar of a leader during a transition. That's largely because Nadella practices the growth mindset he preaches. In a presentation at Talent Connect, an annual conference organized by LinkedIn (which is owned by Microsoft), Oakes said Nadella has been Microsoft's "culture champion." Nadella understands that organizational culture is critical to the company's performance, Oakes said.

But today's Microsoft is still far from perfect. The positive contributions of growth mindset have not yet matched up with diversity and equity for Microsoft's workforce, according to some employees. Microsoft is the subject of a gender discrimination lawsuit still pending , which was denied class-action status by a federal judge. Employees have also openly alleged sexual harassment and discrimination.

The company released its first diversity and inclusion report in 2019 to track its progress in hiring - and retaining - a more diverse workforce. Results from that report showed that minorities in Microsoft's US offices earned $1.006 for every $1 white employees earned. A closer look reveals that white men still held more high-paying leadership positions than women or underrepresented minorities.

Meanwhile, Microsoft leadership still has some philosophical differences with employees as it relates to employee activism. Employee groups have protested Microsoft and Microsoft-owned GitHub's relationship with Immigration and Customs Enforcement, and more recently, some employees have said Microsoft's relationship with oil and gas companies is at odds with the company's goal to become "carbon negative" by 2030.

The Xbox Adaptive Controller is designed to be used by people with limited mobility. It was advertised during the 2019 Super Bowl.

At that point, Neal recalled, a third meeting participant addressed the male colleague to ask whether perhaps he hadn't understood the female colleague's point. And Neal said it wasn't a passive-aggressive attack. Senior leaders are encouraged to "be curious and ask questions, versus making statements," as a way of modeling growth mindset, he added.

Microsoft has been equally vocal about diversity and inclusion within its customer base, building products that are accessible to as many users as possible. Ben Tamblyn, a 15-year company veteran and Microsoft's director of inclusive design, mentioned Xbox as a prime example. In 2018, Tamblyn helped oversee the release of the Xbox Adaptive Controller , which makes it easier for gamers who have limited mobility or physical impairments to play. (Interviews with Neal and Tamblyn were arranged by Microsoft's public-relations firm.)

Microsoft is a case study in growth mindset

Microsoft's culture shift, and its accompanying business turnaround, is already a case study in business schools and in reports from management consultancies and research centers . That makes sense to Mary Murphy, a professor of psychological and brain sciences at Indiana University and Dweck's co-author on the paper about growth mindsets within organizations.

Growth mindset is essential for innovation in the technology industry, Murphy said, where change rarely happens incrementally. Instead, there are big inflection points from which there's no return. Microsoft, Murphy added, needs to be on the "cutting edge" of growth mindset in order to stay relevant.

Nadella, for his part, has modeled a growth mindset from the top of the organization, not least in his response to his tone-deaf comments about gender and compensation. "I learned, and we will together use this learning to galvanize the company for positive change," Nadella wrote in the memo he sent apologizing for the comments. "We will make Microsoft an even better place to work and do great things."

Got a tip? Contact reporters Shana Lebowitz via email at [email protected] and Ashley Stewart via email at [email protected] , message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242 .

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Satya Nadella employed a 'growth mindset' to overhaul Microsoft's cutthroat culture and turn it into a trillion-dollar company — here's how he did it

• Microsoft is a case study in how a growth-mindset culture can help companies succeed in the future economy.

• Microsoft is a trillion-dollar company thanks largely to a culture shift led by Satya Nadella.
• Since Nadella became CEO in 2014, he's encouraged the entire company to adopt a growth mindset, or the belief that skills are developed through hard work and challenges are opportunities to learn.
• Before Nadella took over, Microsoft was characterized by competition between teams and between individual employees.
• Now, in keeping with a growth mindset, Microsoft evaluates employees' performance based partly on how much they helped their colleagues succeed. The company also looks to learn from its former rivals in the tech industry.
• Business Insider spoke with a range of company insiders and organizational researchers to get the inside story on how to change the culture of a 150,000+ employee software giant.
• Visit Business Insider's homepage for more stories .

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A cartoonist once drew an illustration depicting Microsoft's organizational chart as warring factions. 

Take a look and you'll see three separate gangs: one blue, one green, one yellow. The gangs are assembled in pyramid-shaped hierarchies, with one leader at the top, two or three deputies at the next level, and so on.

A hand sticks out from each pyramid, pointing a gun directly at one of the others. It's clear. This is war.

And then Satya Nadella became CEO.

Nadella described the era of warring gangs in his 2017 memoir-manifesto, " Hit Refresh :" "Innovation was being replaced by bureaucracy. Teamwork was being replaced by internal politics. We were falling behind."

That particular cartoon – drawn in 2011 by a Google employee named Manu Cornet , no less – made changing Microsoft's culture Nadella's No. 1 goal as CEO.

"As a 24-year veteran of Microsoft, a consummate insider, the caricature really bothered me. But what upset me more was that our own people just accepted it," Nadella wrote. "When I was named Microsoft's third CEO in February 2014, I told employees that renewing our company's culture would be my highest priority."

Since becoming CEO, Nadella has been credited with a grand reinvention of Microsoft, exemplified by its market value exceeding $1 trillion, one of just a handful in history to hit that mark. When Nadella first took over, its market value was around $300 billion.

One of the keys to this transformation is a psychological concept that's become a mantra at Nadella's Microsoft: growth mindset . The concept has helped Microsoft made the shift to remote work with aplomb, reaching a market cap of more than $1.6 trillion, showing that Nadella's strategy has survived the pandemic intact.

Microsoft has traded a fixed mindset for a growth mindset

Growth mindset describes the belief that skills are developed through hard work and that challenges are opportunities to learn. Fixed mindset, on the other hand, refers to the belief that talent is innate and that struggling is a sign of failure. Research on the difference between growth and fixed mindset — and how they predict success — was pioneered by Stanford's Carol Dweck.

Early on in her career as a developmental psychologist, Dweck visited children at school and presented them with a series of increasingly difficult puzzles. Her goal was to better understand how people cope with failure. Some students, she found, weren't fazed by it.

In her 2006 book, " Mindset ," she recalls one 10-year-old boy who "pulled up his chair, rubbed his hands together, smacked his lips, and cried out, 'I love a challenge!'"

Dweck would spend the next five decades trying to figure out the difference between people who relish a good challenge and those who fear failure. Scores of studies published under her name suggest that people who see intelligence and abilities as learnable are more successful, personally and professionally, than people who think they're static.

Recently, Dweck coauthored a study that drew a link between growth mindset and organizational success . Employees who think their companies have a fixed mindset, the study found, interpret the company's culture as less collaborative, less ethical, and less willing to take risks than employees who think their companies have a growth mindset.

Given the rapid pace of technological change , these research findings are hyper-relevant. Across industries, adopting a growth mindset may be the only way to survive, and certainly the only way to thrive. When neither executives nor rank-and-file employees can predict what their jobs will look like next week, they need to embrace the resulting vulnerability, and get excited about learning.

Plenty of companies, in industries from telecommunications to early education, talk about cultivating a growth mindset , and about looking for job candidates who have it . But Microsoft is perhaps the most powerful example of an organization that has used growth mindset, and the psychology behind it, to rebuild its culture. 

In many ways, fixed mindset and growth mindset can describe Microsoft before and after Nadella. 

Nadella has encouraged Microsoft employees to be 'learn-it-alls' instead of 'know-it-alls'

Since the era of Bill Gates, Microsoft's founder and first CEO, its leadership had generally rewarded the smartest person in the room. And Microsoft performed well under Gates, but that performance came at a cost.

Gates was famous for meltdowns and browbeating – so much so that Microsoft cofounder Paul Allen once described working with Gates as "being in hell." Gates would only back down if you could convince him you knew what you were talking about, Allen said.

Gates' successor, Steve Ballmer, also known for an explosive temper, later presided over the atmosphere depicted in that cartoon Nadella was determined to address. Ballmer was known for cultivating a culture in which Microsoft teams warred with each other, as previously reported by Business Insider .

Nadella, who joined Microsoft as an engineer in 1992, came up in this culture, before becoming CEO in early 2014. 

By that point, the company's bid to compete in the smartphone market through the purchase of Nokia was proving to be a burden and would lead it to write off nearly the entire $7.6 billion acquisition price. The personal computer market was shrinking, leading to declines in Microsoft's flagship Windows operating system business, and the Xbox One console's poorly received launch made it a punchline.

Microsoft's history as a tech-industry pioneer wouldn't help the company compete, Nadella wrote in an email to employees on his first day as CEO. The company needed a change in mindset.

"Our industry does not respect tradition — it only respects innovation," Nadella wrote on Feb. 4, 2014,  in a memo to employees days after taking on the CEO role. "Every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this."

Nadella's leadership philosophy evolved into the adoption of a growth mindset. He asked employees to be "learn-it-alls," not "know-it-alls," and promoted collaboration inside and outside the organization. Employees are now evaluated partly on how much they've helped others on their team.

Microsoft introduced a new performance-management framework based on growth mindset

With any company culture shift, executives run the risk of promoting jargon more than action, and of HR representatives being the only ones who know there's a culture change underway.

Microsoft has tried to avoid that fate, not only by training its employees on the psychology of growth mindset, but also by embedding the concept into its daily work flow. 

Prompts to adopt a growth mindset appear on posters throughout Microsoft's campuses ( something at which employees sometimes poke fun ). At the start of a meeting, a manager might remind colleagues to approach an issue with a growth mindset.

And in one of the most significant manifestations of growth mindset, Microsoft has eliminated stack ranking .

Stack ranking was famously used by Jack Welch when he was CEO of General Electric. Ballmer used the system at Microsoft to evaluate employees, although he did start phasing it out prior to his departure. Microsoft managers had to rank their employees from one to five in equal measure. Which meant that, no matter how good the employees were, some of them had to get the lowest ranking of a five.

Performance was defined in stack ranking as the quality of individual work, and that emphasis on individual performance was linked to fierce competition among Microsoft employees. It was also a barrier to Microsoft's innovation, since it facilitated a culture that rewarded a few standout team members and even gave employees incentive to hope their colleagues failed. 

"We had a little bit of a 'not-invented-here' syndrome," Microsoft Chief People Officer Kathleen Hogan previously told Business Insider , referring to the tendency for developers and even organizations to reject acceptable solutions to problems if they hadn't developed those solutions themselves.

Dweck's research helps explain this trend, too. Her studies suggest that stack ranking's emphasis on "star" employees can leave everyone else afraid to try anything new, for fear of failing. In turn, that means companies are less innovative.

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Microsoft leadership says its new system for evaluating employees instead rewards collaboration. Managers and employees meet often to discuss performance , in keeping with the general trend of companies nixing annual reviews and having managers regularly speak with employees about their work.

"What we really value is three dimensions," said Hogan , Microsoft's chief people officer. "One is your own individual impact, the second is how you contributed to others and others' success, and the third is how you leveraged the work of others." 

To use Hogan's examples, maybe a more seasoned employee helped someone new to the team, or a software engineer built on another engineer's work instead of reinventing it. 

Microsoft recently applied growth mindset to a new framework for managers : model, coach, care. That's a combination of setting a positive example for employees, helping the team adapt and learn, and investing in people's professional growth.

To measure the impact of these initiatives in real time, Microsoft emails employees with a different question every day asking how they're feeling about the company and its culture.

The shift from competition to collaboration might seem like it would be a breath of fresh air. And on the whole, it has been. But employees say it's presented its own challenges, too.

Nadella pushes Microsoft executives to take on stretch assignments

Nadella asked Peter Lee , one of the company's top researchers, to make a big change.

It was 2017 and Lee – now corporate vice president of Microsoft healthcare – had long worked on broader technology problems as a key leader in Microsoft Research, the company's research division. 

Nadella wanted him to take on a new challenge and lead the company's emerging health care business, using his background in artificial intelligence and cloud computing to find new ways to tune the products to the needs of healthcare companies.

"Taking on healthcare was something that really perplexed me at first," he said. "I joked Satya sent me out into the Pacific Ocean and said, 'Go find land.'"

Adopting a growth mindset can be uncomfortable, he said. 

"Growth mindset is a euphemism because it can feel pretty painful, like a jump into the abyss," he said. "You need to be able and willing to confront your own fixed mindset – the things that make you believe something can't work. It's painful to go through personally, but when you get past it, it's tremendously rewarding."

The transition has been edifying, both in terms of his personal growth – Lee was recently named to the National Academy of Medicine – and Microsoft's growth in the industry, as it establishes itself as a meaningful player in healthcare tech. 

Microsoft now sees the business case for letting go of its rivalries with other tech giants

Under Ballmer, Microsoft was notorious for prioritizing its Windows operating system and Office productivity applications businesses over the rest of the company – at one point, it even canceled the Courier tablet, which would have been an early, future-looking competitor to Apple's iPad, because it may have undermined Windows.

Likewise, Microsoft once shunned Linux, a free open-source operating system once considered the biggest threat to Windows. Ballmer once called it a "cancer." But early on in Nadella's time as CEO, Microsoft changed tack and proclaimed, " Microsoft loves Linux ."

It wasn't just Microsoft being friendly. There was a strong business case for blurring boundaries. At the time, Microsoft said it realized its customers used both Windows and Linux, and saw providing support to both as a business opportunity on-premise and in the cloud. That would have been unthinkable in the Ballmer years, but it's proven to be a savvy business move: Microsoft recently hinted that Linux is more popular on its Azure cloud platform than Windows itself.

Microsoft's relationship with Salesforce has followed a similar trajectory. Whereas Ballmer had frequent and public bouts with Salesforce CEO Marc Benioff , Microsoft under Nadella put aside its rivalry with Salesforce – which competes directly with Microsoft's customer-relationship-management Dynamics 365 product – in order to ink a big cloud deal that was good for the company overall. 

Nadella even invites leaders from companies across industries to Microsoft's CEO Summit so the executives can learn from each other. Ballmer, meanwhile, famously snatched an employee's iPhone at a company meeting and pretended to stomp on it.

Which is not to say Microsoft always plays nice in the Nadella era. The company last summer changed licensing agreements to raise prices — often significantly — when customers choose to run certain Microsoft software on rival clouds including Amazon Web Services or Google Cloud. And it's been trading public barbs with AWS over the still contested $10 billion Pentagon cloud contract.

The Trump administration awarded the contract to Microsoft over AWS, but Amazon is challenging the decision in court, alleging political interference. The Pentagon in September upheld its decision to award the contract to Microsoft but AWS is expected to file a new complaint as part of the lawsuit next week.

The culture shift at Microsoft is an ongoing process

The beginning of Microsoft's culture shift was rocky.

In "Hit Refresh," Nadella recalls a Microsoft manager who announced in the early days, "Hey, Satya, I know these five people who don't have a growth mindset." Nadella writes, "The guy was just using growth mindset to find a new way to complain about others. That is not what we had in mind."

Even today, Microsoft leaders acknowledge that the culture change isn't over . Things have improved under Nadella, but the company culture is still far from perfect.

Diversity is an opportunity for improvement at Microsoft. Much like the larger technology industry , Microsoft still employs relatively few women and people of color in leadership and technical roles.

One of Nadella's biggest gaffes as CEO happened early on in his tenure, when he suggested women should not ask for raises, but rely on "faith" and "karma." After these comments, Nadella sent out an internal memo admitting to his mistake, explaining how he planned to learn from it, and stating his belief in "equal pay for equal work." 

Nadella writes in "Hit Refresh" that in some ways he's glad to have belly-flopped in public. "It helped me confront an unconscious bias I didn't know I had," Nadella writes, "and it helped me find a new sense of empathy for the great women in my life and at my company." 

Kevin Oakes, who runs a human-resources research company that helped Microsoft with its shift toward growth mindset, sees Nadella as an exemplar of a leader during a transition. That's largely because Nadella practices the growth mindset he preaches. In a presentation at Talent Connect, an annual conference organized by LinkedIn (which is owned by Microsoft), Oakes said Nadella has been Microsoft's "culture champion." Nadella understands that organizational culture is critical to the company's performance, Oakes said.

But today's Microsoft is still far from perfect. The positive contributions of growth mindset have not yet matched up with diversity and equity for Microsoft's workforce, according to some employees. Microsoft is the subject of a gender discrimination lawsuit still pending , which was denied class-action status by a federal judge. Employees have also openly alleged sexual harassment and discrimination.

The company released its first diversity and inclusion report in 2019 to track its progress in hiring — and retaining — a more diverse workforce. Results from that report showed that minorities in Microsoft's US offices earned $1.006 for every $1 white employees earned. A closer look reveals that white men still held more high-paying leadership positions than women or underrepresented minorities.

Microsoft has since announced plans to double the number of Black leaders and employees within the company, and the number of Black suppliers with which it works.

Meanwhile, Microsoft leadership still has some philosophical differences with employees as it relates to employee activism. Employee groups have protested Microsoft and Microsoft-owned GitHub's relationship with Immigration and Customs Enforcement, and some employees have said Microsoft's relationship with oil and gas companies is at odds with the company's goal to become "carbon negative" by 2030. 

Some Microsoft employees say the company is making progress. Rich Neal, a senior director who's been with the company since 2003, recalled a recent meeting in which a male colleague all but repeated the same comment a female colleague had shared 15 minutes earlier.

At that point, Neal recalled, a third meeting participant addressed the male colleague to ask whether perhaps he hadn't understood the female colleague's point. And Neal said it wasn't a passive-aggressive attack. Senior leaders are encouraged to "be curious and ask questions, versus making statements," as a way of modeling growth mindset, he added.

Microsoft has been equally vocal about diversity and inclusion within its customer base, building products that are accessible to as many users as possible. Ben Tamblyn, a 15-year company veteran and Microsoft's director of inclusive design, mentioned Xbox as a prime example. In 2018, Microsoft released the Xbox Adaptive Controller , which makes it easier for gamers who have limited mobility or physical impairments to play. (Interviews with Neal and Tamblyn were arranged by Microsoft's public-relations firm.)

Microsoft is a case study in growth mindset

Microsoft's culture shift, and its accompanying business turnaround, is already a case study in business schools and in reports from management consultancies and research centers . That makes sense to Mary Murphy, a professor of psychological and brain sciences at Indiana University and Dweck's co-author on the paper about growth mindsets within organizations. 

Growth mindset is essential for innovation in the technology industry, Murphy said, where change rarely happens incrementally. Instead, there are big inflection points from which there's no return. Microsoft, Murphy added, needs to be on the "cutting edge" of growth mindset in order to stay relevant.

Nadella, for his part, has modeled a growth mindset from the top of the organization, not least in his response to his tone-deaf comments about gender and compensation. "I learned, and we will together use this learning to galvanize the company for positive change," Nadella wrote in the memo he sent apologizing for the comments. "We will make Microsoft an even better place to work and do great things."

Got a tip? Contact reporters Shana Lebowitz via email at [email protected] and Ashley Stewart via email at [email protected] , message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242 .

Watch: Microsoft News' corporate vice president explains how his team avoids fake news sorting through 170,000 stories a day

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E.U. Charges Microsoft With Antitrust Violations Over Teams Bundling

The tech giant has been accused of stifling competition by packaging its video conferencing app with other tools like Word and Excel.

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Reporting from London

European Union regulators on Tuesday charged Microsoft with breaking antitrust rules by bundling its Teams video conferencing and collaboration software with a suite of other productivity tools, giving it an unfair advantage over rivals.

Regulators said Microsoft’s packaging of Teams with other well-established software tools in Office 365 and Microsoft 365, which includes programs like Word, Excel, PowerPoint and Outlook, amounted to an illegal abuse of market dominance that rival companies like Zoom and Slack could not match. Regulators said businesses essentially had little choice but to take Teams if they wanted other software made by Microsoft.

The charges are just the latest in a barrage of announcements by the European Union in recent months in its effort to crack down on the world’s largest tech platforms. On Monday, regulators accused Apple of violating competition rules because of its App Store policies. Amazon, Google, Meta, TikTok and X are also facing investigations related to their business practices and services.

The Microsoft case has its roots in the Covid-19 pandemic, when videoconferencing and collaboration tools like Zoom, Slack and Teams became essential for remote workforces. In 2020, Slack, now owned by Salesforce, complained to regulators that Microsoft’s bundling of Teams with other productivity software was anticompetitive, setting off the initial E.U. investigation.

E.U. regulators said Microsoft had an unfair “distribution advantage” by not giving customers a choice of whether to buy Teams when purchasing other software. Rivals makers of videoconferencing tools also face challenges making their services work with other Microsoft software, regulators said.

“The conduct may have prevented Teams’ rivals from competing, and in turn innovating, to the detriment of customers,” the European Commission, the European Union’s executive branch conducting the investigation, said in a statement.

The charges brought on Tuesday are one step in a long process. Microsoft can now respond to the complaint, but if the two sides do not reach an agreement, the company could face a fine of up to 10 percent of its annual global revenue.

The case has parallels to the antitrust charges brought decades ago by the U.S. Justice Department against Microsoft for bundling Internet Explorer inside its Windows operating system, a case that was eventually resolved.

On Tuesday, Microsoft said it had taken steps to resolve the dispute. Last year, Microsoft agreed to sell Teams separately from Office products.

“Having unbundled Teams and taken initial interoperability steps, we appreciate the additional clarity provided today and will work to find solutions to address the commission‘s remaining concerns.” Brad Smith, Microsoft’s president, said in a statement.

The European Commission said Microsoft’s changes were “insufficient” and called for more changes to be made to “restore competition,” without specifying what those changes should be.

Adam Satariano is a technology correspondent for The Times, based in London. More about Adam Satariano

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