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Abstract

The case describes how Microsoft, a market leader in desktop computing in 1995 with a 95% market share, faced its share of problems from 2000 to 2010 with existing products losing market share and new products not taking off. Microsoft executives blamed the system of stack ranking for the lack of innovations in the company compared to competitors like Google and Apple. Upon realizing this, Microsoft ditched its traditional performance management system in 2013 and took several initiatives to help create a new Performance and Development (P&D) system. The new P&D system focused on employees' skills and competencies and facilitated open conversations. Through 'Connects', employees received real time feedback that helped them learn, grow, and focus on their strengths and key learning areas. This flexibility allowed managers to discuss P&D all through the year. In 2018, the HR team partnered with Core Services Engineering and Operations (CSEO) and built a new feedback tool that would make feedback more actionable without triggering negative feelings. The new 'Perspectives' Tool was a result of studies on brain science which showed that people were more receptive to feedback when they themselves asked for it rather than when someone wanted to give feedback. As part of Perspectives, employees were invited to suggest things that their colleagues should keep doing and actions they should rethink. These two new initiatives had an impact on changing the mindsets of employees. They also improved communication and co-ordination between and within teams. 'Perspectives' also helped Microsoft rethink how it was evaluating and critiquing employees and was a step forward in building the company culture. Satya Nadella's push for a cultural shift and a growth mindset created an enthusiasm for a new era of innovation at Microsoft. These efforts to improve innovation, collaboration, and communication also led to a business shift. In November 2019, Microsoft achieved a one trillion dollar valuation, a 200% increase since Satya became CEO in 2014.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Hear from the authors

During their award presentation in 2022 the case authors shared insights into writing and teaching this case.

Educators, trainers and PhD students with teaching responsibility can login to view the video interview.

Time period

The events covered by this case took place in 2013-2019.

Geographical setting

Region:
Americas
Country:
United States

Featured company

Microsoft Corporation
Employees:
10000+
Turnover:
USD 110.4 billion (2018)
Type:
Public company
Industry:
Technology & communications

About

Abstract

The case describes how Microsoft, a market leader in desktop computing in 1995 with a 95% market share, faced its share of problems from 2000 to 2010 with existing products losing market share and new products not taking off. Microsoft executives blamed the system of stack ranking for the lack of innovations in the company compared to competitors like Google and Apple. Upon realizing this, Microsoft ditched its traditional performance management system in 2013 and took several initiatives to help create a new Performance and Development (P&D) system. The new P&D system focused on employees' skills and competencies and facilitated open conversations. Through 'Connects', employees received real time feedback that helped them learn, grow, and focus on their strengths and key learning areas. This flexibility allowed managers to discuss P&D all through the year. In 2018, the HR team partnered with Core Services Engineering and Operations (CSEO) and built a new feedback tool that would make feedback more actionable without triggering negative feelings. The new 'Perspectives' Tool was a result of studies on brain science which showed that people were more receptive to feedback when they themselves asked for it rather than when someone wanted to give feedback. As part of Perspectives, employees were invited to suggest things that their colleagues should keep doing and actions they should rethink. These two new initiatives had an impact on changing the mindsets of employees. They also improved communication and co-ordination between and within teams. 'Perspectives' also helped Microsoft rethink how it was evaluating and critiquing employees and was a step forward in building the company culture. Satya Nadella's push for a cultural shift and a growth mindset created an enthusiasm for a new era of innovation at Microsoft. These efforts to improve innovation, collaboration, and communication also led to a business shift. In November 2019, Microsoft achieved a one trillion dollar valuation, a 200% increase since Satya became CEO in 2014.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Hear from the authors

During their award presentation in 2022 the case authors shared insights into writing and teaching this case.

Educators, trainers and PhD students with teaching responsibility can login to view the video interview.


Settings

Time period

The events covered by this case took place in 2013-2019.

Geographical setting

Region:
Americas
Country:
United States

Featured company

Microsoft Corporation
Employees:
10000+
Turnover:
USD 110.4 billion (2018)
Type:
Public company
Industry:
Technology & communications

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