Microsoft Was Resting on Its Laurels. Then This Book Helped Reset Its Culture

September 24, 2018, 11:24 PM UTC

As Microsoft ceded its tech dominance following the personal computer era, its employees gained a reputation for “resting and vesting.” In other words, they were viewed as idling—not innovating—while their stock options matured.

Then, over the past few years, Microsoft rebounded—seemingly out of the blue. What happened?

Peggy Johnson, Microsoft’s top dealmaker, provided a glimpse at what caused a culture shift inside the company while speaking Monday in Chicago at Brainstorm Reinvent, Fortune’s conference devoted to business rejuvenation.

The transformation began around the time Johnson joined in 2014, after CEO Satya Nadella succeeded Steve Ballmer, the company’s longtime chief. Nadella, newly in charge, realized that he had to change the entrenched, corporate psyche.

Nadella found the language and the tools to do so in a book he had read called Mindset: The New Psychology of Success, by Carol S. Dweck, a psychology professor at Stanford University, Johnson said. The book talks about the importance of maintaining a “growth mindset,” she explained, meaning “the ability to be free to think beyond boundaries.”

This idea seemed to apply well to Microsoft’s workforce: full of talent, but lacking vitality and initiative. Drawing on Dweck’s concepts, “Satya had this idea of changing that culture from a know-it-all culture to a learn-it-all culture,” Johnson said.

“It started to roll through all the many layers of Microsoft, and the change became palpable,” Johnson said. “It was like a spark that started a fire.”

“Any company that has a successful business model, you can fall back on it and say, ‘Well, this thing is going to go on forever,'” Johnson continued. But Nadella recognized “if the company didn’t change we would be left behind.”

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