How Microsoft’s Satya Nadella rejected a ‘know-it-all’ mentality and earned the title of ‘most underrated CEO’

This year, Nadella was voted the “most underrated” CEO for the sixth consecutive year, according to the survey behind Fortune’s World’s Most Admired Companies. Nadella has headed that list since 2017. 

Nadella achieved this honor through his encouraging leadership style, humility, and vision. 

Nadella’s early life and background

Born in Hyderabad, India, Nadella was raised in a Hindu family. His mother was a lecturer in Sanskrit, and his father worked for the government. 

He got his bachelor’s degree from Manipal Institute of Technology and earned a master’s in computer science from the University of Wisconsin–Milwaukee. He also earned an MBA from the University of Chicago Booth School of Business. 

Nadella joined Microsoft in 1992 when he was only 25 years old. In 1999, he became president of Microsoft bCentral, where he led web services for small businesses, and in 2014 he became the third CEO of Microsoft.

Happily married to his wife, Anupama, with whom he has three children, he is fond of poems and is known to quote from them and other works of literature in public appearances. A fan of cricket and other team sports, he sees these pastimes as a tool for fostering energy in communities and has applied these tactics in business as well. His love of team sports even prompted him in 2019 to become part owner of the Seattle Sounders, a Major League Soccer club.

Beyond business, Nadella also believes in giving back: Last year the Nadella family committed $15 million to Seattle Children’s Hospital to promote advancements in research, youth mental health care, and equitable access to health care for families in the community.

Rejecting the status quo and changing Microsoft’s culture

When Nadella became CEO, according to an account from the book From Incremental to Exponential, by Vivek Wadhwa and Ismail Amla with Alex Salkever, he asked Microsoft’s top executives to read Nonviolent Communication by Marshall Rosenberg. The book discourages traditional business feedback practices like criticism and judgment and provides instruction on how to be more encouraging. 

While his predecessors supported hardball business tactics, Nadella took a different approach. He is known for his calm demeanor and his focus on positive feedback to reinforce good habits and motivate his team. He has strived to create a comfortable environment and made it clear that aggressive behavior will not be tolerated.

Even though the company previously operated with a “know-it-all” worldview, Nadella rejected this, instead promoting a “learn-it-all” culture. 

As part of this initiative, he implemented a new practice in which Microsoft researchers could phone in to talk about their innovations. The purpose of this was to keep leaders up to date on the company’s advancements, reminding them to think futuristically.

Although Microsoft was profitable when Nadella ascended to the top role, there were many doubts about the company’s trajectory at the time. Its primary revenue stream came from software licenses, and its investment to dominate the smartphone market had fallen flat. 

To turn the wheel, in his first public appearance as CEO, Nadella said Microsoft would focus heavily on mobile and cloud computing, areas where the company had been falling behind. Behind the scenes, he asked executives to put their egos aside and collaborate with other major tech firms.

But more than anything, he tried to convey the sense that the legendary tech giant could be cool and innovative.

Making Microsoft ‘cool’ again

Since the firm’s 1990s heyday, the tech scene had grown cluttered with fierce competition. Nadella leaned into it.

One of Nadella’s first acts was to release Office Productivity for iPhone, a collaboration with famous rival Apple that Microsoft leadership had previously blocked. He expanded Microsoft by bringing its software and services to other operating systems such as Linux and to Google, and Apple. Today, the company continues to partner with competitors such as Salesforce and Red Hat. 

Nadella also put Azure, Microsoft’s cloud computing platform, at the center of the business, creating distance from the outdated Windows suite. This returned the title of innovator to the company, and last year it was even ranked first in capability, profitability, and maturity of pricing by CRN, a news source for IT providers.

He also recognized that Microsoft’s smartphone efforts were a lost cause and wrote off the Nokia acquisition. Leading the company in a new direction, he oversaw the purchase of LinkedIn in 2016 for $26 billion and with no real competition has let the platform grow. In 2018, the company made another big acquisition with GitHub for $7.5 billion to show its commitment to sharing open-source software. Last year, the company completed the acquisition of ZeniMax, the parent company of Bethesda, a video game publisher, for another $7.5 billion to sway people to play on the Xbox Series S, Series X, and PCs and compete directly with Sony’s PlayStation 5.

As CEO of Microsoft, Nadella has overseen the company’s increase in market cap from around $300 billion to more than $2 trillion. Today, Microsoft’s shares trade higher than Google’s Alphabet, Apple, or Meta.

Looking into the future, the company plans to acquire Activision Blizzard for $68.7 billion, a key move that would render Microsoft the third-largest gaming company and give it a potential foothold in the metaverse. Furthermore, Microsoft will continue investing in world-class content, community, and the cloud as Nadella predicts that data and A.I. will bridge the digital and physical worlds.

Fellow executives’ admiration of Nadella stems from his refreshing approach to communication and his willingness to collaborate with others, even competitors. 

To read more about Nadella and other inspiring businesses and leaders, check out Fortune’s list of the World’s Most Admired Companies. 

CORRECTION: An earlier version of this article said that Satya Nadella had been voted the “most admired CEO” in a Fortune survey.