1 October, 2021

The Future of Human Capital – Lessons from Microsoft

Every organisation is unique. The uniqueness lies not so much in the incorporation documents, the brand logos or the vision statement. Organisations are unique because of the culture that shapes the identity and ethos. The intentions, actions and energy of the People in any business, fuel and enliven the organisational vision, attract stakeholders and characterise the brand.

The 2020 crisis was a test of organisational agility and leadership resilience. As individuals, our living and working context, sense of value and perspectives about day-to-day priorities, were transformed in an unimaginable way, that had seven billion human beings all experiencing a CTRL+ALT+DEL reset of the status quo. Fourth industrial revolution technologies, that very few leaders had the courage or justification to adopt early, found a sudden and sharp demand. Ironically, it was these emergent technologies and digital communication tools that enabled continuity of essential activities and processes for governments, corporations, societies, communities, families and the average person with internet connectivity. Sometimes change is forced on us when we least expect it – the Covid-19 black swan landed abruptly and it caught even the most sophisticated institutions lagging in future-proof systems, continuity plans and policies. A select few were ready and able to adapt, with speed and profitable success, while most were thrown into the quicksand of pandemic survival.

Companies in the technology sector, among others, were catapulted into accelerated scale-up and innovation overnight, to respond to a global clarion call for online and digital solutions; and on mass demand. One such company is Microsoft which was the subject of our recent conversation on the Lift As We Rise podcast.

Founded in 1975 by Bill Gates and co-founder Paul Allen, incorporated in 1981 and listed on the NASDAQ in 1986, Microsoft is a technology company whose mission is:

“to empower every person and every organization on the planet to achieve more.”

For close to five decades, the company has remained anchored in its ethos and executed its strategy accordingly, focussing largely on:

  1. product development and innovation;
  2. synergistic partnerships;
  3. enabling, relevant technologies; and
  4. building, evolving and sustaining the company culture.

Over the company’s forty-six year history, Microsoft has had only two significant changes in leadership – in 2000 Steve Ballmer succeeded Bill Gates as Chief Executive Officer (CEO), followed by Satya Nadella who took to the helm as CEO in 2014 and as Chairman of the Board in 2021.

Ballmer was the thirtieth employee to join the organisation in 1980, the fellow-Harvard alumnus having been handpicked by Bill Gates. Nadella joined in 1992, progressing through the ranks to lead the development and positioning of cloud computing technology. Steve Ballmer and Satya Nadella’s backgrounds and life experiences are different, diverse. What they share is a work ethos that is wired the “Microsoft Way”.

It is interesting to note that, in identifying and grooming Steve and Satya for the top leadership positions, Microsoft “grew its own timber” - this is unusual in a corporate environment where executive roles are often filled by the appointment of external candidates who send ripples of uncertainty and insecurity, among internal stakeholders and long-term investors, when they enter an established culture.

While Steve Ballmer focussed on systematic Product development and expedited execution to support Profit objectives, Nadella’s leadership prioritises People through empathy, inclusion, collaboration and a growth mindset. In his 2020 Letter to Shareholders, Satya Nadella shared the following sentiments:

“Ultimately, we will only achieve our mission if we live our culture. It is at the root of every decision we make. We fundamentally believe that we need a culture founded in a growth mindset. It starts with a belief that everyone can grow and develop; that potential is nurtured, not predetermined; and that anyone can change their mindset.”

Nadella’s emphasis on the inherent potential in every person is the type of leadership philosophy that stimulates two things that support sustainable organisations:

  • a stronger sense of belonging and contribution; and
  • a greater sense of self-belief.

Those who have experienced some form of historical disadvantage or discrimination, be this on the basis of race, gender, ethnicity, sexual orientation, disability, neurodiversity or other, are likely to relate most strongly to the experienced limitations that exclusion, or a feeling of exclusion, places on an individual or group. This feeling creates tremendous internal conflict and inner turbulence that, over time, becomes detrimental to self-belief and to high- performance. It is not possible to cultivate a growth mindset in such an environment. Replicated across growing, large and multi-national organisations, a low sense of belonging and low self-belief among employees:

  • weakens organisational resilience;
  • compromises strategic effectiveness; and
  • ultimately disconnects the organisation from its key stakeholders and markets.

Through my work with corporates, institutions and SME's, I have found that organisations generally arrive at similar choice points when shifting gears from strategic planning to operationalisation or commercialisation. One common question that arises is how to align People and motivate Performance so that leaders can execute strategy effectively and efficiently. I have held a long-standing view that human capital is core to sustainable strategies. Human capital can add little value where it is positioned as an operational function, limited to recruitment, employee relations and related administrative processes.

In a world where proof-of-concept designs, innovation and intellectual capital offer premium commercial value, now is surely the time to debit the non-current asset class in the "new normal" Balance Sheet with Human Capital, rather than as an expense line in the Income Statement? Surely this will result in fairer presentation of the value and revenue generation prospects that employees represent? Microsoft’s 2020 revenue of USD 143 billion, divided by circa 163 000 employees, represents a contribution of approximately USD 900 000 per employee. An asset or an expense?

What follows below are some themes and approaches to human capital which emerged from the referred podcast conversation and my experience in organisational strategy with respect to resilience and sustainability.

1) Purpose matters

A starting point is having a Purpose that pulls stakeholders from a limited vision of the present to a compelling vision of a future state; a Purpose that inspires a growth mindset and attracts stakeholders to believe in and support the “Impossible”, so that it is ultimately gets done. This is a long-term outcome which hinges on resilience.

The clear articulation of this vision is the responsibility of leadership – the Chief Executive Officer, supported by the Board. The business model, systems and culture are then shaped and developed, on an evolving basis, to ensure that the wheels of the organisation move forward with due focus and momentum, over the short, medium and long-term. The leadership lens, the prevailing business context and projected market trends inform a mission statement that is most appropriate to the business.

Words matter. Committed action matters more. Effective, consistent execution is what builds and sustains stakeholder trust.

Microsoft’s mission statement in 2011, under Ballmer, read: “Our mission is to enable people and businesses throughout the world to realize their full potential”. A decade later, it has evolved under Nadella who is leading his mission: “To empower every person and every organization on the planet to achieve more.”

Impact on strategy – Intentional leadership action to anchor the Purpose

  • The leadership voice must be heard consistently, to position, clarify and engage stakeholders on the Purpose. This builds a more resilient and relevant organisation that is focussed on and responsive to a long-term vision.
  • Empower stakeholders, starting with employees, so that they feel connected to the Purpose and can support mobilisation, with critically evaluated plans and solutions that add value.
  • Shift the focus from creating and pulling product demand, with a pure bottom-line motive, to developing solutions that support “build better" outcomes, for business, for society and for the planet.

2) A growth mindset can change the world

Every person needs a reason to get up and show up with full commitment. Where vested interest in the targeted outcomes is high, linked to potential financial rewards and/or high accountability for managing related risks, such individuals are said to have “skin in the game". They are therefore strongly motivated to learn, grow and contribute to the best of their ability.

To those who are further removed from the tangible risks and rewards, building a sense of ownership and a growth mindset requires more effort from leaders and managers to encourage and incentivise above-par contribution, particularly during times of turbulence, change and uncertainty. Yet, we often find that leaders prefer to lead from the boardrooms and offices, or virtual offices. In growing or mature organisations, a select few leaders actively engage and connect with employees on a day-to-day basis. Over time, this leads to an erosion of culture.

Impact on the strategy – Managers are the key change agents

  • Set clear goals; then enable co-creation, building and running fair and empowering accountability measures, linked to the Purpose.
  • Acknowledge that every person has the potential to lead a solution; nurture and enable that potential to channel ambition, support succession and sustain the leadership culture.
  • Managers are the bridge that “closes the distance” between the lived experience and culture, as suggested by Satya Nadella; manage the culture more.

3) Contribution creates ownership

In an organisation with sound recruitment practices, it can be said that every employee will want to make a difference during their tenure and to do so to the best of their ability. How and to what extent this intent is applied to generate value-add contribution, are influenced by the individual’s environment, both at work and at home.

During the 2020 lockdown and the consequent transition of organisations and institutions to a work-from-home model, some countries have seen a rise of up to 45% in voluntary over- time by employees, according to a Reuters report, despite a positive trend indicating a rise in 62% in leadership empathy during this same period. The sudden elimination of social interactions with colleagues and porous walls between work-from-office and living-at- home, aggravated by financial pressures and mental health challenges, are possible contributors to this trend. Whatever the root causes, this trend is unsustainable, particularly in high-pressure, high-performance companies that attract high achievers whose intrinsic motivation feeds off tangible results and related feedback.

Impact on the strategy – Promote and recognise empathy

  • Encourage collaboration and teamwork that contribute to broader employee welfare and wellness objectives. Also encourage employees to make a positive contribution to the company, to each other’s success and to society.
  • Re-formulate performance measurement and monitoring systems to measure employee contribution which, at Microsoft, includes an employee’s contribution to a colleague’s success and how the contribution builds on the work of others, in addition to the individual’s personal achievements and results.
  • Create structured interventions and embedded programs that help to understand, empathise, and act in support of someone else, such as Allyship at Microsoft, so that employees feel supported through the undulating journey of growth and change.

4) Diversity & Inclusion is a leadership strategy

No person in an organisation should be made to feel like an outlier, under-valued or marginalised because of those very traits that characterise each person's uniqueness. Paraphrasing Satya Nadella’s words, leaders need to be more intentional to promote and drive diversity and inclusion to create a culture where every employee can discover and unlock his or her highest potential.

Biases, conscious or unconscious, compromise growth and strategic progress in our rapidly evolving world where human, consumer and societal behaviours are undergoing significant change. Companies that choose to implement diversity and inclusion programmes, with a low appetite for organisational change, will gain limited benefit from applying a conservative approach. Whereas those that implement pioneering diversity and inclusion strategies tend to yield strong returns in the areas of employee engagement, decision-making, innovation and profitability, as confirmed in the World Economic Forum’s Diversity, Inclusion and Equity 4.0 report.

The leadership context needs to be recognised by the Board when appointing a champion to drive diversity and inclusion strategies. By way of example, Satya Nadella’s focussed commitment to diversity, inclusion and disabilities may well be influenced by his South Indian origins and his experience as a parent having a child with disabilities. His approach, therefore, may be and may perceived to be, more authentic, empathetic and urgent.

Impact on the strategy – Courageous leadership sets the tone for diversity and inclusion

  • Identify the key areas of strategic priority where diversity and inclusion could support innovation and shared value objectives; apply critical thinking to develop specific, measurable and positively impactful outcomes and to provide psychological safety to those who feel unheard, excluded, under-represented or misunderstood.
  • Facilitate input from stakeholders so that diversity and inclusion programmes are relevant to and beneficial for the company as well as to its value chain as a whole, garnering systemic buy-in and sharing accountability for targeted outcomes; and
  • Identify, assess and take committed action to mitigate existing biases through courageous conversations and an open, progressive mindset; leadership must set the tone to this end.

5) Leverage technology to support a People-centric culture

On the future, Nadella stated to shareholders: 

“The world is at an inflection point, and digital technology will be key to defining what comes next.”

The World Economic Forum’s Future World of Work reports identifies problem solving, critical thinking and self-management as the top three skills required in the new normal. In the pre-Covid paradigm, there was a limited need for these skills due to the standard structures and long-standing systems that represented the working environment. In the era of Industry 4.0, 43% of companies are expected to reduce the workforce due to technological integration and automation. Global unemployment and under-employment risks are high.

This means that investment in training and development can no longer be deprioritised in favour bottom-line objectives, as has been the trend for discretionary training spend in recent history. This requires a committed focus on evenly distributed, affordable and accessible learning platforms, by leaders in governments, business and education.

In the 2020 Annual Report, the CEO states Microsoft's commitment to support the upskilling of People, across the globe, to sustain jobs, particularly referring to including those with lower incomes, women, and underrepresented minorities. This is being enabled through widely accessible online learning platforms such as LinkedIn which has been augmented recently by the company's acquisition of TakeLessons.

Impact on the strategy – Committed multi-stakeholder partnerships to lift citizens into the dawning digital era

  • Agility is key – cultivate strategic and operational flexibility to think critically, collaborate with stakeholders and reimagine a world of work where no employee is left behind.
  • A growth mindset recognises that the knowledge, professional competence and skills-set for every employee in the organisation is due for an upgrade; this requires unlearning for new learning, from the CEO to the intern.
  • Industry 4.0 is about People and technology, rather than People or technology; adaptive leadership thinking, digital investment strategies and related human capital management policies should be a key focus area for Boards.

Roshni Gajjar is a chartered accountant, a strategy consultant and the founder of StratAstute Consulting. She hosts the monthly podcast, Lift As We Rise, which engages thought leaders and experts on "build better" strategies for sustainable business strategies for sustainable, purpose-driven business. StratAstute Consulting approaches strategy using the unique 4P's model - Purpose, Performance, People and Profit. On this basis, these terms may be written in upper case, for emphasis.

This article has been reviewed by the company prior to publication. Thank you to Jasmin Pillay, HR Consulting Director, Africa and Middle East at Microsoft, for her contribution to the published content.

For information about StratAstute Consulting and access to the StatConnect podcast channel channel, visit For information about Microsoft, visit the Microsoft website .

Article written by Roshni Gajjar