Why Microsoft CEO Satya Nadella doesn't really worry about revenue
Simple: Both of them are more interested in a lot of people using their products than they are in chasing after revenue.
That's according to Microsoft Corporate Vice President Brad Anderson, who reported to Nadella for three years when he served as president of Microsoft's Server and Tools Division before becoming CEO in 2014.
"Revenue is a lagging indicator, usage is a leading indicator," Nadella likes to say, according to Anderson.
Which is to say that if Microsoft does have a new attitude, it's because Nadella is less concerned about protecting its existing businesses and more concerned about making sure people actually use the stuff they buy from Microsoft.
Just like a Silicon Valley startup, Nadella's expectation is that if you double down on making products that customers really like, revenue will follow. But by that same token, if Microsoft ignores what its customers want, revenue maybe wouldn't dip this quarter or the next, but the fall is inevitable.
Anderson describes the feeling of Microsoft during the past year of Nadella's reign as a "giant startup."
It's a feeling that Anderson says has extended to every aspect of Microsoft over the last year: Executive bonuses - including stock option grants - are now based less on how much money the business unit made and more on how many customers are actually using their products.
"It's at the heart of the company," Anderson says.
For Anderson's own Enterprise Client & Mobility (ECM) team, which makes Microsoft's products for managing and securing mobile devices, this attitude enables all kinds of neat things that wouldn't have been possible before, he says.
Where before, the focus might have been pushing Microsoft phones and tablets into the workplace, his team is free to work on making its products "fantastic on any device," including iOS and Android, Anderson says. It's all about getting those users on board.
And for the team, it represents a freedom that they'd never had before. Where before, new updates might come once every year or so, Microsoft can push them in months. To that end, Anderson's team today announced a bunch of small but useful improvements to its products, including the ability for IT managers to discover cloud apps that their employees are secretly using without company permission (which could pose a security threat), and new features for detecting attacks from hackers.
Right now, Anderson's team is starting work on new features and updates for release in June and July, which would have been unthinkably quick in the old days. Microsoft's developers love the faster pace, since customers get the cool new stuff much more quickly.
"The energy level just goes up exponentially," Anderson says.
If a Silicon Valley startup can do the great things that they do with their venture capital backing and limited resources, imagine what a giant company like Microsoft can do with the same approach, Anderson says.
"It's amazing what you can do with a startup mentality," Anderson says.
It seems to be working. A lot of Microsoft's new-wave software and services, like Microsoft Office 365, were risky bets that seem to be paying off. It's buying Nadella a lot of wiggle room that many startup founders would be envious of.