The Five forces that shape StrategyRivalry among existing co.docx

The Five forces that shape Strategy
Rivalry among existing competitors
Threat of new entrants
Bargaining power of supplies
Bargaining power of buyers
Threat of substitute products or services
Thomas–Kilmann
Instrument
Conflict Mode
P R O F I L E A N D I N T E R P R E T I V E R E P O R T
Kenneth W. Thomas and Ralph H. Kilmann
TM

Thomas-Kilmann Conflict Mode Instrument Profile and
Interpretive Report Copyright 2001, 2007 by CPP, Inc. All
rights reserved. The TKI logo and the CPP logo are
trademarks or registered trademarks of CPP, Inc., in the United
States and other countries.
CPP, Inc. | 800-624-1765 | www.cpp.com
Report prepared for
VANESSA
WOODARD
February 4, 2020
Interpreted by
JWMI
JWI 510
Leadership in the 21st Century
TKI PROFILE & INTERPRETIVE REPORT VANESSA
WOODARD
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The Five Conflict-Handling Modes
The Thomas-Kilmann Conflict Mode Instrument (TKI) assesses
an individual’s behavior in conflict
situations—that is, situations in which the concerns of two
people appear to be incompatible.

In conflict situations, we can describe a person’s behavior along
two basic dimensions*: (1)
assertiveness, the extent to which the individual attempts to
satisfy his or her own concerns, and
(2) cooperativeness, the extent to which the individual attempts
to satisfy the other person’s
concerns. These two dimensions of behavior can be used to
define five methods of dealing with
conflict. These five conflict-handling modes are shown below:
COMPETING COLLABORATING
COMPROMISING
AVOIDING ACCOMMODATING
A
S
S
E
R
T
IV
E
N
E
S
S
U
N
A
S
S

E
R
T
IV
E
A
S
S
E
R
T
IV
E
COOPERATIVENESS
UNCOOPERATIVE COOPERATIVE
* This two-dimensional model of conflict-handling behavior is
adapted from “Conflict and Conflict Management” by Kenneth
Thomas in The Handbook of Industrial and Organizational
Psychology, edited by Marvin Dunnette (Chicago: Rand
McNally, 1976). Another valuable contribution in this field is
the work by Robert Blake and Jane Mouton in The Managerial
Grid
(Houston: Gulf Publishing, 1964, 1994).
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Competing is assertive and uncooperative, a power-oriented
mode. When competing, an
individual pursues his or her own concerns at the other person’s
expense, using whatever power
seems appropriate to win his or her position. Competing might
mean standing up for your
rights, defending a position you believe is correct, or simply
trying to win.
Collaborating is both assertive and cooperative. When
collaborating, an individual attempts to
work with the other person to find a solution that fully satisfies
the concerns of both. It involves
digging into an issue to identify the underlying concerns of the
two individuals and to find an
alternative that meets both sets of concerns. Collaborating
between two persons might take
the form of exploring a disagreement to learn from each other’s
insights, resolving some
condition that would otherwise have them competing for
resources, or confronting and trying
to find a creative solution to an interpersonal problem.
Compromising is intermediate in both assertiveness and
cooperativeness. When compromising,
an individual has the objective of finding an expedient,
mutually acceptable solution that
partially satisfies both parties. Compromising falls on a middle
ground between competing and
accommodating, giving up more than competing but less than
accommodating. Likewise, it
addresses an issue more directly than avoiding but doesn’t
explore it in as much depth as
collaborating. Compromising might mean splitting the
difference, exchanging concessions, or
seeking a quick middle-ground position.

C O M P E T I N G
C O L L A B O R A T I N G
C O M P R O M I S I N G
Avoiding is unassertive and uncooperative. When avoiding, an
individual does not immediately
pursue his or her own concerns or those of the other person. He
or she does not address the
conflict. Avoiding might take the form of diplomatically
sidestepping an issue, postponing an
issue until a better time, or simply withdrawing from a
threatening situation.
Accommodating is unassertive and cooperative—the opposite of
competing. When
accommodating, an individual neglects his or her own concerns
to satisfy the concerns of the
other person; there is an element of self-sacrifice in this mode.
Accommodating might take the
form of selfless generosity or charity, obeying another person’s
order when you would prefer
not to, or yielding to another’s point of view.
A C C O M M O D A T I N G
A V O I D I N G
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Your TKI Profile
Your profile of TKI scores, shown below, indicates the
repertoire of conflict-handling modes you use in
the kinds of conflicts you face. Your scores are arranged in
descending order by percentile, with your
highest score indicating your most frequently used conflict
mode.
100%75%
LOW
25%0%
MEDIUM HIGH
PERCENTILE SCOREMODE RAW
SCORE
ACCOMMODATING 8 87%
AVOIDING 8 78%
COMPETING 6 69%
COLLABORATING 6 41%
COMPROMISING 2 1%
Your raw score on each conflict-handling mode is simply the
number of times you chose a TKI
statement for that mode. More important are your percentile
scores. These show how your raw scores
compare to those of a representative sample of 8,000 employed

adults who have already taken the
TKI.* Your percentile scores show the percentage of people in
the sample who scored the same as or
lower than you on each mode.
Your profile shows that you scored highest on accommodating,
where your score of 8 gave you a
percentile score of 87. This means you scored higher than 87
percent of the people in the sample on
accommodating. In contrast, you scored lowest on
compromising, where your percentile score is
comparable to the lowest scores on this conflict mode in the
sample.
The vertical lines at the 25th and 75th percentiles separate the
middle 50 percent of the scores on
each mode from the top 25 percent and the bottom 25 percent.
Scores that fall in the top
25 percent are considered high. Similarly, scores that fall in the
bottom 25 percent are considered
low. Scores that fall in the middle 50 percent are considered
medium. Look at your scores to see
where they fall within this range.
*The norm sample consisted of 4,000 women and 4,000 men,
ages 20 through 70, who were employed full-time in the United
States. Data were drawn from a database of 59,000 cases
collected between 2002 and 2005 and were sampled to ensure
representative numbers of people by organizational level and
race/ethnicity.
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Interpreting Your Scores
When you look at your profile on the TKI, you probably want to
know, “What are the correct
answers?” In the case of conflict-handling behavior, there are
no right or wrong answers. All five
modes are useful in some situations: each represents a set of
useful social skills. Our conventional
wisdom recognizes, for example, that often “Two heads are
better than one” (collaborating). But it
also says, “Kill your enemies with kindness” (accommodating),
“Split the difference” (compromising),
“Leave well enough alone” (avoiding), and “Might makes right”
(competing). The effectiveness of a
given conflict-handling mode depends on the requirements of
the specific situation and the skill with
which you use that mode.
You are capable of using all five conflict-handling modes; you
cannot be characterized as having a
single, rigid style of dealing with conflict. However, most
people use some modes more readily than
others, develop more skills in those modes, and therefore tend
to rely on them more heavily. Many
have a clear favorite. The conflict behaviors you use are the
result of both your personal predispositions
and the requirements of the situations in which you find
yourself.
The following pages provide feedback on your conflict-handling
modes as indicated by your TKI scores,
beginning with your most frequently used mode,
accommodating.

To help you judge how appropriate your use of the five modes is
for your situation, this section lists a
number of uses for each mode. The uses are based on lists
generated by company presidents. In
addition, because your predispositions may lead you to rely on
some conflict behaviors more or less
than necessary, this section also lists some diagnostic questions
concerning warning signs for the
overuse or underuse of each mode.
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Percentile: 87%
Range: High
Accommodating
Uses
You may be using this mode most frequently because of the
circumstances you face. A group of
company presidents identified the following situations as times
when accommodating is especially
useful and effective:
• When you realize that you are wrong—to allow a better
solution to be considered, to learn from
others, and to show that you are reasonable
• When the issue is much more important to the other person

than it is to you—to satisfy the needs
of others and as a goodwill gesture to help maintain a
cooperative relationship
• When you want to build up social credits for later issues that
are important to you
• When you are outmatched and losing and more competition
would only damage your cause
• When preserving harmony and avoiding disruption are
especially important
• When you want to help your employees develop by allowing
them to experiment and learn from
their mistakes
Accommodating as a Style
Your frequent use of accommodating may also be part of an
accommodating style you have developed
to deal with conflict. Styles are rooted in personal beliefs,
values, and motives that “push” one’s
conflict behavior in a consistent direction.
Accommodators tend to see conflicts as social/emotional issues
to be settled with support and
sensitivity. They often believe in the Golden Rule (“Do unto
others . . .”) and believe that generosity
will eventually be rewarded in kind. They regard coworkers as
friends—people to be supported and
looked after—and value support, generosity, goodwill, and team
cohesiveness. They often see
compassion and friendship as more important than the minor
issues involved in most conflicts.
Accommodators help coworkers meet their concerns—for the

sake of the coworker and to help build
cohesiveness and goodwill.*
* This style description is adapted with permission from
Introduction to Conflict and Teams by Kenneth W. Thomas and
Gail Fann Thomas (Mountain View, CA: CPP, Inc., 2004).
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Contributions of an Accommodating Style
Accommodators’ compassion and generosity can serve an
important role in the interpersonal relations
of their organization—as a kind of shock absorber when people
are under stress. Accommodators help
maintain goodwill and trust. They provide psychological
support and a sympathetic ear and can serve
as peacemakers to restore harmony. Their style helps soothe
hurt feelings and resentments.
Questions to Ask
The danger in any style is that you may use your preferred mode
out of habit—even when it is not the
most appropriate mode. Because you scored in the high range on
accommodating, there is a good
chance that you are overusing this conflict mode and underusing
others. To help you determine if you
are overusing accommodating, consider the following questions:

Signs of overuse
• Do you feel that your ideas and concerns sometimes don’t get
the attention they deserve?
Deferring too much to the concerns of others can deprive you of
influence, respect, and
recognition. It can also deprive the organization of your
potential contributions.
• Is discipline lax?
Although discipline for its own sake may be of little value,
some rules, procedures, and assignments
are crucial and need to be enforced. Accommodating on these
issues may harm you, others, or the
organization.
In contrast, the fact that you scored high on accommodating
makes it unlikely that you are underusing
this mode. However, you may be interested in these signs of
underuse in others:
Signs of underuse
• Having trouble building goodwill.
Accommodating on minor issues that are important to others is a
gesture of goodwill.
• Being viewed as unreasonable.
• Having trouble admitting when one is wrong.
• Failing to recognize legitimate exceptions to the rules.
• Refusing to give up.

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Percentile: 78%
Range: High
Avoiding
Uses
• When an issue is unimportant or when other, more important
issues are pressing
• When you perceive no chance of satisfying your concerns—for
example, when you have low power
or you are frustrated by something that would be very difficult
to change
• When the potential costs of confronting a conflict outweigh
the benefits of its resolution
• When you need to let people cool down—to reduce tensions to
a productive level and to regain
perspective and composure
• When gathering more information outweighs the advantages of
an immediate decision
• When others can resolve the issue more effectively
• When the issue seems tangential or symptomatic of another,
more basic issue

Questions to Ask
Because you scored high on avoiding, there is a good chance
that you are overusing this mode. To help
you determine whether this is the case, consider the following
questions:
Signs of overuse
• Does coordination suffer because people sometimes have
trouble getting your input on issues?
• Does it sometimes appear that people are “walking on
eggshells”?
Sometimes a disproportionate amount of energy is devoted to
caution and avoiding issues,
indicating that those issues need to be faced and resolved.
• Are decisions on important issues sometimes made by default?
In contrast, the fact that you scored high on avoiding makes it
unlikely that you are underusing this
mode. However, you may be interested in these signs of
underuse in others:
Signs of underuse
• Hurting people’s feelings or stirring up hostilities.
People who score low on avoiding may need to exercise more
discretion and tact, learning to
frame issues in nonthreatening ways.
• Feeling harried or overwhelmed by a number of issues.
This symptom may indicate a need to set priorities—that is, to
decide which less-important issues

can be avoided or delegated to others.
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Percentile: 69%
Range: Medium
Competing
Uses
• When quick, decisive action is vital—for example, in an
emergency
• On important issues when unpopular courses of action need
implementing—for example, cost
cutting, enforcing unpopular rules, discipline
• On issues vital to company welfare when you know you’re
right
• When you need to protect yourself from people who take
advantage of noncompetitive behavior
Questions to Ask
Because you scored in the medium range on competing, there is
little reason to suspect that you
overuse or underuse this mode in general. However, the
questions below can help you determine if you

are overusing or underusing competing in specific situations.
Signs of overuse
• Are you surrounded by “yes” people?
If so, perhaps it’s because they have learned that it’s unwise to
disagree with you or have given up
trying to influence you. This closes you off from information.
• Are others afraid to admit ignorance and uncertainties to you?
In a competitive climate, one must fight for influence and
respect, acting more certain and
confident than one feels. This means that people are less able to
ask for information and
opinions—they are less likely to learn.
Signs of underuse
• Do you often feel powerless in situations?
You may be unaware of the power you have, unskilled in its
use, or uncomfortable with the idea
of using it. This may hinder your effectiveness by restricting
your influence.
• Do you sometimes have trouble taking a firm stand, even when
you see the need?
Sometimes concerns for others’ feelings or anxieties about the
use of power cause people to
vacillate, which may result in postponing the decision and
adding to the suffering and/or
resentment of others.
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Percentile: 41%
Range: Medium
Collaborating
Uses
• When you need to find an integrative solution and the
concerns of both parties are too important to
be compromised
• When your objective is to learn and you wish to test your
assumptions and understand others’
views
• When you want to merge insights from people with different
perspectives on a problem
• When you want to gain commitment by incorporating others’
concerns into a consensual decision
• When you need to work through hard feelings that have been
interfering with a relationship
Questions to Ask
Because you scored in the medium range on collaborating, there
is little reason to suspect that you
are overusing or underusing collaborating in specific situations.

Signs of overuse
• Do you sometimes spend time discussing issues in depth that
don’t seem to warrant it?
Collaboration takes time and energy—perhaps the scarcest
organizational resources. Trivial
problems don’t require optimal solutions, and not all personal
differences need to be hashed out.
The overuse of collaboration and consensual decision making
sometimes represents a desire to
minimize risk—by diffusing responsibility for a decision or by
postponing action.
• Does your collaborative behavior fail to elicit collaborative
responses from others?
The exploratory and tentative nature of some collaborative
behavior may make it easy for others to
disregard your overtures or take advantage of the trust and
openness you display. You may be
missing some cues that would indicate the presence of
defensiveness, strong feelings, impatience,
competitiveness, or conflicting interests.
Signs of underuse
• Is it difficult for you to see differences as opportunities for
joint gain, learning, or problem solving?
Although conflict situations often involve threatening or
unproductive aspects, approaching all
conflicts with pessimism can prevent people from seeing
collaborative possibilities and thus deprive
them of the mutual gains and satisfactions that accompany
successful collaboration.
• Are others uncommitted to your decisions or policies?
Perhaps their concerns are not being incorporated into those

decisions or policies.
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Percentile: 1%
Range: Low
Compromising
Uses
• When goals are moderately important but not worth the effort
or the potential disruption involved
in using more assertive modes
• When two opponents with equal power are strongly committed
to mutually exclusive goals—as in
labor–management bargaining
• When you want to achieve a temporary settlement of a
complex issue
• When you need to arrive at an expedient solution under time
pressure
• As a backup mode when collaboration or competition fails
Questions to Ask
Because you scored low on compromising, there is a good

chance that you are underusing this mode.
To help you determine whether that is the case, consider the
following questions:
Signs of underuse
• Do you sometimes find yourself too sensitive or embarrassed
to engage in the give-and-take of
bargaining?
This reticence can keep you from getting a fair share in
negotiations—for yourself, your team, or
your organization.
• Do you sometimes find it difficult to make concessions?
Without this safety valve, you may have trouble gracefully
getting out of mutually destructive
arguments, power struggles, and so on.
In contrast, the fact that you scored low on compromising
makes it unlikely that you are overusing this
mode. However, you may be interested in these signs of overuse
in others:
Signs of overuse
• Concentrating so heavily on the practicalities and tactics of
compromise that one loses sight of
larger issues.
Neglected issues may include principles, values, long-term
objectives, or company welfare.
• Creating a cynical climate of gamesmanship.
An emphasis on bargaining and trading may create a climate
that undermines interpersonal trust
and deflects attention from the merits of the issues.

© Full copyright information appears on page 1.
Thomas–Kilmann
Instrument
Conflict Mode
P R O F I L E A N D I N T E R P R E T I V E R E P O R T
Kenneth W. Thomas and Ralph H. Kilmann
TM
Thomas-Kilmann Conflict Mode Instrument Profile and
Interpretive Report Copyright 2001, 2007 by CPP, Inc. All
rights reserved. The TKI logo and the CPP logo are
trademarks or registered trademarks of CPP, Inc., in the United
States and other countries.
Report prepared for
VANESSA
WOODARD
February 4, 2020
Interpreted by
JWMI

JWI 510
Leadership in the 21st Century
WOODARD
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. . . . . . . . . . . . . . .
The Five Conflict-Handling Modes
The Thomas-Kilmann Conflict Mode Instrument (TKI) assesses
an individual’s behavior in conflict
situations—that is, situations in which the concerns of two
people appear to be incompatible.
In conflict situations, we can describe a person’s behavior along
two basic dimensions*: (1)
assertiveness, the extent to which the individual attempts to
satisfy his or her own concerns, and
(2) cooperativeness, the extent to which the individual attempts
to satisfy the other person’s
concerns. These two dimensions of behavior can be used to
define five methods of dealing with
conflict. These five conflict-handling modes are shown below:
COMPETING COLLABORATING
COMPROMISING
AVOIDING ACCOMMODATING
A
S
S

E
R
T
IV
E
N
E
S
S
U
N
A
S
S
E
R
T
IV
E
A
S
S
E
R
T
IV
E
COOPERATIVENESS
UNCOOPERATIVE COOPERATIVE

* This two-dimensional model of conflict-handling behavior is
adapted from “Conflict and Conflict Management” by Kenneth
Thomas in The Handbook of Industrial and Organizational
Psychology, edited by Marvin Dunnette (Chicago: Rand
McNally, 1976). Another valuable contribution in this field is
the work by Robert Blake and Jane Mouton in The Managerial
Grid
(Houston: Gulf Publishing, 1964, 1994).
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. . . . . . . . . . . . . . .
Competing is assertive and uncooperative, a power-oriented
mode. When competing, an
individual pursues his or her own concerns at the other person’s
expense, using whatever power
seems appropriate to win his or her position. Competing might
mean standing up for your
rights, defending a position you believe is correct, or simply
trying to win.
Collaborating is both assertive and cooperative. When
collaborating, an individual attempts to
work with the other person to find a solution that fully satisfies
the concerns of both. It involves
digging into an issue to identify the underlying concerns of the
two individuals and to find an
alternative that meets both sets of concerns. Collaborating
between two persons might take
the form of exploring a disagreement to learn from each other’s
insights, resolving some

condition that would otherwise have them competing for
resources, or confronting and trying
to find a creative solution to an interpersonal problem.
Compromising is intermediate in both assertiveness and
cooperativeness. When compromising,
an individual has the objective of finding an expedient,
mutually acceptable solution that
partially satisfies both parties. Compromising falls on a middle
ground between competing and
accommodating, giving up more than competing but less than
accommodating. Likewise, it
addresses an issue more directly than avoiding but doesn’t
explore it in as much depth as
collaborating. Compromising might mean splitting the
difference, exchanging concessions, or
seeking a quick middle-ground position.
C O M P E T I N G
C O L L A B O R A T I N G
C O M P R O M I S I N G
Avoiding is unassertive and uncooperative. When avoiding, an
individual does not immediately
pursue his or her own concerns or those of the other person. He
or she does not address the
conflict. Avoiding might take the form of diplomatically
sidestepping an issue, postponing an
issue until a better time, or simply withdrawing from a
threatening situation.
Accommodating is unassertive and cooperative—the opposite of
competing. When
accommodating, an individual neglects his or her own concerns

to satisfy the concerns of the
other person; there is an element of self-sacrifice in this mode.
Accommodating might take the
form of selfless generosity or charity, obeying another person’s
order when you would prefer
not to, or yielding to another’s point of view.
A C C O M M O D A T I N G
A V O I D I N G
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. . . . . . . . . . . . . . .
Your TKI Profile
Your profile of TKI scores, shown below, indicates the
repertoire of conflict-handling modes you use in
the kinds of conflicts you face. Your scores are arranged in
descending order by percentile, with your
highest score indicating your most frequently used conflict
mode.
100%75%
LOW
25%0%
MEDIUM HIGH
PERCENTILE SCOREMODE RAW

SCORE
ACCOMMODATING 8 87%
AVOIDING 8 78%
COMPETING 6 69%
COLLABORATING 6 41%
COMPROMISING 2 1%
Your raw score on each conflict-handling mode is simply the
number of times you chose a TKI
statement for that mode. More important are your percentile
scores. These show how your raw scores
compare to those of a representative sample of 8,000 employed
adults who have already taken the
TKI.* Your percentile scores show the percentage of people in
the sample who scored the same as or
lower than you on each mode.
Your profile shows that you scored highest on accommodating,
where your score of 8 gave you a
percentile score of 87. This means you scored higher than 87
percent of the people in the sample on
accommodating. In contrast, you scored lowest on
compromising, where your percentile score is
comparable to the lowest scores on this conflict mode in the
sample.
The vertical lines at the 25th and 75th percentiles separate the
middle 50 percent of the scores on
each mode from the top 25 percent and the bottom 25 percent.
Scores that fall in the top
25 percent are considered high. Similarly, scores that fall in the

bottom 25 percent are considered
low. Scores that fall in the middle 50 percent are considered
medium. Look at your scores to see
where they fall within this range.
*The norm sample consisted of 4,000 women and 4,000 men,
ages 20 through 70, who were employed full-time in the United
States. Data were drawn from a database of 59,000 cases
collected between 2002 and 2005 and were sampled to ensure
representative numbers of people by organizational level and
race/ethnicity.
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. . . . . . . . . . . . . . .
Interpreting Your Scores
When you look at your profile on the TKI, you probably want to
know, “What are the correct
answers?” In the case of conflict-handling behavior, there are
no right or wrong answers. All five
modes are useful in some situations: each represents a set of
useful social skills. Our conventional
wisdom recognizes, for example, that often “Two heads are
better than one” (collaborating). But it
also says, “Kill your enemies with kindness” (accommodating),
“Split the difference” (compromising),
“Leave well enough alone” (avoiding), and “Might makes right”
(competing). The effectiveness of a
given conflict-handling mode depends on the requirements of
the specific situation and the skill with
which you use that mode.

You are capable of using all five conflict-handling modes; you
cannot be characterized as having a
single, rigid style of dealing with conflict. However, most
people use some modes more readily than
others, develop more skills in those modes, and therefore tend
to rely on them more heavily. Many
have a clear favorite. The conflict behaviors you use are the
result of both your personal predispositions
and the requirements of the situations in which you find
yourself.
The following pages provide feedback on your conflict-handling
modes as indicated by your TKI scores,
beginning with your most frequently used mode,
accommodating.
To help you judge how appropriate your use of the five modes is
for your situation, this section lists a
number of uses for each mode. The uses are based on lists
generated by company presidents. In
addition, because your predispositions may lead you to rely on
some conflict behaviors more or less
than necessary, this section also lists some diagnostic questions
concerning warning signs for the
overuse or underuse of each mode.
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. . . . . . . . . . . . . . .
Percentile: 87%

Range: High
Accommodating
Uses
You may be using this mode most frequently because of the
circumstances you face. A group of
company presidents identified the following situations as times
when accommodating is especially
useful and effective:
• When you realize that you are wrong—to allow a better
solution to be considered, to learn from
others, and to show that you are reasonable
• When the issue is much more important to the other person
than it is to you—to satisfy the needs
of others and as a goodwill gesture to help maintain a
cooperative relationship
• When you want to build up social credits for later issues that
are important to you
• When you are outmatched and losing and more competition
would only damage your cause
• When preserving harmony and avoiding disruption are
especially important
• When you want to help your employees develop by allowing
them to experiment and learn from
their mistakes
Accommodating as a Style

Your frequent use of accommodating may also be part of an
accommodating style you have developed
to deal with conflict. Styles are rooted in personal beliefs,
values, and motives that “push” one’s
conflict behavior in a consistent direction.
Accommodators tend to see conflicts as social/emotional issues
to be settled with support and
sensitivity. They often believe in the Golden Rule (“Do unto
others . . .”) and believe that generosity
will eventually be rewarded in kind. They regard coworkers as
friends—people to be supported and
looked after—and value support, generosity, goodwill, and team
cohesiveness. They often see
compassion and friendship as more important than the minor
issues involved in most conflicts.
Accommodators help coworkers meet their concerns—for the
sake of the coworker and to help build
cohesiveness and goodwill.*
* This style description is adapted with permission from
Introduction to Conflict and Teams by Kenneth W. Thomas and
Gail Fann Thomas (Mountain View, CA: CPP, Inc., 2004).
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. . . . . . . . . . . . . . .
Contributions of an Accommodating Style
Accommodators’ compassion and generosity can serve an
important role in the interpersonal relations

of their organization—as a kind of shock absorber when people
are under stress. Accommodators help
maintain goodwill and trust. They provide psychological
support and a sympathetic ear and can serve
as peacemakers to restore harmony. Their style helps soothe
hurt feelings and resentments.
Questions to Ask
The danger in any style is that you may use your preferred mode
out of habit—even when it is not the
most appropriate mode. Because you scored in the high range on
accommodating, there is a good
chance that you are overusing this conflict mode and underusing
others. To help you determine if you
are overusing accommodating, consider the following questions:
Signs of overuse
• Do you feel that your ideas and concerns sometimes don’t get
the attention they deserve?
Deferring too much to the concerns of others can deprive you of
influence, respect, and
recognition. It can also deprive the organization of your
potential contributions.
• Is discipline lax?
Although discipline for its own sake may be of little value,
some rules, procedures, and assignments
are crucial and need to be enforced. Accommodating on these
issues may harm you, others, or the
organization.
In contrast, the fact that you scored high on accommodating
makes it unlikely that you are underusing
this mode. However, you may be interested in these signs of

underuse in others:
Signs of underuse
• Having trouble building goodwill.
Accommodating on minor issues that are important to others is a
gesture of goodwill.
• Being viewed as unreasonable.
• Having trouble admitting when one is wrong.
• Failing to recognize legitimate exceptions to the rules.
• Refusing to give up.
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. . . . . . . . . . . . . . .
Percentile: 78%
Range: High
Avoiding
Uses
• When an issue is unimportant or when other, more important
issues are pressing
• When you perceive no chance of satisfying your concerns—for
example, when you have low power

or you are frustrated by something that would be very difficult
to change
• When the potential costs of confronting a conflict outweigh
the benefits of its resolution
• When you need to let people cool down—to reduce tensions to
a productive level and to regain
perspective and composure
• When gathering more information outweighs the advantages of
an immediate decision
• When others can resolve the issue more effectively
• When the issue seems tangential or symptomatic of another,
more basic issue
Questions to Ask
Because you scored high on avoiding, there is a good chance
that you are overusing this mode. To help
you determine whether this is the case, consider the following
questions:
Signs of overuse
• Does coordination suffer because people sometimes have
trouble getting your input on issues?
• Does it sometimes appear that people are “walking on
eggshells”?
Sometimes a disproportionate amount of energy is devoted to
caution and avoiding issues,
indicating that those issues need to be faced and resolved.

• Are decisions on important issues sometimes made by default?
In contrast, the fact that you scored high on avoiding makes it
unlikely that you are underusing this
mode. However, you may be interested in these signs of
underuse in others:
Signs of underuse
• Hurting people’s feelings or stirring up hostilities.
People who score low on avoiding may need to exercise more
discretion and tact, learning to
frame issues in nonthreatening ways.
• Feeling harried or overwhelmed by a number of issues.
This symptom may indicate a need to set priorities—that is, to
decide which less-important issues
can be avoided or delegated to others.
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. . . . . . . . . . . . . . .
Percentile: 69%
Range: Medium
Competing
Uses
• When quick, decisive action is vital—for example, in an
emergency

• On important issues when unpopular courses of action need
implementing—for example, cost
cutting, enforcing unpopular rules, discipline
• On issues vital to company welfare when you know you’re
right
• When you need to protect yourself from people who take
advantage of noncompetitive behavior
Questions to Ask
Because you scored in the medium range on competing, there is
little reason to suspect that you
are overusing or underusing competing in specific situations.
Signs of overuse
• Are you surrounded by “yes” people?
If so, perhaps it’s because they have learned that it’s unwise to
disagree with you or have given up
trying to influence you. This closes you off from information.
• Are others afraid to admit ignorance and uncertainties to you?
In a competitive climate, one must fight for influence and
respect, acting more certain and
confident than one feels. This means that people are less able to
ask for information and
opinions—they are less likely to learn.
Signs of underuse
• Do you often feel powerless in situations?

You may be unaware of the power you have, unskilled in its
use, or uncomfortable with the idea
of using it. This may hinder your effectiveness by restricting
your influence.
• Do you sometimes have trouble taking a firm stand, even when
you see the need?
Sometimes concerns for others’ feelings or anxieties about the
use of power cause people to
vacillate, which may result in postponing the decision and
adding to the suffering and/or
resentment of others.
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. . . . . . . . . . . . . . .
Percentile: 41%
Range: Medium
Collaborating
Uses
• When you need to find an integrative solution and the
concerns of both parties are too important to
be compromised
• When your objective is to learn and you wish to test your
assumptions and understand others’
views

• When you want to merge insights from people with different
perspectives on a problem
• When you want to gain commitment by incorporating others’
concerns into a consensual decision
• When you need to work through hard feelings that have been
interfering with a relationship
Questions to Ask
Because you scored in the medium range on collaborating, there
is little reason to suspect that you
are overusing or underusing collaborating in specific situations.
Signs of overuse
• Do you sometimes spend time discussing issues in depth that
don’t seem to warrant it?
Collaboration takes time and energy—perhaps the scarcest
organizational resources. Trivial
problems don’t require optimal solutions, and not all personal
differences need to be hashed out.
The overuse of collaboration and consensual decision making
sometimes represents a desire to
minimize risk—by diffusing responsibility for a decision or by
postponing action.
• Does your collaborative behavior fail to elicit collaborative
responses from others?
The exploratory and tentative nature of some collaborative
behavior may make it easy for others to
disregard your overtures or take advantage of the trust and
openness you display. You may be

missing some cues that would indicate the presence of
defensiveness, strong feelings, impatience,
competitiveness, or conflicting interests.
Signs of underuse
• Is it difficult for you to see differences as opportunities for
joint gain, learning, or problem solving?
Although conflict situations often involve threatening or
unproductive aspects, approaching all
conflicts with pessimism can prevent people from seeing
collaborative possibilities and thus deprive
them of the mutual gains and satisfactions that accompany
successful collaboration.
• Are others uncommitted to your decisions or policies?
Perhaps their concerns are not being incorporated into those
decisions or policies.
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. . . . . . . . . . . . . . .
Percentile: 1%
Range: Low
Compromising
Uses
• When goals are moderately important but not worth the effort
or the potential disruption involved

in using more assertive modes
• When two opponents with equal power are strongly committed
to mutually exclusive goals—as in
labor–management bargaining
• When you want to achieve a temporary settlement of a
complex issue
• When you need to arrive at an expedient solution under time
pressure
• As a backup mode when collaboration or competition fails
Questions to Ask
Because you scored low on compromising, there is a good
chance that you are underusing this mode.
To help you determine whether that is the case, consider the
following questions:
Signs of underuse
• Do you sometimes find yourself too sensitive or embarrassed
to engage in the give-and-take of
bargaining?
This reticence can keep you from getting a fair share in
negotiations—for yourself, your team, or
your organization.
• Do you sometimes find it difficult to make concessions?
Without this safety valve, you may have trouble gracefully
getting out of mutually destructive
arguments, power struggles, and so on.
In contrast, the fact that you scored low on compromising

makes it unlikely that you are overusing this
mode. However, you may be interested in these signs of overuse
in others:
Signs of overuse
• Concentrating so heavily on the practicalities and tactics of
compromise that one loses sight of
larger issues.
Neglected issues may include principles, values, long-term
objectives, or company welfare.
• Creating a cynical climate of gamesmanship.
An emphasis on bargaining and trading may create a climate
that undermines interpersonal trust
and deflects attention from the merits of the issues.
© Full copyright information appears on page 1.
Professor Herminia Ibarra, Professor Aneeta Rattan and Anna
Johnston prepared this case based on public sources and
interviews
with Jill Tracie Nichols and Joe W hittinghill.
London Business School cases are developed solely as the basis
for class discussion and are not intended to serve as
endorsements,
sources of primary data, or illustrations of effective or
ineffective management.
Copyright © 2018 London Business School. All rights reserved.
No part of this case study may be reproduced, stored in a
retrieval

system, or transmitted in any form or by any means electronic,
photocopying, recording or otherwise without written
permission of
London Business School.
Satya Nadella at Microsoft:
Instilling a growth mindset
In early 2018, Satya Nadella celebrated his fourth anniversary
as the CEO of Microsoft. Under his
stewardship, Microsoft has gone from a company perceived as a
Windows-centric lumbering giant to
a $700 billion market cap tech player whose strategic bets on
artificial intelligence (AI) and cloud
computing were paying off (see Exhibit 1). After a decade of
flat growth under Nadella’s predecessor,
the company’s share price soared to an all-time high in June
2018.
Nadella remembered February 4, 2014 vividly in his book Hit
Refresh: The Quest to Rediscover
Microsoft’s Soul and Imagine a Better Future for Everyone. It
was the day he took charge of a company
widely portrayed by its own employees as plagued by internal
knife fights, bickering and inertia. In his
mind, the company’s ability to make great technology was never
lost. However, a culture of internal
competition and “not invented here” mentality had focused
employees on a narrow vision of
performance over customers and increasingly expansive market
opportunities.
An engineer, Nadella thus set out to change the human system at
Microsoft. Four years later, he
prided himself on the company again becoming a magnet for top
engineering talent, a world-class

competitor among the heavyweights of the tech industry, and
valued partner to companies undergoing
their own digital transformation (see Exhibit 2).
“People often ask how it’s going,” said Nadella. “My response
is very eastern: We’re making great
progress, but we should never be done.” 1
The “lost decade”
Just 17 days after founder and technical whizz Bill Gates
handed over the reins to Steve Ballmer in
2000, the stock market crashed. In the decade that followed, a
culture that crippled innovation
flourished at Microsoft.
Herminia Ibarra
Aneeta Rattan
Anna Johnston
LBS Ref: CS-18-008
HBP: LBS128
June 2018
This document is authorized for use only by Vanessa Woodard
in Leadership in the 21st Century at Strayer University, 2020.
Copyright © 2018 London Business School Page 2
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Microsoft’s infamous “stack ranking” performance management

system pitted employees against each
other every six months. Like a stack of LEGO bricks, employees
were essentially slotted into top, good,
average, below average and poor positions. The forced
distribution meant that one in 10 people would
always receive a poor rating, regardless how much they
contributed. As one product manager
remembered: “If you don’t play the politics, it’s management by
character assassination.”
Management practices like the stacking system killed
collaboration: developers feared that giving
away their best ideas could damage their position. Employees
prioritised what would help them get
the highest ratings over the quality of their work. “I was told in
almost every review that the political
game was always important for my career development,”
reflected one former Microsoft engineer.
Ultimately, “staffers were rewarded not just for doing well but
for making sure their colleagues failed.”
(See Exhibit 3.)
A wave of external competition crashed down on the firm,
causing talent to jump ship. By 2004, thanks
to the rapid growth of upstart firms such as Google, some of
Microsoft’s most talented employees were
leaving faster than they could be replaced. “Instead of a culture
that said, ‘Let’s experiment and see
which ideas work,’ the culture is one of, ‘Let’s kiss enough ass
so maybe they’ll approve of our product’,”
said one Microsoft executive who eventually quit in 2009 to
work for Google 2. A former engineer said
it was like “designing software by committee.”3
Microsoft’s product development process lagged: Bing failed to
extinguish Google search, and Zune

couldn’t compete with Apple’s iPod. In 1998, for example, a
group of executives passionate about
bringing an e-book to market were waved away by Gates and
told to report into an Office-run division.
“Potential market-busting businesses, such as e-book and smart
phone technology, were killed or
delayed amid bickering and power plays.”4
Ballmer aggressively opposed open-source innovation, calling
Linux a “cancer that attaches itself in
an intellectual property sense to everything it touches.” The
industry labelled him “shortsighted”.
Morale plummeted. By 2011, Ballmer’s Glassdoor rating among
his own employees was just
29%. Despite climbing to 46% the following year, it still lagged
behind others at that time: Google CEO
Larry Page’s approval rating was 94% and Mark Zuckerberg’s
was 99%.
After the tech bubble burst and with the stock price flat,
“People realised they weren’t going to get
wealthy,” one former senior executive said. “They turned into
people trying to move up the ladder,
rather than people trying to make a big contribution to the
firm.” Meanwhile, companies like Google
were paying employees up to 23% above the industry average.5
By 2014, the Microsoft that Nadella inherited was fading toward
irrelevance, heralded the press. The
tech industry had shifted from desktop computers to
smartphones – from Microsoft’s Windows to
Apple’s iPhone and Google’s Android. Apple and Google had
soared to record market valuations;

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Microsoft’s stock price had stalled, despite the fact that revenue
had tripled and profits had doubled
during Ballmer’s reign as CEO from 2000 to 2014.6
As industry analyst Jan Dawson summarised: “It was an
enormously profitable company. They were
in no danger of going out of business soon – it was just a
question of whether they’d go into permanent
decline.”7
Satya Nadella
The consummate insider, Nadella grew up professionally in the
Microsoft that Gates and Ballmer
created. The India-born cricket enthusiast started working at
Microsoft in 1992 when products were
saved on disks and the world was powered by Windows 3.0. A
computer scientist by training, Nadella
moved through a range of leadership roles, including heading up
R&D for Online Services, and
ultimately becoming executive vice president of the Cloud and
Enterprise group. He recalled taking
risks along the way:
I distinctly remember Steve saying, ‘Hey, look, you know if you
go to Bing and you

don’t do a good job or succeed, it might just be your last job.’
But at the same time,
his own intellectual honesty and how he talked about that job
made it, you know, very
enticing. It was tough to refuse to go there to learn. And it’s
clear that if I had not gone
and learned… and if I had not run the cloud infrastructure
business, I’m sure the
board would have not seen me as a candidate even for CEO.8
Reflecting on important influences in his life, Nadella cites his
formative experiences: “It’s the language,
routines and mindset of my parents back in India and my
immediate family in Seattle that helped form
me and still guide me today.”9
In particular, he traces the roots of his ideas about leadership to
the birth of his first child, Zain, who
was premature, weighed just three pounds, and had cerebral
palsy. “Empathy, we learned, was
invisible and was a universal value,” said Nadella. “And we
learned that empathy is essential to deal
with problems everywhere, whether at Microsoft or at home;
here in the United States or globally. That
is also a mindset, a culture.” 10
Taking charge
As Microsoft’s new CEO on February 4, 2014, Nadella scripted
a letter to all employees (see
Exhibit 4):
Today is a very humbling day for me. It reminds me of my very
first day at Microsoft,
22 years ago. Like you, I had a choice about where to come to
work. I came here

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because I believed Microsoft was the best company in the
world. I saw then how
clearly we empower people to do magical things with our
creations and ultimately
make the world a better place. I knew there was no better
company to join if I wanted
to make a difference. This is the very same inspiration that
continues to drive me
today.
He spoke of focusing the company on its core values, but
through a new lens. “We need to prioritise
innovation that is centred on our core value of empowering
users and organisations to ‘do more’.”
As Nadella reflected on what needed to shift, he set his sights
on what he himself called “a vague and
amorphous term”:
Microsoft’s culture had been rigid. Each employee had to prove
to everyone that he
or she was the smartest person in the room. Accountability –
delivering on time and
hitting numbers – trumped everything. Meetings were formal. If

a senior leader
wanted to tap the energy and creativity of someone lower down
in the organisation,
she or he needed to invite that person’s boss, and so on.
Hierarchy and pecking order
had taken control, and spontaneity and creativity had
suffered.11
“We all knew something was going to be different when he
assigned the Leadership Team to read
[Marshall Rosenberg’s] Nonviolent Communication: A
Language of Life: Life Changing Tools for
Healthy Relationships,” recalled Phil Spencer, Head of Xbox.12
Microsoft president and chief legal
officer Brad Smith, a 24-year company veteran, agreed this was
a clear indication that Nadella was
going to transform “not just the business strategy, but the
culture as well.”13
Nadella devoted much of his first year to listening and learning
from others:
I heard from hundreds of employees at every level and in every
part of the company.
We held focus groups to allow people to share their opinions
anonymously as well.
Listening was the most important thing I accomplished each
day, because it would
build the foundation of my leadership for years to come. To my
first question, why
does Microsoft exist, the message was loud and clear. We exist
to build products that
empower others. That is the meaning we’re all looking to infuse
into our work. I heard
other things as well. Employees wanted a CEO who would make
crucial changes,

but one who also respected the original ideals of Microsoft,
which had always been
to change the world. They wanted a clear, tangible and inspiring
vision. They wanted
to hear more frequently about progress in transparent and
simple ways. Engineers
wanted to lead again, not follow. They wanted to up the
coolness. We had technology
the press would fawn over in Silicon Valley, such as leading-
edge artificial intelligence,
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but we weren’t showing it off. What they really demanded was a
road map to remove
paralysis.14
Nadella’s to-do list for the first year included preparing
Microsoft for a mobile- and cloud-first world,
building “new and surprising partnerships” and working to
ensure they could truly empower every
person on the planet as their new mission stated.
In the spring of 2014, despite a contentious historical rivalry
with Apple and lack of traction with their
own Windows phones, Microsoft made Office available on all
iOS devices, including the iPhone and

iPad. The next year, the global launch of Windows 10 originated
in a tiny village in Kenya.
“Articulating our core raison d’etre and business was a good
first step. But I also needed to get the
right people on the bus to join me in leading these changes,”
Nadella said. He wanted a senior
leadership team (SLT) that would “lean into each other’s
problems, promote dialogue, and be effective”.
“I don’t mean yes-men and yes-women,” he explained. “Debate
and argument are essential. Improving
upon each other’s ideas is crucial. I wanted people to speak up.
‘Oh, here’s a customer segmentation
study I’ve done’. ‘Here’s a pricing approach that contradicts
this idea’. It’s great to have a good, old-
fashioned college debate. But there also has to be high quality
agreement.”15
To her surprise, Nadella selected Jill Tracie Nichols, Ballmer’s
communications lead 2009–2014, as
his chief of staff in 2014. When she questioned why, Nadella
told her: “I’ve seen you work with others
and you treat them well. You show respect. I want my office to
be about the culture we are trying to
create and not about power.”16
Peggy Johnson, a seasoned Qualcomm executive, became head
of business development. Her job
would be to forge ties with former Silicon Valley rivals, such as
Dropbox. “Satya was already on a
regular cadence of visiting the Valley, which was new for the
CEO of Microsoft,” said Johnson. “And
he said to me, ‘I want you to be outside of Redmond as much as
you are inside of Redmond’.”

Kathleen Hogan, who had experience at McKinsey and Oracle,
would transition from leading
Microsoft’s global consulting and support business to partnering
with Nadella on leading the cultural
transformation as chief people officer. Kurt DelBene, who “was
handpicked by President Obama to fix
Healthcare.org” and once upon a time led the Office division,
returned as chief strategy officer. Chris
Capossela headed up marketing and Scott Guthrie, an engineer
who had worked with Nadella in
building the cloud business, would lead Cloud and Enterprise,
Microsoft’s “fastest growing business”.
“Over time, these changes meant that some executives left,”
recalled Nadella. “They were all talented
people, but the senior leadership team needed to become a
cohesive team that shared a common
world view… We needed everyone to view SLT as his or her
first team, not just another meeting they
attended. We needed to be aligned on mission, strategy and
culture.” 17
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The 2015 annual executive retreat offered another opportunity
to convey that things were changing.
“One aspect of the off-site really bugged me,” admitted Nadella.

“Here we were with all this talent, all
this bandwidth, and all this IQ in one place just talking at each
other in the deep woods. And frankly,
it seems like most of the talking was about poking holes in each
other’s ideas. Enough.”
Nadella broke tradition by inviting the founders of companies
Microsoft had recently acquired in the
year prior, such as Mojang, the maker of Minecraft. As Nadella
said:
These new Microsoft leaders were mission-orientated,
innovative, born in the mobile-
first and cloud-first world. I knew we could learn from their
fresh, outside perspective.
The only problem was that most of these leaders did not
officially “qualify” to go to
executive retreats given the person’s level in the organisation.
To make matters
worse, neither did the manager, or even their manager’s
manager… Inviting them
was not one of my more popular decisions. But they showed up
bright-eyed,
completely ignorant of the history they were breaking. They
asked questions. They
shared their own journeys. They pushed us to better.18
Another change “not universally loved” was scheduling
customer visits during the retreat. Despite
some “eye-rolling and groaning,” executives from different
business lines were shuttled off together to
visit customers. The invigorated executives ended up talking for
days about what they had learned
and what that meant for the future of Microsoft. “The
transformation was under way,” concluded
Nadella.

From know-it-alls to learn-it-alls
At Microsoft’s July 2015 global sales conference in Orlando,
Nadella revealed a fresh company
mission: “To empower every person and every organisation on
the planet to achieve more.” The
original mission enshrined by Gates was “a computer on every
desk and in every home.”
After covering business plans, including building an intelligent
cloud platform, with the spotlight on his
face, Nadella talked about his children and what learning each
of their special needs had meant for
him and his wife, Anu. Nearing the end of the speech, he turned
to talking about the Microsoft culture:
We can have all the bold ambitions. We can have all the bold
goals. We can aspire
to our new mission. But it’s only going to happen if we live our
culture, if we teach our
culture. And to me, that model of culture is not a static thing. It
is about a dynamic
learning culture. In fact, the phrase we use to describe our
emerging culture is ‘growth
mindset’, because it’s about every individual, every one of us
having that attitude –
that mindset – of being able to overcome any constraint, stand
up to any challenge,
making it possible for us to grow and thereby for the company
to grow.19

LBS128
In early 2015, Anu had given him a best-selling book by
Stanford psychologist Carol Dweck entitled
Mindset: The New Psychology of Success. She had found it
helpful in thinking about creating
conditions for success for one of their daughters who has
learning differences, but suspected it might
also give Nadella some ideas for Microsoft. People who operate
with a fixed mindset, the theory says,
are more likely to stick to activities that utilise skills they’ve
already mastered, rather than risk
embarrassment by failing at something new. People focused on
growth make it their mission to learn
new things, understanding that they won’t succeed at all of them
at first.20
This rang true for Nadella, who seized on the ideas to forge a
plan for Microsoft. “Dweck divides the
world between learners and non-learners,” explained Nadella,
“demonstrating that a fixed mindset will
limit you and a growth mindset can move you forward.”21
Microsoft’s culture change, he concluded,
would centre on “the belief that everyone can grow and develop;
potential is nurtured, not
predetermined; and anyone can change their mindset”.22 They
would shift from being “know-it-alls” to
“learn-it-alls.”
Nadella told Hogan that the primary things he wanted her to
help him on was evolving the culture. At

an offsite with 180 executives divided into 17 teams, they
started a dialogue on what kind of culture
they wanted to have. The 17 leaders became Hogan’s “culture
cabinet,” charged with defining growth
mindset for Microsoft.23 After much debate, and consultation
with experts like Dweck, the group
articulated three pillars, all in the service of making a
difference in the world:
Customer obsession. We need to obsess about our customers. At
the core of our
business must be the curiosity and desire to meet a customer’s
unarticulated and
unmet needs with great technology. This was not abstract: We
all get to practice each
day. When we talk to customers, we need to listen. We need to
be insatiable in our
desire to learn from the outside and bring that learning into
Microsoft.
Diversity and inclusion. We are at our best when we actively
seek diversity and
inclusion. If we are going to serve the planet as our mission
states, we need to reflect
the planet. The diversity of our workforce must continue to
improve, and we need to
include a wide range of opinions and perspectives in our
thinking and decision-
making. In every meeting, don’t just listen – make it possible
for others to speak so
that everyone’s ideas come through. Inclusiveness will help us
become open to
learning about our own biases and changing our behaviours so
we can tap into the
collective power of everyone in the company. As a result, our
ideas will be better, our

products will be better, and our customers will be better served.
One Microsoft. We are one company, one Microsoft – not a
confederation of
fiefdoms. Innovation and competition don’t respect our silos, so
we have to learn to
transcend those barriers. 24
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Throughout 2015 and 2016, Nadella spoke widely about the
importance of mindset. “The CEO sets
the tone for the culture,” explained Nichols. “Gates and Ballmer
were super-smart, driven and hard-
charging. Their model was ‘precision questioning:’ picking
apart ideas in meetings to test their validity
and the presenter’s conviction, and that approach flowed
through the organisation. Satya models being
curious, seeking to learn as people bring him new ideas and
information.25
Grounding the pillars
“We made big intentional changes that would grab people’s
attention,” said Hogan, “like changing the
performance review system ... and small changes like giving
people a list of 10 inclusive behaviours

and asking them to pick one and discuss it.”26 “We never
believed that there would be one thing that
would change the company. It would be a lot of things, big and
small, reinforcing the change,” echoed
Nichols.27
Customer obsession required employees to get up from their
chairs and into the field. Dorothee Ritz,
Microsoft’s general manager for Austria in July 2015,
encouraged her team to speak with customers
on their turf:
One account manager spent a week out on a street with police
officers, trying to
understand when and where remote data could help them.
Another account manager
spent two days in a hospital to observe first-hand and
understand what it would really
mean to become paperless.28
After a year of experimenting with “immersive experiences”,
Ritz selected a set of key customers
(whom she calls partners) across industries ranging from car
manufacturing to retailers to hospitals.
Fifteen executives from Microsoft went on-site to talk to their
customers about their challenges. 29
“Getting to know each other in the context of solving a
partner’s problems was more meaningful than
ropes exercises or off-site discussions,” explained Ritz.30
The commitment to making Microsoft a safe and inclusive place
was less about training than the
behaviour modelled by senior managers. For example, when
Xbox sponsored a party at the 2016
Game Developer’s Conference, featuring scantily-clad women
dancers31, Xbox head Spencer made

a swift apology. “What made it easier for me to hold myself
accountable was really believing in the
growth mindset piece of our culture.”32 And, to ensure the
numbers reflected the intentions, diversity
targets were set for senior management.33
The infamous stack-ranking performance system was abolished,
replaced by “continual feedback and
coaching”34 and a compensation process that put more
influence in the hands of managers. Instead
of basing rewards such as bonuses on an algorithm driven by
employee ratings, managers are given
a budget for compensation that they can hand out as they see fit.
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Microsoft’s annual Hackathon, OneWeek, is an example of the
new “one company” ethos. Employees
are invited to step away from their work and concentrate on a
hack: a problem that, when solved, could
benefit people, business, society or the environment. People
team up, plot a business plan, create a
prototype and then pitch it company-wide; winning hackathon
teams are funded to build their projects.
At first, people wondered if OneWeek was worth the effort. But
the potential to reach millions of people
around the world held a strong allure.

On September 26, 2017, Nadella’s book, Hit Refresh was
released, and every employee received a
copy with a letter inside (see Exhibit 5). “Writing it was more
for employees and to advance culture
than anything else,” said co-author Nichols.35
Nudges and small reminders engage all 125,000 employees with
the new culture. For example,
leaders close meetings with a reflection, “Was that a growth-
mindset or fixed-mindset meeting? Why?”
Nadella issues monthly videos reviewing his top few learnings,
prompting groups across Microsoft to
discuss their own learnings. Visitors to Redmond have been
welcomed by elevator doors decorated
with the Chinese symbol for “listen”. Employees in the canteen
are reminded to be lifelong learners
when they wipe their face – thanks to the napkin holders.
Role-modelling the change
Eight months into his tenure, Nadella gave the keynote speech
at the Grace Hopper Celebration of
Women in Computing, an annual event for women in the tech
industry. During the Q&A, Dr Maria
Klawe, a computer scientist and former Microsoft board
member, asked Nadella what advice he had
for women seeking a pay raise who are not comfortable asking.
He advised patience, and “knowing
and having faith that the system will actually give you the right
raises as you go along.”
Nadella’s comments went viral, provoking outrage. He was
mocked publicly as ignorant of well-
documented gender pay gaps, and his stated commitment to
diversity was questioned. Instead of

waiting for the furore to settle, Nadella said, “I was determined
to use the incident to demonstrate what
a growth mindset looks like under pressure.”36
By email, the CEO told his employees he had “answered that
question completely wrong”. Nadella
explored his own biases and asked his executive team to do the
same. It made an impression with his
top team, including Hogan, who said: “I became more
committed to Satya, not less. He didn’t blame
anybody. He owned it. He came out to the entire company and
he said, ‘We’re going to learn, and
we’re going to get a lot smarter’.”37
There were plenty of other opportunities to learn from public
mistakes.
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In March 2016, researchers at Microsoft’s Future Social
Experiences (FUSE) Labs unveiled Tay, an
AI-based chatbot. Tay soon became a powerful reminder that
“AI can (and often should) behave in
ways human creators might not expect”.38 Twitter trolls
discovered that if they “pummelled Tay’s
account with racism, sexism and other hateful rhetoric – a
scenario Microsoft had not accounted for –

she would spew some of it back.”39 In just 24 hours, the bot
tweeted 96,000 times in an “increasingly
vile fashion”. Microsoft’s public AI experiment “failed by its
own standards”.
It was a “humiliation,” the press scorched. Undeterred, Nadella
wrote to Tay’s creators, “Keep pushing,
and know that I am with you.” In December 2016, Microsoft
launched Zo, a bot similar to Tay, but
designed to be more “troll-resistant.”
Reflecting on what he described as the most difficult lesson he
had learned, at the 2016 Game
Developer’s conference Xbox chief Spencer echoed his boss.
“When we make mistakes – and we
bump, or collide, into each other – the easy way is to retreat,
maybe even to deny there’s a problem.
Instead, I think we have to be humble. I think we have to be
active learners – read, educate ourselves,
try to understand other people’s journeys, and read some more.
And then, better informed, I think we
commit to leading with deliberate purpose.”40
Four years on
Today, Microsoft is once again a magnet for top engineering
talent, rated as one of five best AI
companies for employees 41, and Nadella has a Glassdoor
employee approval rating of 95%.
“Our industry doesn’t respect tradition,” said Nadella, “it
respects innovation.” His first four years have
seen a number of bold tech decisions; for example, investments
in quantum computing and mixed
reality, and innovations such as HoloLens, a holographic
computer that enables people to interact with

holograms.
Today, over 95% of Fortune 500 companies choose Azure,
Microsoft’s cloud computing service. Azure
has announced 50 regions globally, with 40 generally available
today – more than any other major
cloud vendor. The company has embraced Linux, the open-
source Windows rival “rather than clinging
to Windows like a security blanket.” Nadella’s $26 billion deal
for LinkedIn, which combines LinkedIn’s
500 million professional users with the 85 million people who
use Office 365, “gives Microsoft a
formidable data hoard for its AI operations.”42
“After years of intensive focus,” Nadella said of the culture
change, “we began to see some
encouraging results.”
LBS128
Employees told us they felt the company was heading in the
right direction. They felt
we were making the right choices for long-term success and
they saw different
groups across the company working together more…
But we also saw some trends that were not as encouraging.

When asked whether
their vice president, or group leader, was prioritising talent
movement and
development, the results were worse than they’d been before our
culture-building
project began. Even the most optimistic workers will become
discouraged if they are
not being developed. I had set a clear mission and envisioned an
empowering culture.
Employees and senior leaders were on board, but we had a
missing link-middle
management. 43
Expecting 125,000 people to take a learning-oriented approach
to their work is a significant task. Not
everyone gets it right away. “It’s a lot like love, grace, or
forgiveness,” said Nichols. “Words don’t
describe it until you experience it.”
At a meeting of 150 Microsoft executives that Nadella convened
to discuss developing high potentials,
he shared a story. One of his managers had told him that five of
his team members didn’t have a
growth mindset. “The guy was just using growth mindset to find
a new way to complain about others,”
Nadella told the group. He declared the whining over. “To be a
leader in this company, your job is to
find the rose petals in a field of shit.”44
“Cultural transformation is hard and demanding work,” agreed
Spencer. “Four years into it, it’s still
sometimes incredibly slow and incredibly painful to get
everyone on board, much less to admit our
own biases.”45

The future
In September 2017, at Microsoft Ignite, an annual conference
for developers and IT professionals,
Nadella closed with an ambition:
The core soul of our company is to empower every person and
every organisation on
the planet to achieve more. That means we want to democratise
the access to
technology.
I was reminded of a poem I’ve read by Vijay Seshadri, the
Pulitzer Prize-winning poet
from 2014, called Imaginary Number. The last line goes: ‘The
soul, like the square
root of minus 1, is an impossibility that has its uses.’ It
definitely does.
We all seek to unlock the unimaginable and solve the
impossible. That’s the quest
we are on.46
LBS128

LBS128
Exhibits
Exhibit 1: Evolution of Microsoft’s share price
Source: Macrotrends
LBS128
Exhibit 2: Top players by market share and revenue growth in
cloud computing, Q2 2017
Source: Synergy Research Group

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Exhibit 3: Organisation-chart cartoon courtesy of Manu Cornet
Source: http://bonkersworld.net/
This file is licensed under the Creative Commons Attribution-
Share Alike 3.0 Unported
http://bonkersworld.net/
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Exhibit 4: Satya Nadella’s first letter to employees as Microsoft

CEO
From: Satya Nadella
To: All Employees
Date: Feb. 4, 2014
Subject: RE: Satya Nadella – Microsoft’s New CEO
Today is a very humbling day for me. It reminds me of my very
first day at Microsoft, 22 years ago.
Like you, I had a choice about where to come to work. I came
here because I believed Microsoft was
the best company in the world. I saw then how clearly we
empower people to do magical things with
our creations and ultimately make the world a better place. I
knew there was no better company to join
if I wanted to make a difference. This is the very same
inspiration that continues to drive me today.
It is an incredible honor for me to lead and serve this great
company of ours. Steve and Bill have taken
it from an idea to one of the greatest and most universally
admired companies in the world. I’ve been
fortunate to work closely with both Bill and Steve in my
different roles at Microsoft, and as I step in as
CEO, I’ve asked Bill to devote additional time to the company,
focused on technology and products.
I’m also looking forward to working with John Thompson as our
new Chairman of the Board.
While we have seen great success, we are hungry to do more.
Our industry does not respect tradition

— it only respects innovation. This is a critical time for the
industry and for Microsoft. Make no mistake,
we are headed for greater places — as technology evolves and
we evolve with and ahead of it. Our
job is to ensure that Microsoft thrives in a mobile and cloud-
first world.
As we start a new phase of our journey together, I wanted to
share some background on myself and
what inspires and motivates me.
Who am I?
I am 46. I’ve been married for 22 years and we have 3 kids. And
like anyone else, a lot of what I do
and how I think has been shaped by my family and my overall
life experiences. Many who know me
say I am also defined by my curiosity and thirst for learning. I
buy more books than I can finish. I sign
up for more online courses than I can complete. I fundamentally
believe that if you are not learning
new things, you stop doing great and useful things. So family,
curiosity and hunger for knowledge all
define me.
Why am I here?

LBS128
I am here for the same reason I think most people join
Microsoft — to change the world through
technology that empowers people to do amazing things. I know
it can sound hyperbolic — and yet it’s
true. We have done it, we’re doing it today, and we are the team
that will do it again.
I believe over the next decade computing will become even
more ubiquitous and intelligence will
become ambient. The coevolution of software and new hardware
form factors will intermediate and
digitize — many of the things we do and experience in business,
life and our world. This will be made
possible by an ever-growing network of connected devices,
incredible computing capacity from the
cloud, insights from big data, and intelligence from machine
learning.
This is a software-powered world.
It will better connect us to our friends and families and help us
see, express, and share our world in
ways never before possible. It will enable businesses to engage
customers in more meaningful ways.
I am here because we have unparalleled capability to make an
impact.
Why are we here?
In our early history, our mission was about the PC on every

desk and home, a goal we have mostly
achieved in the developed world. Today we’re focused on a
broader range of devices. While the deal
is not yet complete, we will welcome to our family Nokia
devices and services and the new mobile
capabilities they bring us.
As we look forward, we must zero in on what Microsoft can
uniquely contribute to the world. The
opportunity ahead will require us to reimagine a lot of what we
have done in the past for a mobile and
cloud-first world, and do new things.
We are the only ones who can harness the power of software
and deliver it through devices and
services that truly empower every individual and every
organisation. We are the only company with
history and continued focus in building platforms and
ecosystems that create broad opportunity.
Qi Lu captured it well in a recent meeting when he said that
Microsoft uniquely empowers people to
"do more." This doesn’t mean that we need to do more things,
but that the work we do empowers the
world to do more of what they care about — get stuff done,
have fun, communicate and accomplish
great things. This is the core of who we are, and driving this
core value in all that we do — be it the
cloud or device experiences — is why we are here.
What do we do next?

LBS128
To paraphrase a quote from Oscar Wilde — we need to believe
in the impossible and remove the
improbable.
This starts with clarity of purpose and sense of mission that will
lead us to imagine the impossible and
deliver it. We need to prioritize innovation that is centered on
our core value of empowering users and
organisations to "do more." We have picked a set of high-value
activities as part of our One Microsoft
strategy. And with every service and device launch going
forward we need to bring more innovation
to bear around these scenarios.
Next, every one of us needs to do our best work, lead and help
drive cultural change. We sometimes
underestimate what we each can do to make things happen and
overestimate what others need to do
to move us forward. We must change this.
Finally, I truly believe that each of us must find meaning in our
work. The best work happens when
you know that it’s not just work, but something that will
improve other people’s lives. This is the
opportunity that drives each of us at this company.
Many companies aspire to change the world. But very few have
all the elements required: talent,
resources, and perseverance. Microsoft has proven that it has all

three in abundance. And as the new
CEO, I can’t ask for a better foundation.
Let’s build on this foundation together.
Satya
Source: Microsoft
LBS128
Exhibit 5: Satya Nadella’s letter to “the two families that have
shaped my life”

LBS128
References and Notes
1 Fast Company. (2018). Satya Nadella: The C In CEO Stands
For Culture. [online] Available at:
www.fastcompany.com/40457741/satya-nadella-the-c-in-ceo-
stands-for-culture
2 Fortune. (2018). Microsoft’s office: Why insiders think top
management has lost its way. [online] Available at:
http://fortune.com/2011/03/31/microsofts-office-why-insiders-
think-top-management-has-lost-its-way/
3 Eichenwald, K. (2018). How Microsoft Lost Its Mojo: Steve
Ballmer and Corporate America’s Most Spectacular
Decline. [online] The Hive. Available at:
www.vanityfair.com/news/business/2012/08/microsoft-lost-
mojo-steve-
ballmer
4 Eichenwald, K. (2018). How Microsoft Lost Its Mojo: Steve
Ballmer and Corporate America’s Most Spectacular
Decline. [online] The Hive. Available at:
www.vanityfair.com/news/business/2012/08/microsoft-lost-
mojo-steve-
ballmer
5 Bergen, J. (2018). Google pays 23% more than industry
average, and then there’s the perks - Geek.com. [online]
Geek.com. Available at: www.geek.com/news/google-pays-23-
more-than-industry-average-and-then-theres-the-
perks-1390323/

6 Paragraph excerpted from Fast Company and adapted by case
writer to include chronology. (2018). Satya
Nadella Rewrites Microsoft’s Code. [online] Available at:
www.fastcompany.com/40457458/satya-nadella-
rewrites-microsofts-code
7 Jackdaw Research. (2018). Media. [online] Available at:
https://jackdawresearch.com/media/
8 Harvard Business Review. (2018). Microsoft’s CEO on
Rediscovering the Company’s Soul. [online] Available at:
https://hbr.org/ideacast/2017/09/microsofts-ceo-on-
rediscovering-the-companys-soul.html
9 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh: The
Quest to Rediscover Microsoft’s Soul and Imagine
a Better Future for Everyone. William Collins, p.92.
10 Ibid, p.93.
11 Fast Company. (2018). Satya Nadella: The C In CEO Stands
For Culture. [online] Available at:
www.fastcompany.com/40457741/satya-nadella-the-c-in-ceo-
stands-for-culture
12 Phil Spencer (2018). 2018 Dice Keynote Transcript. [online]
Slideshare.net. Available at:
www.slideshare.net/PhilSpencer/2018-dice-keynote-transcript
13 Fast Company. (2018). Satya Nadella Rewrites Microsoft’s
Code. [online] Available at:
www.fastcompany.com/40457458/satya-nadella-rewrites-
microsofts-code
14 Nadella, S., Shaw, G. and Nichols, J. (2017). Hit Refresh:
The Quest to Rediscover Microsoft’s Soul and Imagine
a Better Future for Everyone. William Collins, p.75-76.

15 Ibid, p.81.
16 Interview with Jill Tracie Nichols, Satya Nadella’s Chief of
Staff 2014–2017 and co-author of Hit Refresh: The
Quest to Rediscover Microsoft’s Soul and Imagine a Better
Future for Everyone, London, May 1, 2018
17 Ibid, p.80.
18 Ibid, p.83.
19 Ibid, p.93-94.
microsofts-code
LBS128
22 Microsoft.com. (2018). Empowering Our Employees -
Microsoft Corporate Social Responsibility. [online] Available
at: www.microsoft.com/en-us/about/corporate-

responsibility/empowering-employees
23 Interview with Kathleen Hogan.
www.youtube.com/watch?v=4kf7mhkG6cM
26 Interview with Hogan
www.youtube.com/watch?v=4kf7mhkG6cM
27 Ibid.
28 Cable, D. (2018). Alive at Work: The Neuroscience of
Helping Your People Love What They Do. Harvard
Business Review Press, p.168.
29 Ibid, p.169.
30 Ibid, p.170.
31 BBC News. (2018). Xbox apologises for go-go dancer party.
[online] Available at:
http://www.bbc.co.uk/news/technology-35861212
33 The Verge. (2018). Microsoft says it will tie executive
bonuses to diversity hiring goals. [online] Available at:
www.theverge.com/2016/11/18/13681738/microsoft-diversity-
goals-executive-bonuses-women-in-tech
34 McKinsey & Company. (2018). Ahead of the curve: The
future of performance management. [online] Available at:

www.mckinsey.com/business-functions/organisation/our-
insights/ahead-of-the-curve-the-future-of-performance-
management
microsofts-code
38 West, J. (2018). Microsoft’s disastrous Tay experiment
shows the hidden dangers of AI. [online] Quartz. Available
at: https://qz.com/653084/microsofts-disastrous-tay-experiment-
shows-the-hidden-dangers-of-ai/
microsofts-code
41 Chamberlain, D. (2018). Who’s Hiring AI Talent in
America? - Glassdoor Economic Research. [online] Glassdoor
Economic Research. Available at:

www.glassdoor.com/research/studies/ai-jobs/
microsofts-code
44 Ibid, p.119.
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46 News.microsoft.com. (2018). [online] Available at:
news.microsoft.com/uploads/2017/09/Satya-Nadella-transcript-
Ignite-2017.pdf

Structure BookmarksSatya Nadella at Microsoft: Instilling a
growth mindset The “lost decade” Satya Nadella Taking charge
From know-it-alls to learn-it-alls Grounding the pillars Role-
modelling the change Four years on The future Exhibits Exhibit
1: Evolution of Microsoft’s share price Exhibit 2: Top players
by market share and revenue growth in cloud computing, Q2
2017 Exhibit 3: Organisation-chart cartoon courtesy of Manu
Cornet Exhibit 4: Exhibit 5: Satya Nadella’s letter to “the two
families that have shaped my life” References and Notes
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The Five forces that shape StrategyRivalry among existing co.docx

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