By Amy Merrick, courtesy of Chicago Booth Magazine
Photo by Robert Kozloff

He can take a situation and analyze and articulate the issues involved. That is a useful skill in a CEO.”
—Stephen Kaplan
Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance

Editor’s note: This article is adapted from the Spring 2014 issue of Chicago Booth Magazine. Read it in its entirety here. 

In 1992, at the same time he was accepted at the University of Chicago Booth School of Business, Satya Nadella received his first job offer from Microsoft. Nadella didn’t want to pass up either opportunity, so he deferred his admission and then enrolled in Booth’s Weekend MBA Program. That meant flying to Chicago on Friday nights, attending classes on Saturdays, and returning to Seattle for the workweek, a process he repeated for two-and-a-half years over the course of earning his MBA.

Nadella, 46, credits his UChicago education with complementing his engineering background, giving him the knowledge and confidence to tackle complex questions at the intersection of business and technology. Booth teaches that “all strategy can be boiled down to simple microeconomic analysis,” Nadella said in a June 2013 interview.

After 22 years with Microsoft, Nadella, MBA’97, was promoted to CEO of the company on Feb. 4, becoming only the third person in Microsoft’s history to hold that title.

He has taken the helm at a time when tech competitors have Microsoft in their crosshairs. Similar leadership changes have been happening at Apple Inc., where CEO Tim Cook is trying to live up to the legacy of the late Steve Jobs. Meanwhile, young CEOs such as Facebook Inc.’s Mark Zuckerberg have shifted the technology frontier to social media.

In his four months leading Microsoft, Nadella has been credited with beginning its change into a company with a “fresh outlook and a more respectful attitude.”

Nadella “brings a more entrepreneurial, more start-up-y strategy to Microsoft,” said Sunil Kumar, dean of Chicago Booth, in a recent interview with Forbes. “But he keeps talking about playing the long game, too.”

The making of a CEO

The skills Nadella needed to evaluate new business opportunities at Microsoft were honed in a Booth entrepreneurial finance class taught by Steven Kaplan, the Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance. In a November 2013 talk with Booth students, Nadella said the class was one of the two most important courses he took at Booth, along with professor emeritus Marvin Zonis’s leadership class.

Nadella was a student in the first entrepreneurial finance class Kaplan taught, in the spring of 1996. The class is considered a capstone in which students use case studies to evaluate what makes a good investment for a startup or for an established company. “You really have to put together a lot of things: strategy, qualitative analysis, and quantitative analysis,” Kaplan said in an interview.

Nadella excelled at that holistic thinking, Kaplan recalled. “He can take a situation and analyze and articulate the issues involved. That is a useful skill in a CEO. He can both write well and understand the case quantitatively. In my experience, the people who have that set of skills are successful.”

At Microsoft, Nadella is navigating a rapidly shifting technology landscape, in which customers have been moving away from traditional desktop computers, toward nimbler mobile platforms such as tablets and smartphones.

Nadella took a decisive first step in late March with the announcement at his first news conference that Microsoft would publish iPad versions of Word, Excel, and PowerPoint. That’s a dramatic departure for the company whose software had been designed to run on its Windows operating system. Nadella outlined a platform-neutral vision that he called “a critical intersection of mobile and cloud.”

“You can measure whether you’re doing anything useful,” Nadella told students in November. “Do you feel a little stretched? If not, there’s something wrong.”

‘A great designer and a psychologist’

Born in Hyderabad, India, Nadella began at Microsoft by building the operating system that became known as Windows NT. Since then, he assisted in managing software products for small and medium-sized businesses. For a while he had technical oversight of Bing, Microsoft’s search engine. He’s been in charge of engineering for the company’s advertising systems, along with the company’s news portal MSN, and he’s managed Microsoft’s servers and cloud platform.

Most recently, as executive vice president of Microsoft’s cloud and enterprise businesses, Nadella capitalized on the trend toward cloud-based computing, which uses a network of remote servers on the internet to store and process data.

At the November conversation with students, he talked about four major trends in technology that he sees evolving simultaneously—mobile, cloud, big data, and social media—with big data being the largest potential opportunity. Microsoft’s Xbox video game Halo 4, Nadella said, “is the most data-driven application on the planet.”

In conversations, he stresses cross-disciplinary connections. “It’s a true renaissance time in terms of what it takes to create successful products,” Nadella told students. “You’ve got to have the sensibility of both a great designer and a psychologist.”

With his natural enthusiasm and willingness to learn from others, the new CEO demonstrates a mind constantly at work. He jokes about buying more books than he can read and signing up for more online courses than he can finish. Though fluent in technical jargon, he also is devoted to poetry.

In his email to Microsoft employees on his first day as CEO, he paraphrased advice from an unlikely source: Oscar Wilde. Nadella wrote, “We need to believe in the impossible and remove the improbable.”

Originally published on June 2, 2014.