Microsoft’s Peggy Johnson: ‘Innovation needs diversity of thought’

15 Mar 2019

Peggy Johnson. Image: Naoise Culhane

One of the architects of Microsoft’s phenomenal reboot over the past five years is Peggy Johnson. She talks with John Kennedy about how to change a company’s culture and achieve a growth mindset.

I don’t know if it was fate or coincidence ahead of my meeting with Peggy Johnson that I managed to overhear a part of Microsoft CEO Satya Nadella’s keynote at Mobile World Congress in Barcelona. Nadella was talking about turning around the culture and mindset at Microsoft, from a lumbering battleship with a lot of legacy and sacred cows, to a more mindful, nimble, open, 21st-century digital leader.

“One of the best things about Microsoft was that it had Bill Gates. But one of the problems at Microsoft was that at the top there were 30 other people who thought they were Bill Gates,” Nadella recalled. He said the fundamental key to Microsoft’s revival was transforming it from a company full of “know-it-alls” to a company full of “learn-it-alls”.

‘Innovation can literally come from anywhere, so we should be looking for it everywhere’

Two days later at the One Microsoft Place campus in Dublin, where the software giant was hosting the inaugural Hopper Local, modelled after the Grace Hopper Celebration, I recount this to Peggy Johnson, one of the most powerful women at the helm of the global tech industry and executive vice-president of business development of the world’s biggest software company.

Getting to grips with a growth mindset

Johnson smiles in recognition. “Where Satya got that whole genesis was a book he read called Mindset, which was written by Stanford psychologist Carol Dweck. When I first met Satya he was just a few months into the CEO job, and he said that the company was at an inflection point and that we needed to change the culture because so many things were happening. The industry around us was changing to a subscription-based model and technology was on a rapid growth trajectory, and he felt that the company’s culture needed to change to fit this new mode.

“He said that we were going to go on a cultural journey, and that change was the heart of it. And that resonated with me. His vision and his focus on changing and the need for change. I just knew that if they offered, I was going to take the job.”

It was a fortuitous move for Johnson, who had spent 25 years at chip giant Qualcomm and had no previous inkling she was about to change jobs and industries. But it was also a fortuitous move for Microsoft as the dynamic new leadership she is part of at the software giant has made it a very different kind of company, with an emphasis on opening up and working with rival platforms such as  iOS and Android. The open, cross-platform approach is working and in its most recent Q2 earnings it reported a 12pc spike in revenues of $32.5bn, driven through solid gains in its Cloud and Office businesses as well as the success of its Surface hardware.

“I loved San Diego and, after 25 years at Qualcomm, had no plans to change jobs. I grew up there professionally and I loved the climate. Then, one day I got the call from Microsoft. And I never answered recruitment calls because so many great things were happening, but I was intrigued by the new leadership and especially when Satya made the stunning move to put Office into iOS and Android.

“Curiosity got the better of me and when I met Satya he talked about what he called ‘ambient intelligence’, and the ‘A-ha!’ moment for me was when he said that it’s really about mobile plus the cloud. I came from a mobile world that never thought of what happened after data left the device, and that vision resonated with me.

“We have been on a journey since the first day that Satya told me about Microsoft embracing a growth mindset. We are still changing and we still have some ways to go but we have succeeded in distributing that message across the company.”

One Microsoft

Strolling around Microsoft’s giant new campus at Sandyford in Dublin, where more than 2,000 people are based, you wouldn’t guess it because everything is so quiet and even the building itself seems to blend in to emerge from the rolling, hilly landscape. It’s all zen and there’s even a yoga room centred at the top of the building, placed to capture the sun rising over the mountains in the mornings. Gone are the cubicles, polo shirts and khaki chinos. Instead, everything feels calmer, relaxed and youthful. There’s even a DreamSpace innovation and education hub, which aims to equip 100,000 schoolkids and their teachers with vital digital skills.

The zen analogy isn’t too far off the mark, I discover. “We have this idea of being a ‘One Microsoft’. In the past we were more siloed. When I started one of the first things I was told was to have a more ‘outward-in’ perspective and bring that into the company,” said Johnson.

“That was a challenge because physically Microsoft is a bit further north than Silicon Valley and the key was to re-engage with partners and with Silicon Valley in general, and so I spent a lot of time doing that. We were missing a lot by not being present in an area with so much innovation, and one of the first decisions we made was to launch an early-stage venture capital company called M12 and we’ve made more than 70 investments in the last three years.”

Johnson, an avid runner who is known to hold meetings while out jogging, said that there is a clear line between diversity and business impact. But this is not just about diversity of people, it is about diversity of thought.

“Innovation can and should come from anywhere. But if you have just one type of person on a product or design team – imagine a whole team of Peggy Johnsons, for example – then you will make a product that only Peggy Johnson will love.

“But how many other people will love that product or use it?”

Johnson warned that that’s the trap so many companies fall into, by having similar people with similar mindsets on the team instead of embracing different perspectives and cultures.

“The business opportunity really for diversity is to bring in all the different thoughts and perspectives, and it crosses not just gender or ethnicity, but it is also about different geographies, socioeconomic backgrounds, age groups, people who have different experiences in their lives.

“Innovation can literally come from anywhere, so we should be looking for it everywhere and building teams that have this wide diversity of thought because those are the products that will have the broadest consumption.

“Not only should we be doing it because it is the right thing to do, but we should also be doing this and have a focus on it because there is a business impact. I would say that over the years that I’ve been with Microsoft, our focus on diversity has only increased and that has been just so gratifying because I do think you could say, ‘OK we’re going to do diversity training and check the boxes, everybody’s done unconscious bias training’, and move on to the next business problem.

“But it really needs to be infused into every part of the company and it needs to be constant and consistent as a priority.”

Business impact from innovation

The core element at the heart of the new Microsoft, Johnson said, is inclusion – both spiritually and pragmatically as a business.

“It’s exciting to see 450 women and men at the Hopper Local here in Dublin, but it’s also about having an environment at work that allows you to do your best work. A lot of times in my career I was asked to be something I was not; to be more assertive and aggressive, and those aren’t things that come to me naturally. But I was told that was what success looked like and I thought of leaving the industry like a lot of my peers had. And then there is the whole aspect of having children.

“I learned somewhere along the way that life is like juggling a load of glass balls, and that when you are stressed out you juggle them faster. But I figured it is OK to set one or two down to concentrate on not dropping the others. And I was fortunate that my previous company and my current company … leadership was thinking of that.

“For example, Microsoft now has paternity leave because it is only right that all parents should be able to bond with their young children.

“This mindfulness is also applicable to how we approach partnerships. Previously, all tech companies fought each other in such a way that it was a zero-sum game; that in order for you to win, your opponents had to lose. We’ve changed that to focus on being better partners in the ecosystem and jointly focus on, ultimately, the end customer.

“Even companies that are competitors can somehow find a way to partner. Rather than take away a piece of the pie, we want to grow the pie for all of us. And that’s what has made the difference in the last few years, as companies we would have competed with are now partners. It’s all part of that growth mindset equation.”

Want stories like this and more direct to your inbox? Sign up for Tech Trends, Silicon Republic’s weekly digest of need-to-know tech news.

Updated, 11.20am, 15 March 2019: This article was updated to clarify that the One Microsoft Place campus in Sandyford houses more than 2,000 staff, not 1,200.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years