Fortune - USA (2019-12)

BUSINESSPERSON OF THE YEAR

MICROSOFT

APPLE MARKET

CAPITALIZATION

0.4

0.6

0.8

1.0

$1.2 trillion

NOV. 1, 2016 NOV. 1, 2019

77

FORTUNE.COM // DECEMBER 2019

WI N D O WS O F

OPPORTUNITY

From left: Hogan,

CEO Nadella, Hood,

and Smith form the

inner circle that has

brought Microsoft

to new heights.

uted to the company’s
stagnation.
Today, Nadella wears
the gaps in his résumé as
comfortably as the jeans
and blazers that are his
corporate uniform. Key
to his leadership style is
a willingness to delegate,
particularly to three
powerful members of
his management team:
president Brad Smith,
who runs policy and
legal affairs; Amy Hood,

to the company, for

leading policy initiatives

on areas from cyber­

security to ethics in A.I.

and privacy. A roving

corporate ambassador,

Smith has deftly posi­

tioned Microsoft, once

the scourge of Wash­

ington and Brussels, as

the most thoughtful and

least under attack of its

Big Tech cohort. Smith

is perhaps even better

known in global capitals

than Nadella. The CEO’s

take on that? “Brad was

a senior leader in the

company long before

I was a leader in the

company.”

Hood was appointed

CFO a year before

Nadella’s promotion. He

says she plays an outsize

strategic role, particu­

larly when it comes to

capital allocation: “If

you look at what was

happening to Microsoft’s

growth rates, we’ve had

to go through the hard

journey of not having

growth to having growth

at scale. That only hap­

pens when you can give

oxygen to new businesses

long before they become

growth businesses.” A

prime example is the

company throttling back

on its Windows franchise

to pay for investments

in its successful cloud

business.

As for Hogan, a

Microsoft sales con­

sultant before Nadella

promoted her in 2015,

the CEO refers to her

as the senior leader­

ship team’s “conscience”

and a “constant audi­

Microsoft’s chief finan­

cial officer; and chief

people officer Kathleen

Hogan. Each cuts a wide

swath in areas many

CEOs call their own, a

state of affairs that suits

Nadella just fine. “I’m

wired to be fairly confi­

dent in myself and to let

others shine,” he says.

It’s not that Nadella

lacks an ego, and the

robust financial results

his company has racked

up give him undeni­

able bragging rights.

The company earned

$39 billion on revenue

of $126 billion in fiscal

2019, while growing

revenue at a three­year

compound annual rate

of 11%. Profits by the

same measurement have

jumped 24%. Microsoft

is worth the once­

unheard­of valuation

of a trillion dollars.

Nadella credits Smith,

Microsoft’s longtime

general counsel and pre­

viously an outside lawyer

The Race to a Trillion-

Dollar Valuation