A successful rebrand from the inside: Microsoft

The best branding insights often come from the unlikeliest places. The “Brave New World” podcast is nominally about the transformation of humanity by machines. But one reason it’s a must-listen for me is its host Vasant Dhar’s wide-ranging curiosity, which often brings him and his guests to interesting and unexpected places. And in his talk with Microsoft’s Jeff Teper on the post-Covid workplace, we’re treated to a fascinating mini case study of Microsoft’s 2014 rebrand from the perspective of a senior exec who had a hand in it.

After many years on Microsoft’s product side, Teper did a one-year stint as head of corporate strategy, starting just as Satya Nadella took over from Steve Ballmer as Microsoft’s CEO. Teper experienced first-hand how Satya led the firm’s rebranding (Teper and Dhar refer to Nadella by his first name, and I will too). Because he also participated in the rebrand—not as a marketer but as a business head—Teper’s story has a practicality that I really like, and none of the usual brandspeak that really turns me off.

Definitely listen to the podcast and hear it from straight Teper. In the rest of this post I’ll try to capture the takeaways that strike me as important.

Culture beats strategy, brand drives culture

When Satya took over, “The company was in a ditch,” according to The Economist (October 22, 2020). “Its share price [had] barely budged for years.” So why would a hard-nosed product guy who likes to build things begin his tenure as CEO with a “soft” initiative like branding?

SAtya nadella (Brian Smale and Microsoft, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons)

Because “culture eats strategy for breakfast.” Satya loves to quote Peter Drucker, says Teper, and whether Drucker actually said this about culture, it’s one of Satya’s favorite Druckerisms. And it explains why his first step as CEO was to lead not with strategy but with a re-brand. While a brand does many things, a big part of any brand’s job is to place the company culture in a business context.

Before Satya took the helm, Microsoft was already headed toward the cloud. Ballmer understood the cloud’s economic advantages well before the markets and pushed the company in this strategic direction. And Ballmer wisely chose Satya to lead its cloud business. So Satya knew Microsoft’s future lay in the cloud. But to get there, he knew that Microsoft’s culture needed a re-set. That favorite Drucker quote, says Teper, was “the key to Satya’s leadership: the cultural renewal of the company.”

The brand speaks to past, present, future

When a brand as well-known as Microsoft revisits its brand strategy, it doesn’t work from a clean slate. It’s constrained by reality: its people and capabilities, its customers and markets, its history.

At the same time, the brand also must have a forward focus. For the brand to serve its business purpose, it must hit that sweet spot where market will be, where the company can compete, and where its history supports the narrative. (Is it believable that Microsoft can compete with the already well-established Amazon Web Services?)

In my experience, most firms about to re-brand themselves haven’t given enough thought to where this sweet spot lies.

Companies—not agencies—create brands

Branding is hard work for both the agency (if one is involved) and the firm. I think the hardest work falls on the firm—answering the difficult questions raised in the branding process. This is the gritty reality of branding: it’s the company’s job to do the heavy cognitive lifting that branding requires, with its superior knowledge of itself and its markets. And it’s the agency’s job to facilitate that process, with creativity and objectivity.

Satya was more than willing to do the hard work. Notice his contribution to the mission statement Microsoft settled on:

“To empower every person and organization on the planet to achieve more... ”

When the rest of the branding team protested that “on the planet” was just extra words, Satya resisted. “’I really want our employees to know it’s everyone,’” Teper recalls Satya saying. “He believed our success extends from our customers’ success,” says Teper, and that included often neglected markets such as emerging economies and forgotten customers such as those with impairments.

Based on his $2.5-million annual base salary alone, Satya’s hourly value to Microsoft is higher than most people’s weekly pay. Yet he knows that fighting over three words is a smart use of shareholder value, and of his time. The mission statement, which explains why the company exists, is that important. Satya also understands that a brand should be as simple as possible, but no simpler.

A re-brand involves the entire company

With the “why” of the mission statement completed, Satya charged the firm’s business leaders with defining the “how”—the product statement. How would Microsoft’s business lines deliver on the mission?

The product statement is a phrase that’s added to the mission statement and makes it specific to a market, completing the thought. Without communicating how a business will deliver its mission, the mission statement will ring hollow. It has no practical relevance to the audience.  

For Teper, who by that time was leader of Microsoft Teams, that product statement was “to empower every person and organization on the planet to achieve more,

“... with industry-leading collaboration tools, integrated together in a hub for teamwork at school, work, and home.”

Assigning the product statement definition to business heads gets a lot done. First, it gives the task to the right people: business heads are closer to the customer than senior management. It turns the firm’s business leaders into brand leaders by making them co-authors of the brand and of their responsibilities in fulfilling the brand promise (much like having sales help set its own sales quotas).

And it ensures that the new brand will be executed across the firm, not by words but by deeds. By itself, a product statement is a beginning. A successful rebranding is accomplished by the actions of the entire firm over time. Not by words, visual symbols, or a set of brand guidelines, but in everything the firm does.

This deep expression of the brand through the company is the larger underwater portion of the branding iceberg, and is often given short shrift or overlooked entirely. Satya intentionally chose business leaders he thought would excel as brand leaders and realize, through their people, the mission they helped create.

A rebrand should aim for big business impact

Satya’s rebrand seems to have worked. By 2020, Microsoft had double-digit revenue growth, its stock price had more than quintupled, and only two companies had bigger market capitalization: Apple and oil giant Saudi Aramco. At the time of the podcast, the stock had increased eightfold, and as of early September 2022 those market cap rankings still held.

How much of this is attributable to Satya’s re-brand? Teper ascribes Microsoft’s success to two things. First, Satya’s decision to revamp the company’s mission and strategy to truly become cloud-first. This seems obvious now, says Teper, but it wasn’t obvious to the enterprise market in 2014. Second, Satya’s commitment to fostering the culture around collaboration and inclusion. “That made a huge difference,” he says, “to Microsoft’s innovation, revenue growth, and prestige” over the years of Satya’s leadership.

In other words, making the right strategic call wasn’t necessarily enough. It took getting serious about brand and culture.