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It was the year of artificial intelligence, and no big tech company embraced the trend like Microsoft.
In 2023, the company's CEO, Satya Nadella, made a billion-dollar investment in AI, commercialized and added AI tools like ChatGPT to its product lineup ahead of the competition, and stunned industry observers with its ability to handle a crisis quickly, calmly, and thoughtfully.
Under his leadership, the company is once again becoming a technology innovator after years of benefiting from the success of Windows. Wall Street has noticed, too: Microsoft shares are up 55% this year.
That's why the CNN Business staff chose Nadella as CEO of the Year, beating out other candidates including Chase CEO Jamie Dimon, OpenAI CEO Sam Altman and Nvidia CEO Jensen Huang.
“There is no question that 2023 was the year of AI,” Nadella told CNN in an email response. “We no longer just talk about innovation in the abstract; We are seeing real product manufacturing, delivery and productivity improvements. Ultimately, however, this innovation will only be beneficial if it empowers all of us in our careers, in our communities and in our countries.”
Since 2018, the CNN Business writing and editorial team has met at the end of each year to select an individual whose leadership achievements stand out. The process is admittedly subjective – we select someone based on criteria that change from year to year.
The company's stock may have outperformed its competitors. Maybe the CEO righted the ship after a chaotic product launch, or the company developed a life-saving vaccine that changed the course of human history (hat tip to 2021 CEO of the Year, Pfizer's Albert Bourla).
This year's CEO of the Year is once again a man, pointing to a larger representation problem in the top ranks of corporate America. According to Fortune, about 10% of CEOs of Fortune 500 companies are women. But our goal has never been to choose one leader over another. Rather, we hold a mirror up to the business world and tell a story about what we see. (We also considered non-CEO executives and selected Taylor Swift as our Business Leader of the Year.)
Going into 2023, Nadella's decisions have greatly influenced and influenced the direction of AI, the most significant innovation to come out of Silicon Valley in decades.
Gil Luria, senior research analyst at asset management firm DA Davidson, puts it best: “His ability to steer the aircraft carrier Microsoft into this new era has been nothing short of remarkable.”
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A Microsoft sign at the company's headquarters on March 19, 2023 in Seattle, Washington. (Photo by I RYU/VCG via Getty Images)
Nadella's background doesn't quite fit Silicon Valley's Ivy League dropout archetype. Nadella was born in India and came to the United States in the late 1980s to pursue a master's degree in computer science at the University of Wisconsin-Milwaukee. He later earned an MBA from the University of Chicago Booth School of Business.
Nadella's outstanding performance is a highlight of his work over the past few years. He joined the company as an engineer in 1992, at a time when Microsoft was labeled a monopolist by regulators.
By the time he was promoted to CEO nearly a decade ago, Microsoft had developed a reputation for being slow to adapt to major trends like mobile devices. Today, technology companies are lining up to partner with Microsoft and join its mission to commercialize artificial intelligence for the masses.
In Nadella's 2017 book, Hit Refresh: The Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone, he wrote about his experiences internally overhauling team by team and product by product to make Microsoft better for employees is to work with others.
He also worked to soften and revitalize Microsoft's image. Back in 2016, the company entered into a partnership with OpenAI – an emerging company with new AI tools at the time – and allowed them to run the technology on its Azure cloud servers in exchange for access to those tools.
But after a massive $13 billion investment in OpenAI earlier this year and the viral launch of ChatGPT in November 2022, Microsoft introduced AI-powered versions of its flagship products like Word, PowerPoint and Excel, breathing new life into otherwise boring software . Nadella's push to commercialize these tools quickly gave the company a leg up on rivals like Google and Amazon that were working on similar technologies, and helped spark an arms race across the industry.
Now, as more companies, from Instacart to Snapchat, add ChatGPT and others to their own services, Microsoft's cloud business is poised for stronger growth. Microsoft has reported strong Azure growth over the past three quarters.
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Microsoft CEO Satya Nadella (R) speaks as OpenAI CEO Sam Altman (L) looks on during the OpenAI DevDay event on November 6, 2023 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
While Nadella had an impressive year overall, his leadership shined even better during the series of events that followed OpenAI CEO Altman's surprise ouster on the Friday afternoon before Thanksgiving week.
The timing was also notable: just four days earlier, Nadella stood with Altman on stage at OpenAI's first developer conference to discuss the future of artificial intelligence and their partnership.
The executives represented one of the most dynamic and important relationships in the technology industry, not just of the year but in years: Altman had clearly emerged as the face of the generative AI movement, and Nadella was one of the most powerful technology leaders who funded its development Tools.
“You have created something magical,” Nadella said at the time. “It was fantastic for us.”
But despite his longstanding relationship with OpenAI, Nadella reportedly learned of Altman's removal from the company “shortly before” OpenAI released a statement, leaving Microsoft without control of the situation.
The company said in a statement that an internal investigation found that Altman was not always honest with the board.
In response, Microsoft's shares fell, perhaps because OpenAI was intended to serve as a linchpin for their plans to expand AI into their products. “Things weren’t looking good for Microsoft,” Luria said.
Nadella quickly picked up the phone and offered to hire Altman at Microsoft to lead a new AI research lab, along with one of the co-founders, Greg Brockman, and one of the 700 Open AI employees planning to leave the company.
According to Luria, he also spoke to some of OpenAI's board members – the people who originally forced him out – and was able to get them on board with a solution that would be favorable to Microsoft.
Altman eventually returned to OpenAI with a new board intact.
“He turned a seemingly bad and embarrassing situation into an opportunity to improve Microsoft's standing with this very important partner,” Luria added. “What we saw with Mr. Nadella is an interpersonal skill that you don't always find in CEOs who can be visionaries and luminaries and great at product, but not necessarily able to pick up the phone, talk to people “To speak and reach them.” to see things your way.”
As Fred Havemeyer, a senior enterprise software analyst at financial services firm Macquarie, said in a letter to investors: “Mr. Nadella may have pulled off his own coup and taken over the most important part of OpenAI – its ambitious talent.”
On Monday morning, Microsoft was in better shape than it had been a week earlier. The stock reached a record high that day; Shares rose 2.1% to an all-time high of $377.44, surpassing the previous record of $376.17.
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Satya Nadella and Stephanie Mehta speak on stage at the “A Conversation with Satya Nadella of Microsoft” panel on November 7, 2019 in New York City. (Photo by Brad Barket/Getty Images for Fast Company)
According to Stuart Carlaw, chief research officer at ABI Research, Nadella's successful year is largely due to his remaining extremely “focused.”
“His approach to the mechanics of leadership remains people-oriented,” Carlaw said. “He understands that people drive outcomes and has stayed true to that ethic in his interactions with Sam Altman and the entire OpenAI team.”
Nadella also discusses what he wants to use his energy for. “He hasn’t invested that much since he took over,” Carlaw said. “He has focused heavily on value-added areas that advance the Microsoft brand.”
Microsoft Chief Marketing Officer Takeshi Numoto, who has been with the company for 25 years in various roles, said he felt an internal culture shift this year and said the company felt “fresh” and “energetic.”
“There is a feeling that we are helping to build the next wave of computing across the board for the world, and carefully,” he said.
Indeed, Nadella told CNN that he remains focused on empowering both people and organizations to achieve more as the company continues to build and deploy new products.
“That is our mission at Microsoft … and what we continue to focus on as we look to 2024 and beyond,” he said. “Imagine if 8 billion people had access to a personal tutor, a doctor to give them medical advice, a mentor to give them advice on whatever they needed. I believe that everything is within reach. It’s about making the impossible possible.”
The biggest challenge, however, is whether Nadella can take Microsoft to the next level by making these AI-powered products profitable.
“You are only as good as your last results,” Carlaw said. “[But] He’s not the only one facing this dilemma.”
CNN's Allison Murrow contributed to this report