Microsoft CEO Satya Nadella is in the UK to see some cricket, but also to promote his new book Hit Refresh. Fellow podcasters Intelligence Squared hosted a packed debate with the CEO now in his third year at the Microsoft helm and invited Horizon Business Innovation to an audience with Nadella. Below is just some of the key points Nadella shared with an audience of CIOs, Fintech and technology leaders and academics.
Nadella is only the third CEO to lead Microsoft and took to the central London stage with BBC Economics Editor Kamal Ahmed to discuss everything from artificial intelligence (AI), quantum computing, parenthood and of course leadership in one the giants of personal and enterprise technology.
Ahmed asked Nadella to begin his book tour at the very beginning of his story, his childhood in India.
“I didn’t have the idea that one day I would make it Redmond and be the CEO. I’m the product of British and American technology, my first computer was a Sinclair,” he said of the black PCs from Cambridge many of us had our first computing experiences with.
“It had a huge influence on me. My father was a socialist civil servant and my mother a professor,” he would go on to talk with real affection for the calmness his mother instilled in him and how that has helped him as a business leader.
“The only thing my parents agreed on was that I spent too much time on cricket,” but the sport, which he is still a passionate test lover of made him happy and that pleased his parents. “Having intellectual ambition and being given the apparatus to do something with it,” he said of how he left India for the US because at the time the US was a better place for a technology career. Nadella described the importance of the US policies on immigration and would later politely avoid a question on President Trump’s immigration policies.
“I’m such a product of the US, its technology reach and the enlightened American immigration policy,” he said.
Innovation in Microsoft
The core theme of Nadella’s book is how Microsoft has rediscovered itself and reset its operating model. Nadella was honest with the audience “innovation is replaced by bureaucracy” and an inability at “teamwork”. Ahmed pushed the CEO as to whether he can really be the leader of a reset when he is himself a Microsoft product:
“I grew up in Microsoft and everything that is good and everything that is wrong with Microsoft I am part of,” he said graciously. “My role is not so much about change, but rediscovering what we have and acknowledge what we got right and what we haven’t got right.”
Nadella on a number of occasions spoke supportingly of his predecessor Steve Ballmer who advised Nadella to “be your own person” and was the first to advocate Microsoft becoming a leading server technology provider.
Moving from what Microsoft’s strengths and weaknesses were Nadella spoke of his development as a leader, the CEO said he has always sought outside views and says his socialist father gave him this strength.
“I am an insider with some credibility and I am critical of the past, which makes it possible to change. I have an ability to say I made those mistakes.”
That honesty led to Nadella discussing the now well known missed opportunities in its history that have allowed the rapid development of Google, Amazon AWS and the return of Apple.
“One of the things I observe as a pattern is the amazing virtuous circle of when you get your first success you then build a capability and then the culture around that capability and these then reinforce each other. Then the growth stops and you need new capabilities,” he said, going on to admit that Microsoft missed the web, search and mobile: “These were big misses”.
“It is a classic case of the lock between capability and culture, we had a very successful datacentre business and people are asking ‘why are you not moving into a very low margin business’,” he said of missing the point where Amazon disrupted the market and made cloud computing viable. Nadella went on to say on the whole moving into a low margin business is not good business, but went on to admit that margin structures pre-AWS “that you have fallen in love with are no longer sustainable”.
“We had high margins, but we needed to see it through a different lens. We caught it and we caught our own mistakes.”
“You can aspire to be Don Bradman, but an above 50 average is pretty good,” he said returning to his cricketing passion.
Throughout the debate Nadella saluted his family, crediting his wife for teaching him: “better to be a learn it all than a know it all.
“Most large companies become a know it all,” he said with humility. Returning to his leadership on this point he said: “The last thing I want to do with the culture at Microsoft is to replace ABC with XYZ. God knows I have made a lot of mistakes,” he said, adding: “It is not a formula it is a mindset,” and central to this, Nadella says is empathy.
“I look back and say why did we create our best products and hits? It was because we had a deep sense of what are the unmet needs of the customer.
“You have to have a deeper intuition and I believe the source of that is empathy. If you are going to truly listen, that is the inspiration for innovation. You cannot go to work and say I will be empathetic, you cannot turn it on. Empathy comes from a lesson in life,” he said, going on to describe how an empathy question in an interview to join Microsoft he failed completely, but the interviewer gave him the answer, realising that Nadella had the capacity to develop empathy skills. “Those experiences grounded me as an engineer and a leader.” He went on to describe how his child with special needs also played a major part.
‘It gave me a better sense to see things through other people’s eyes. It was the hit refresh moment in my life.”
Nadella also reflected on the loneliness of the top position in a business: “As CEO you see the structures left and right, no one on the team see it the way you see it and the people you work for, in our case the board, don’t see it that way. So you have to get your judgement right.
Ahmed used this juncture to discuss the topic of corporate responsibility and in particular the significant changes technologies such as AI will bring to society.
“I do believe in a world of an abundance of AI and what will be scarce is real human intelligence like empathy,” Nadella defended the technology. “The ability to relate to people will become a really valuable commodity,” he said. Interestingly this has risen up the needs CIOs must have in order to succeed.
“There is a distinction between dystopia and utopia. With any new technology we as a society have to be clear on the impact and be mindful of unintended consequences and that will be the case with AI,” he said. As a technologist Nadella was passionate about AI helping those with visual impairment (a Microsoft project) and how it reduces error rates in oncology scan analysis ensuring that specialists spend more time with the patient and not the data, that empathy skill again. Nadella defended the technology industry and Microsoft for being capitalists, but with a sense of wider purpose.
“For us it is essential that there is a benefit outside of our balance sheet. If there is a value in what we create and you pay us if you make money from it,” he said.
“Inequality is a challenge…how do we democratise networks and platforms to create more inclusion.” Nadella claimed that LinkedIn provides not only Microsoft but organisations, including in London, a way to “map skills to jobs in a dynamic way” and said the education debate across the world needed to “address the high cost of education head-on rather than the mechanisms” in a series of audience led questions.
For many of the CIO community present we recall a time of dominance from Microsoft and Nadella allayed any fears: “We want to be a platform, we don’t want to be directly involved in Fintech or Healthtech. A real currency for a digital business like ours is trust, so you have to be principled by what business you are.”
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