Since rising to CEO in early 2014, Satya Nadella has helped steward Microsoft through a renaissance.
The company shed businesses that were underperforming, focused more directly on diversity and inclusion, and started to work on how it could differentiate itself from other tech giants. Microsoft is often derided for missing the shift to mobile computing during the years Steve Ballmer was in charge. Nadella has taken strides to ensure the company doesn’t miss where the industry appears to be heading now.
Microsoft has become one of the industry leaders in cloud computing. Its Azure platform is used by companies around the world, and in its most recent earnings report, its “Intelligent Cloud” business unit, which includes Azure, generated nearly $11 billion in revenue for the quarter. That’s only about $7 billion less than the entire company generated in the same period in 2013, when Ballmer was still at the helm.
Ahead of the company’s Ignite conference for enterprise developers and IT workers, Quartz spoke with Nadella about how it’s trying to support a new generation of app-makers that don’t know how to code, how he’s shifted the company’s internal thinking, and what it’s like to run one of the largest tech companies in the world.
This interview has been lightly edited for length and clarity.
Quartz: What inspired you to take part in the no-code movement so directly today—why now?
Nadella: The way I come at this is that Microsoft has always been this platform and tools company, you could say ever since our very origin. It’s one of the key things that we’ve tried to reframe even what our mission is. I feel that, as a tech company, our core sense of purpose is how do we take this technology and democratize it, and its access, so that others can reap the benefits of technology. Because if I step back, the real challenge for the world is how is all this progress in technology leading to broad economic surplus, broad productivity growth. It’s not going to happen if all we do is celebrate any one product from a tech company.
You have to celebrate, as a society, as an economy, as a world, a lot of technology products—digital technology products that have been created by lots of people. That’s sort of at the center of what we do. It’s our business model too.
So, in that context, when you say, “Wow, 60% of the jobs in technology now are outside of what is considered the tech industry,” (this is a LinkedIn stat), that’s pretty fascinating. And that’s only going to grow. That means that there are going to be more technology people and software people hired into non-tech industries, and who is going to build the tools and platforms for them—that’s kind of our core mission.
Then, there is this other statistic, which is there’s going to be a shortage of developers and software people. There is a 1 million-job shortage that is expected by 2030, and that’s where one of the things that I feel needs to happen is you can’t say, “Look, everybody needs to become a computer scientist,” at least as it is defined today. In fact, if you look at the stories, I love one of these things, it’s these PowerApps Champions, it’s the human stories of those people, like this gentleman in Heathrow Airport, who picked up PowerApps, and now he’s part of their IT team; this person from Alcoa, who picked up PowerApps and is now part of their IT team. [PowersApps is a Microsoft initiative that allows non-technical users to build mobile apps from pre-selected templates.]
It’s just like with Excel—once Excel was introduced, a lot of people were able to build spreadsheets and become numerical and analytical. Think about all the white collar-ish jobs that were created because of Excel, because people could then do that type of work. We want the same thing to happen, with low-code/no-code, where the domain expertise in the frontlines can be converted into digital processes, that are adding value.
What do you think this means for the status of developers—is the profession rising or falling within companies? Does this low-code movement, by democratizing coding, change what it means to be a developer?
There are going to be a variety of different parts of the labor market, and if anything, what we know is developers are being hired into the non-tech industry. In itself, that’s great to see, but the reality is, how can we create more skills and more jobs that are also digital jobs of the future?
Again, take spreadsheets. I don’t think the bookkeepers or accounting or finance [departments] somehow went away. If anything, everybody became an analyst. That’s sort of what we envision, which is that democratization improves the overall digital capability of an organization. If anything, we will have more professional developers and all these citizen developers or domain developers. Both of those, in fact, will be what I think a company will have as they improve their digital capability.
Looking at your most recent earnings report, the main three reporting lines were all quite even in terms of revenue (around $11 billion each). Will this continue to be the case in let’s say, five years, or as you say, will PowerApps become something like the new Excel, and shift the company’s focus more towards enterprise? How do Xbox and Surface fit in?
I think Microsoft is a very broad-based business. Some [division customers] are purely consumers, some are purely enterprise, some are a mix. So, some of our largest businesses are a mix: Microsoft 365 and Office 365 are bought by consumers and enterprises.
Sometimes, I describe it as user-focused and people-focused. There are certain business models, like Xbox, that are obviously very consumer-focused and consumer-only. But nevertheless, I feel very, very good about the diversity of Microsoft’s businesses. But this conference is all about our enterprise customers, our commercial customers—small, medium, and public sector, large enterprises—and how we provide them an entire stack, from sort of the core infrastructure, data, and AI capabilities, to even their productivity, communication and business process applications.
But the most interesting thing that we’re also making is not just about our stack and our apps; it’s about your own apps and your own stacks and platforms that you want to build on top of it, because if every company is going to be a software company, we want to work with every one of them to build their own digital IP. That is what you’ve seen us emphasize a lot more in the last multiple years because that’s really core to our mission.
It must be challenging to open yourself up to work with other cloud companies or other third-party tools, if that’s what your clients want. Has that required a shift in the way the business operates?
It is a business shift. It’s clearly a different way of partnering, but it all centers around our customers. Things become very clear on what you need to do to succeed, if you listen to your customers, and that’s what we have done, in some simple terms. And it’s not just also what they are asking you to do today, but even these, what I describe as the ‘unmet and unarticulated needs of customers’—as long as you stay humble and stay true to that, then you’re not going to be dogmatic about either the product you build, or the partnerships you have, and you’re going to keep refreshing your approaches, an all fronts. Because ultimately that’s kind of what we’re in business for.
From how it looks on the outside, it seems like you’ve been taking that same approach to things within the company as well—that there’s been a cultural shift in the last few years. How do you go about working to make sure that the cultural history of the company stays intact, while trying to modernize what the company does, and who it is?
One of the things that we have tried to frame, even in terms of what I’ll describe as our cultural journey, is that it’s an ongoing process of renewal. We don’t frame this even as some set of attributes we are changing from the old to new, or some destination that we will reach at some finite time. If anything, the things that we have picked were inspired by Carol Dweck at Stanford, which is this notion of the “growth mindset.” What the growth mindset teaches you is that, each day, every one of the 100,000-plus people at Microsoft, will need to confront, effectively, their fixed mindset.
That means you’ve got to not be a know-it-all, but be a “learn-it-all,” and that has been helpful way to frame it, where we don’t get into this trap, as if all we are doing is changing two things, and we are new—that’s not the point. The point is that [it’s a] hard, continuous process of renewal.
I mean, we’re all human, after all, and the typical thing about us, as human beings, is to look for change in others and not in ourselves. Everybody talks about change, except nobody wants to change. It’s how you bring in that level of introspection where you’re grounding yourself when it comes to diversity and inclusion, or, how we come together as one company. There’s this customer obsession we’ve talked about. These are hard things. We’ll never be perfect at it. To think that—the day we are achieving perfection in customer obsession—then you’re done.
It’s the same thing on diversity and inclusion, and the question is, are we bending the arc towards a more inclusive culture and doing the hard work? I would say we’re pushing ourselves each day, but you know it’s an ongoing journey and not a destination reached.
It must be difficult trying to reconcile business needs with the feelings of your employees. For example, there was that open letter last year about Microsoft not bidding on the Pentagon’s JEDI cloud services contract, which you won last week. How do you balance those sorts of things?
We start by having respect for all views, of all of our employees. We definitely want to make sure that we are hearing their views, their opinions, and being very respectful from where they’re coming, and even seeking to understand, deeply, their concerns—and at the same time, being very clear about our principles, about the choices we make.
It’s not necessary for all of the 100,000-plus people at Microsoft to agree on everything, but for us, as a management team, [we need] to be very clear about the decisions we make, what are the principles, and be transparent about it.
And, in the case of the Department of Defense, and our engagement, and I’ve said this multiple times, that we’ve got a long history of engagement. And, most importantly, as an American company, we’re not going to withhold technology from the institutions that we have elected in our democracy to protect the freedoms we enjoy. That’s something that is a principled stance we have taken, and we are very transparent about it.
For the products you’re building, whether it’s for someone as massive as the Department of Defense, or the sorts of things that customers using PowerApps could leverage in their own tasks, how do you work to make sure that in those instances you’re also free from discrimination or any sorts of problematic issues that can come up from the underlying software? I think about the inherent bias in a lot of facial recognition datasets, which has been an issue for Microsoft in the past—how are you making sure that the products that you create, that others can then leverage, are as unbiased and as secure as possible?
If you look at the history of software products, and clearly in 2019, that responsibility to create the products, the processes and the tools around it—the engineering robustness around products—so that they’re used without bias, with the best security, while preserving things like privacy, and being compliant with regulations, all of these are changing. After all, privacy now is regulated, and that means that the products that come out have to support it. Cybersecurity has been a concern, and so you need to build products that are robust around security. And even on AI ethics.
So, for example, after you brought up bias, let’s say language models: One of the things that we are very, very focused on is how do we build the toolchain? This is, again, where our heritage around building tools is super important. The ways that bias gets introduced is because you don’t have hygiene around data, and lineage around data. And so that’s sort of the work we’re doing.
How do we even build tools to essentially un-bias these word embeddings that happen when you train over a corpus of human language? For some of these state-of-the-art challenges with AI, we’re investing a lot to ensure that, not only are we building the products, but also building the tooling around the products so that you can have the right deployment of the technology, and make sure that the unintended consequences of these technologies are not what gets manifested.
Like everything else you’ve mentioned, it’s kind of a work in progress it seems: You’re never finished, even when you hit some set of goals.
That is correct. Also, when we think about it, we want to make sure that we are doing everything as the platform provider. We also have principles in how we engage with customers around it, but we fully also expect—just like how there are consumer protection authorities in many other industries, like in food safety—ultimately, we think that there can be more regulation, even around AI safety.
In fact, you already see it: In the state of Washington, there is some legislation there, and then there are others. And so I think we should fully expect, as a tech industry and as a society, that whenever things get broadly deployed, and there is a danger of misuse, that there will be a real debate, even in our legislative process, and where we will have some guardrails on how things should be used and how things like safety should be ensured.
Is there anything that you feel like you’ve learned about Microsoft, or about managing, since you’ve become CEO?
Yes—this deeper understanding of how multi-constituent the world is, is what I think I feel like I have learned a lot. The company has learned a lot. One of the things that I’ve been most proud of is Microsoft and its technology reaching all corners of the world, and being that democratizing force.
I mean, in some sense, my own life story is intertwined in there. There’s no way I’d come to the United States, let alone become CEO, if it were not for Microsoft technology reaching me where I was growing up. And so that has obviously had a huge imprint on me. It’s become a lot more real for me, to think “Oh, yeah, you’re a CEO of a multinational company,” but what does it mean? To me, what it means is how are you contributing to every community, whether it’s in the United States, or every country in the world, and the local surplus.
Wherever I visit, whether it’s Atlanta, or, you know, Tokyo, I have to sit down with the people in the local community and say, “Okay, what are the small businesses we have made more productive, the large multi-nationals in the region, where they are more competitive, or public sector more efficient?”
That’s the realization that ultimately that’s what our business is about. But it comes with that understanding that, unless you’re making a lot of people successful around you, you’re not going to have a long-term business. I think this is what I feel the most proud of, and the most grounded in.
What’s the smallest change you’ve made since becoming CEO that you think has made the biggest difference?
I would have never thought, if you look back at the mail I wrote when I became CEO, and that talk track I had, that sense of purpose, culture—a word here or there may have changed (even on the technology side)—but it startles me how consistent it has been.
Sometimes, it worries me, that am I being dogmatic now, five-and-a-half years [later], but it is that consistency. That’s the small change, which is not to get tired of my own frame, so to speak, because I think it’s not a frame, it’s sort of more of us meeting the world where it’s at, both the aspirations of the people inside the company, and outside the company. That consistency, you can say that’s a small change, or a big change, but there is not a meeting I go to internally, that I don’t start with our sense of purpose and mission, and end with our culture.
And that helps.