(Miss this week’s The Leadership Brief? This interview below was delivered to the inbox of Leadership Brief subscribers on Sunday morning, June 7; to receive weekly emails of conversations with the world’s top CEO’s and business decision makers, click here.)
All of us, including the leader of one of the world’s most influential companies, Microsoft CEO Satya Nadella, are learning to take on world-changing challenges. Diversity in tech—and other industries—is not where it needs to be. In the wake of the unrest that has unfolded following the death of George Floyd, Nadella says the company has “goals and programs to improve representation in all roles and at all levels.” Nadella is also increasing his company’s support for criminal justice reform and minority-owned businesses. “We must do more and do it faster,” Nadella says.
During the COVID-19 epidemic, Nadella has taken to calling the tech giant’s workforce “digital first responders.” The company’s developers and cloud experts are working side-by-side with organizations including the CDC, John Hopkins University of Medicine, state unemployment centers, retailers, and schools. Institutions “have gone through two years’ worth of digital transformation in two months,” says Nadella. “We were seeing the other side of it which is the peak demand on our infrastructure.”
In April, the use of Teams, Microsoft’s video conference and collaboration software, more than doubled from a month earlier to 75 million users. On a recent day, more than 4.1 billion meeting minutes were conducted on Teams. Users are also spending even more time networking on Linkedin, which Microsoft acquired in 2016, and playing Xbox.
Nadella, who was born in India before coming to the US to study computer science, is credited with transforming the tech giant from a stodgy software firm into a major player in cloud computing, AI and gaming. Microsoft, which generated $126 billion in revenues in its most recent fiscal year, has added more than $1 trillion in market cap during his six years as CEO. He has a daily mindfulness practice and his latest obsession is the philosopher Kierkegaard. At the same time, he’s a hardcore techie with degrees in electric engineering and computer science, plus an MBA from the University of Chicago (completed on weekends).
During a video conversation in which he wore a black tee-shirt and geek chic Clark Kent glasses, Nadella discussed the importance of empathy and the steps Microsoft is taking to help address systemic racism.
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(This interview with Microsoft CEO Satya Nadella has been condensed and edited for clarity).
How do you lead a massive organization through what the country is going through right now?
We understand that to call for systemic change outside of our company, we must drive systemic change inside our company. It is by looking inside ourselves and confronting what we need to change, that will begin the change in our company, in our communities and in the world.
Specifically, what is Microsoft doing internally?
As a company, we need to look inside, examine our organization, and do better. We have to embrace the same speed and mindset that we do in anticipating and building for future technological shifts. We must do more and do it faster. In order to be successful as a business in empowering everyone on the planet, we need to reflect the world we serve. This is our commitment; we have goals and programs to improve representation in all roles and at all levels. We’re investing in the talent pipeline broadly, as we’ve expanded our connections with Historically Black Colleges and Universities. We also have to create an environment where all voices are heard and valued. That’s why we’ve made inclusion a core priority for every employee. We have goals and programs to improve representation in all roles and at all levels. Our senior-most leaders have diversity and inclusion progress as a component of their compensation, and we have company-wide learning programs on topics around inclusion, like how to become an effective ally for others. This helps everyone become more equipped to confront our own biases, have uncomfortable conversations and take action to be inclusive with intention.
And what is the company doing externally?
We also have a responsibility to use our platform and resources intentionally to address systemic inequities in our communities and in society broadly. This is the work we need to do to have lasting impact. For example, we’re using our technology and our voice toward a more equitable criminal justice system with our Criminal Justice Reform Initiative. We created our Supplier Diversity program 15 years ago, so our supplier companies better reflected the diversity of our customers. Today, it makes up nearly 10 percent of our supplier spend. That spend has an amplifying effect, growing the local economies in the communities where those businesses are located. We need to keep building on this work in every community we operate in.
What have you communicated to your workforce this week?
We understand that to call for systemic change outside of our company, we must drive systemic change inside our company.There is no place for hate and racism in our society. We know that the everyday racism, bias and violence experienced by the Black and African American community is not new, and the tragic and horrific murder of George Floyd stands as but the latest example of this. I am heartbroken for George and his family and stand with those advocating for change. Addressing systemic racism, which has impacted opportunities and exacerbated injustices for Black and African American communities, requires an urgent holistic response. It starts with having empathy and a shared understanding for the lived experience of others, but it must evolve to intentional action, in our company and in our communities.
Shifting gears, when did you first hear about COVID-19?
I first heard of COVID at the end of January when it was spreading in China, and it was impacting our supply chain. But I first understood the enormity of it the day I landed back at the end of February, from Indonesia, back to Seattle, and that is when the nursing home news was starting to spread. This nursing home was five miles from where I live. That’s when it really registered.
Do you think that experience allowed you to make moves to be more agile in your preparation?
Yes. If you think about the core of this virus, it’s that you can’t ensure your own safety if you don’t ensure the safety of everyone around you. That’s the key insight. It’s not just about you; it’s about what is happening around you. One of the core principles we established was, ‘what’s the public health guidance and what is the data’, so that we don’t take arbitrary actions based on, say, even a CEO’s proclivity to something because that’s not the way to run a large institution.
We said ‘let’s take the most conservative, extreme view of what the guidance is.’ On the way out, we were sort of fast, and on the way back in, we will be slow.
Working from home is a great privilege.
I talk to [CEO] Doug McMillon at Walmart or Rodney [McMullen, CEO) at Kroger, and they always remind me: “Look, when you say ‘work from home,’ remember, ‘We’re sending millions of people to work each day so that your people can work from home.’” At Microsoft we have the privilege of working from home. As I said, we will probably be the last to come back to work. But for us, as a platform provider to the world, we need to be grounded not only in the needs of our own employees, but in what the real world looks like. Our hospitals will have medical professionals, our grocery chains will be open, our deliveries will happen. And that’s going to be the most important thing for us to recognize. I hope we all, as a society, recognize the essential nature of all the roles. Remote education has put more burden, not less, on our teachers and school administrators. I think there is a lot that we will have to account for in terms of how we, as a society, value all of what is going on and how important it is, and especially in a time of acute need.
I’ve been warned you can get very technical: Can you say something nerdy to me?
[Laughs] Today I’m into large-scale graph databases and how do they scale. In databases, there’s always been this challenge of how do you partition a database so that you can have infinite scale. There’s even a theorem called the CAP theorem, and graph databases are challenging in particular. So that’s what I’ve been thinking about: low-latency queries on large scale graph databases. If you figure out the solution, send me an email.
You’ve commented on how COVID-19 has really accelerated the move to digital.
Some of it is what I’d call just peak demand during a time when it’s remote everything and some of it is really structural. We have gone through two years’ worth of digital transformation in two months.
What about the impact on your gaming business?
We have gone through two years’ worth of digital transformation in two months.We’re seeing with gaming that Xbox is having its peak, more so than even in December, and it’s amazing to see. I saw an email from someone who forwarded their high school graduation for their kid on Minecraft [which Microsoft acquired for $2.5 billion in 2014.]
You have focused on transforming Microsoft from a know-it-all company to a learn it all company. What does that mean now that we’re all finding out how little we know?
If you think about this crisis, the fact that we still do not have a complete understanding of the virus itself because we learn every day something new about how it spreads, what its impact is. We know that it impacts different people in different ways. It’s got multiple organs that it impacts. I think that, hopefully, out of this will come out with a new understanding of human biology, how diseases spread, and what is needed in order for us to respond.
I said at Microsoft we want to go from being a know-it-all to a learn-it-all, and we’re grounded in [author and Stanford psychologist] Carol Dweck’s work around the growth mindset, and the idea is to have that mindset that every day I’ll confront some fixed notions or assumptions that I was making about the world around us, and about ourselves, in some sense, and then give permission to change. One of the things that I like to say is that everybody talks about change: everybody wants the other person to change and not change themselves, but the reality is that the inner change is the hardest one. That applies to human beings. It applies to societies, countries and the world.
Then being very flexible, not being the victim of any dogma, past, present or future, because resilience comes from being flexible.
Would you like to see a stronger more coordinated response at the Federal level to the health crisis?
I think we all should be learning, learning from every place. We should learn from New Zealand. We should learn from South Korea. We should learn from Germany. We should learn from the state of Washington. We should learn from New York. The United States is a huge country, so therefore, it’s not a South Korea. It’s not a Germany. It’s not a New Zealand. We do have more diversity, more scope, more scale. Therefore, I think there needs to be a federal response and there needs to be a state-level response.
If we really want to go back to January 2020 where people can go about the world, do their economic activity, then we will need a holistic approach where in every local community through the world, the institutional strength is being added up.
We, as a globe, are only as strong as our weakest link. That’s why I worry a lot about the developing world. Right now, we’re connected, and so, what is happening in Brazil or what happens in India, what happens in Africa will all impact us.
Our office gaming expert asked, is the next Xbox still on track for the fall?
Yes, we are on track. The head of our Xbox did say that one of the challenges in remote work is some of the content creation: There are certain things that do need people to come into studios to do that might have an impact in our first-party and third-party games. But overall, we’re seeing, as I said, fantastic usage data. We even launched a new Minecraft version, for Dungeons, and it’s very exciting.
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In your book, you wrote about how your son being severely disabled has made you more empathetic as a leader. How does that come to bear at this particular time, too?
The birth of my son, his struggles, learning from what my wife and all the care providers who are involved in his life, from the physical therapist, the speech therapist, the occupational therapist taught me a lot about what it means to see life through other people’s eyes. And that made a massive difference to me as I grew in Microsoft as a leader, as a manager. I am a fundamental believer that empathy is the source to what people describe as design thinking. When we say, what’s the source of innovation, it’s about being able to meet the unmet, unarticulated needs of customers. Where does that come from? I mean, it comes from you having thought deeply about those needs of people and planet. That’s why I emphasize empathy.
Looking at sort of the tech community as a whole, how do you think that particular sector is doing in terms of empathy in stepping up to its responsibilities?
I feel the maturity that is needed in the tech sector is where you sort of innovate, you respond to changes, but at the same time recognize that responsibility. I think that’s kind of what is the hardest thing, is what we have glorified up to now is just scale, scale, scale versus thinking about the unintended consequences of some of the scale.
What parts of the CEO job are you less interested in?
I would phrase it slightly differently because, at some level very early on, I recognized I am not particularly great are all things that are required to be effective as a CEO. I’m really blessed to have a very capable team of women and men who I’m surrounded by and who complement my strengths and weaknesses.
What are those weaknesses?
I love to fall in love with new things. I move from one new thing to the next before the new thing that I was in love with yesterday is now actually being executed on. So, I would say my intellectual curiosity is both my extreme strength and could be my extreme weakness.
I understand your father was a Marxist. How did he feel about his son running one of the world’s great capitalist enterprises?
It was a source of a lot of amusement to a lot of my father’s friends.
And your mother was a Sanskrit scholar. What teachings from your parents do you bring to work every day?
There’s a ton. Both of my parents have passed away and I was reflecting on this recently with some of my team members. They were very big into writing their diaries. I have all of them, and I’ve been reading some of them. My mom really is the person who captured a sense of mindfulness. She was present at all times. Whereas my father was the extreme opposite. He was curious about everything. He was just going from one passion to the other. The combination is what I’m most thankful for.
Do you have a mindfulness practice?
I picked this up from the gentleman who works with the Seattle Seahawks, Michael Gervais. The first thing I do when I get up in the morning, you get out of the bed and then you put your feet down and say what you were thankful for and what you’re looking forward to. That’s it. It’s the simplest thing, and given that it’s the first conscious act, very helpful.
NADELLA’S FAVORITES
BUSINESS BOOK: Prosperity by Oxford economist Colin Mayer. He goes back to the Industrial Revolution and talks about the birth of the modern corporation and what’s the social purpose of a corporation. And he has the line which I love where he talks about the social purpose of a corporation is to create profitable solutions to the challenges of people and the planet.
AUTHOR. A lot of the Russians. But lately going back to your question about my mom, I was reading this one part of our life [in her diaries], which is probably very tumultuous in the mid-70s. A lot of things were going on, and she wrote this thing where I think she borrowed it from Kierkegaard. She paraphrased him, saying something like the goal of reflection is to arrive at immediacy. And I thought, “Wow, that’s a powerful thing,” because in some sense, in a time like this, you, of course, have to reflect, but you’ve got to act and act to make a difference. How do you meet the world? What does it mean to be a human in the world ? So now, I’ve suddenly fallen in love! Who was this guy, Kierkegaard? What was he all about? And so, I’m trying to read up and educate myself.
APP: OneNote (Microsoft’s note-taking app.) I love to scribble, write, and note-take. It’s just a beautiful app.
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