Source: The Wall Street Journal
In February 2014, Satya Nadella became the third CEO of Microsoft . Nadella, more soft-spoken than his predecessors, Bill Gates and Steve Ballmer, assumed the company’s helm amid one of its stormiest chapters. Ballmer, toward the end of his 14-year tenure, had purchased Nokia ’s mobile phone business at great cost ($7.2 billion) but failed to make a dent in the market dominance of Apple and Samsung . Nadella quickly nixed those ambitions and instead ramped up investment in artificial intelligence and commercial cloud computing. The result has been a remarkable turnaround, featuring major growth in cloud services revenue, a doubling of year-on-year profits and an all-time stock price high.
In his new book, Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone (released September 26), Nadella, 50, explains this corporate transformation, lays out his hopeful vision for technological progress and recounts his own rich personal history.
Born in India to a Sanskrit scholar mother and a Marxist civil servant father, Nadella immigrated to the United States in 1988, on his 21st birthday, to pursue a master’s in computer science at the University of Wisconsin–Milwaukee. He joined Microsoft in 1992 as an “evangelist” for its Windows NT operating system—traveling the country to demo software to corporate clients—while using his weekends to complete the University of Chicago’s part-time M.B.A program. As he slowly hiked to the peak of Microsoft’s organizational chart, he got married (he was introduced to his wife, Anu, in India by their families) and had three children. Nadella credits his kids, including 21-year-old son, Zain, born with severe cerebral palsy, for softening his outlook on both work and life.
In the book’s foreword, Gates, 61, who co-founded Microsoft, reigned atop the company for a quarter century and now co-chairs the Bill & Melinda Gates Foundation, lauds Nadella’s humility and pragmatism. He also notes the first-time author’s surprising quotient of literary references (Rilke, Nietzsche, Goethe) and cricket lore (Nadella was an avid amateur and remains an enthralled fan). Gates recently dropped by Nadella’s corner office on Microsoft’s sprawling campus in Redmond, Washington, to join a discussion that touched on topics ranging from management ethos to immigration policy to the promises and perils of technological progress.
Seth Stevenson: Why write a midcareer memoir?
Satya Nadella: I ran into Steve Ballmer maybe a couple of months after he had finished as CEO, and I asked him, “Hey, are you writing a book?” And he turned to me and said, “No, that’s in the past; I’m now into the future.” And that’s when it struck me that maybe while I’m going through it all I should actually reflect on what this process is. Quite honestly, it was written as a cathartic thing for me, and for our own employees, as we’re going through this transformation. Not to say we’ve arrived at any destination, but to think through and write about the process as it unveils.
SS: Your book argues that cultivating empathy will bring out the best in a company. How does empathy fit into your management style?
SN: Being hard-core and driven is as essential today as it ever was. But there needs to be humility. The reason why I use the word empathy is because the business we are in is to meet the unmet, unarticulated needs of customers. That’s what innovation is all about. And there’s no way you’re going to do that well without having empathy and curiosity.
Bill Gates: I’ve come to value empathy more over the course of my career. Early on we were speed nuts, staying all night [at the office, thinking], “Oh, you’re five percent slower as a programmer? You don’t belong here.” It was very hard-core. Steve Jobs, the way he ran the Mac team, he was an extreme example of that where—wow, they got a lot done, but within a year nobody was there. I think as this industry has matured, so has what’s expected of a CEO. Satya has a natural ability to work well with lots of people, to tell people they’re wrong in a nice way and to let feedback come through to him more than I did.
SS: Satya, you write that reading Mindset: The New Psychology of Success, by Stanford University psychology professor Carol Dweck, influenced your effort to reshape Microsoft’s corporate culture. What about it spoke to you?
SN: My wife was reading the book probably two or three years before I became CEO, and she forced me to read it, too. It changed my life. The book is about fixed mind-sets versus growth mind-sets—when you have a growth mind-set, you’re always willing to learn. I started thinking about what was happening in my head and asked whether as a company we have a learning culture. Do we have curiosity? Do we have the fundamental posture to act on our learning? When I put that out there as CEO, I was wondering whether people would grab onto it. And most people felt that this was not simply about Satya’s new dogma for us; it was about us as people. Because ultimately, the “learn-it-all” will always do better than the “know-it-all.” And that shows up in a variety of ways. You’ll be a better parent, spouse, team member and manager.
SS: You welcomed Bill Gates back into the fold at Microsoft when you became CEO, asking him to play more of a day-to-day role. What inspired you to lure him back?
SN: Bill is a galvanizing force. Whenever somebody meets with Bill, they want to do their best work. You can’t replicate that. You can push back at Bill and, if you are right, he’ll be the first to acknowledge it. But you can’t be intellectually lazy or dishonest. It’s helpful for anyone to have somebody like Bill as the person you can turn to for tough calls.
BG: It’s been fun. I only spend time on product strategy, so it’s meetings here in Seattle with very smart people. Steve Ballmer would probably tell you that when he was the CEO I was confused about what it meant not to be the CEO, and I had to learn to be the No. 2 guy. But that got figured out. And, hey, being CEO is hard. There’s not any jealousy at all on my part. More empathy than jealousy at this point.
SS: Bill, what’s different about the landscape Satya faces now, as opposed to when you were CEO?
BG: Well, the company is more complicated. We have more products. And the competition—there are four other gigantic companies and 200 other important companies. There was once a period of time, believe it or not, when money was limited. Your competitors actually had limited money, and if they couldn’t sell much in the way of products they couldn’t keep large development teams. Now, because of the belief in this field, the start-up money and super-profitable products, companies can go and spend huge amounts of money. And for the customer it means the speed of innovation across all these different companies is incredible.
SN: I mean, there’s never been a period, I guess, when there were three of us spending north of $10 billion in tech on research and development. Like $12 billion—Amazon is spending that, Google is spending that, we are spending that.
BG: And Apple and Facebook a little bit less. But they have infinite resources. They could afford to. Who knows why they’re not?
SS: Both Microsoft and the Gates Foundation are big believers in the power of technology to better humankind. What are some ways you see technology being used as a force for good?
SN: I talk about mixed reality, artificial intelligence and quantum computing as three things that are going to shape a lot of the technology going forward.
For example, the state I live in today, Washington, as well as the state where I was born in India, are both using essentially the same cloud-based machine learning technique to predict high school dropouts. Because you want to take the scarce state resources and intervene to help those who need it most, who are most likely to drop out. Using some of this cloud capacity to make predictions that are going to be helpful broadly in society, that’s a practical use of AI.
BG: In the Gates Foundation’s work, you really want to track what’s going on to stop corruption. Say there’s a grant to Nigeria for health stuff—if it’s digital money, they can track that it was paid to a certain person and when it was paid out. Then you can audit later and say, “Did that really happen?” You don’t want to tell donors that three percent went astray. Now that there’s digital traceability in a place like Nigeria, where corruption is a huge problem, we can bring that down. A lot of the optimism we have at the foundation about disease, education and financial services is because we’re sitting on top of a digital miracle. That’s why staying engaged with Microsoft isn’t just fun for me personally; it’s also creating synergy. I see where digital tools work and don’t work in my foundation role, and then I come over here and ask, “How come we’re not making this better?” or “What comes next?”
SS: Is there a danger that automation will steal jobs from human beings and create economic hardship?
SN: Technological displacement is a real issue. But it’s not going to be a binary transition. There will be new kinds of jobs. We’ll need education and re-skilling. Over a lifetime, if we have to find different types of employment, we’ll need continuous learning. Without the technological breakthroughs, we’re not going to have enough growth, and that’s not going to be good for anybody. So let’s optimize for growth and at the same time solve for the displacement and bring meaningful cohesion to society so that people feel they’re able to participate and contribute.
SS: Elon Musk has fretted that artificial intelligence could turn humans into “house cats” once computers become smarter than us. Is AI an existential threat to humanity?
BG: The so-called control problem that Elon is worried about isn’t something that people should feel is imminent. This is a case where Elon and I disagree. We shouldn’t panic about it. Nor should we blithely ignore the fact that eventually that problem could emerge.
SN: The core AI principle that guides us at this stage is: How do we bet on humans and enhance their capability? There are still a lot of design decisions that get made, even in a self-learning system, that humans can be accountable for. So we can make sure there’s no bias or bad data in that system. There’s a lot I think we can do to shape our own future instead of thinking, This is just going to happen to us. Control is a choice. We should try to keep that control.
SS: Can you explain in one sentence to my 72-year-old mother: What is quantum computing?
SN: I don’t think so. I wish I could. But in simple terms, I think we’re reaching some limits on the foundations that have helped us get all this computing power. And the question is, What’s the next breakthrough that will allow us to keep up this exponential growth in computing power and to solve problems—whether it’s about climate or food production or drug discovery? I think that’s where quantum plays a role. It’s a natural thing for us to be investing in because we are one of the biggest spenders on cloud computing, and we think of this as our next-generation cloud.
BG: I smiled when you suggested we should try to explain quantum. That’s the one part of Microsoft where they put up slides that I truly do not understand. I know a lot of physics and a lot of math. But the one place where they put up slides and it is hieroglyphics, it’s quantum.
SS: Satya, your book describes the challenges you and your wife have faced as immigrants from India. It also references former White House Chief Strategist Steve Bannon’s notorious contention that there are too many Asian CEOs in the tech sector. How do you respond to the rhetoric about immigration that has emanated from this White House?
SN: I’m a product of two amazing American things: American technology reaching me where I was growing up in India, and American immigration policy letting me come in and live and thrive in the United States. Quite frankly, there is no other place in the world where my life story could have played out the way it has. So I feel blessed to be in this country. Think about it: A guy like me shows up here and can thrive. How many places in the world can you say that about? So that’s how I look at this. What is our competitiveness based on? It’s the ability for people to come, contribute, thrive. And that’s something I think is unique to us, and we should not let go of it. It doesn’t mean we should be loose about our borders or we shouldn’t have immigration policy or we shouldn’t think about labor substitution in smart ways. All of those are really important issues, and the policies should be thought through. But fundamentally, I think there’s something that America gets by being a country that’s been welcoming to immigrants, and we shouldn’t lose it. What I just said to you is something that I’ve shared with President Trump and the administration, and I’ll always advocate for it.
BG: Other countries are trying to imitate us. In every country, when you meet with heads of government, they’re saying, “OK, what are we missing in order to have Silicon Valley in our country?” So America has done a lot of things right, and people ought to think twice before they go and change those things. The rhetoric coming out of this White House has certainly been a change to some degree. The tech sector—myself, Satya—we are speaking up about policies that we think are bad for the country. Now, people will question us and say, “Aren’t you just speaking for your own self-interest?” Yes, we’re biased. We love technology. We love Microsoft. But we’re not going to be chicken about speaking out.
SS: Satya, your father hung a poster of Karl Marx on the wall of your childhood bedroom in India. Does Marxism offer any lessons you can apply to running a massive publicly traded company?
SN: The only part of Marxism that makes sense to me now is the notion of creating surplus so that it can create more surplus for others. Microsoft’s business model is unique from a lot of other tech companies. Our success is not just our success. For everything that we create and every dollar we make, there are others who are able to achieve more success. So I believe that even in a capitalist society, having a long-term distribution of surplus that is more equitable is going to be helpful to keep the system stable.
SS: Do you envy anything your competitors are doing?
SN: I’m not driven by envy. There are a lot of things I admire that our competition is doing. If anything, we’ll take them as inspiration for things we should do.
SS: Bill, has Satya convinced you to like cricket?
BG: Not yet!