Q&A: Satya Nadella on Microsoft’s new world view, dual-screen devices and Pentagon cloud deal

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Microsoft CEO Satya Nadella speaks with GeekWire at the company’s Redmond headquarters this week, coinciding with the Nov. 5 publication of the paperback version of his book, “Hit Refresh,” with a new afterword. (GeekWire Photo / Kevin Lisota)

A lot has changed in the world, in tech and at Microsoft since Satya Nadella published his book, “Hit Refresh,” two years ago. One of the changes: Microsoft reclaimed the title of world’s most valuable company in 2018, two decades after it last held that status. But the company didn’t celebrate the milestone.

“Success is important, but you have to remember that your success has to have come from some sense of purpose,” the Microsoft CEO said in an interview with GeekWire this week. “In 2019, in particular as a tech company, I think that the excessive celebration of technology and tech companies is not what it’s all about.”

Instead, Nadella explained, “We as a world need to make sure that digital technology is helping us create more equitable growth in all communities, in all countries. And that means our success has to be based on success around us.”

That is one of the core themes in Nadella’s new afterword for the paperback edition of “Hit Refresh,” to be released Nov. 5. The update addresses new developments at the company, in the industry, the world and also in his own family.

Speaking with GeekWire this week, Nadella went further on several key topics — discussing Microsoft’s approach to a growing wave of nationalism around the world, addressing employee concerns about their treatment inside the company, and explaining why Microsoft is betting on a new category of dual-screen devices.

He also offered his take on two recent victories: Microsoft winning the coveted JEDI contract from the U.S. Department of Defense, beating Amazon for the $10 billion, $10-year Pentagon cloud deal; and the Seattle Sounders FC making it to the MLS Cup. Nadella and his wife Anu are part of the soccer team’s new ownership group.

Listen to the podcast above, and continue reading for edited excerpts.

Todd Bishop: It has been a couple of years since you came out with your book, Hit Refresh and the paperback is coming out Nov. 5. It’s been an eventful two years. And one of the things that’s changed significantly is that Microsoft became the most valuable company in the world again 20 years after it first achieved this milestone. And you write in the new afterword that people at the company here saw it differently the second time around than they did the first. What was different?

Satya Nadella: To me it’s as much an aspiration, for us to say, “We want to see it differently.” And in some sense it goes back to the core of what we celebrate. Success is important, but you have to remember that your success has to have come from some sense of purpose that is something that needs to endure. You have to ask yourself, why are we successful? We are successful in our case because both of our mission and business model is dependent on others being successful.

So when we say we have somehow achieved some milestone, we better be in touch with the thing that in the first place got us to be successful. And to me, in 2019, in particular as a tech company, I think that the excessive celebration of technology and tech companies is not what it’s all about. We as a world need to make sure digital technology is helping us create more equitable growth in all communities, in all countries. And that means our success has to be based on success around us. And that’s what I mean by that.

TB: You quote David Brooks in his book …

Satya Nadella: “Second Mountain,” yeah.

TB: … and his description of the “declaration of interdependence.” (Shifting from a focus on your own success to the success of others). What does that mean for Microsoft in practical terms?

Satya Nadella: One of the things which gives me the greatest source of pride of working at Microsoft is when I go to any place, whether I’m in Atlanta or in Seattle or I’m in Mumbai or in Beijing, I get to say, “OK, how did Microsoft’s participation in that community, in that country lead to a small business becoming more productive? How do we make multinationals from those communities more competitive, successful, growing employment? How does the public sector there become more efficient? How are health outcomes being changed, educational outcomes?” Because that’s the opportunity people in Microsoft get. Which is we get to contribute to all that. It’s not just the aggregate numbers. It’s that ability to have those anecdotes, those stories, those people, that’s what it’s all about. And so to me that’s really what we’re all seeking.

TB: That is something that’s become clear at Microsoft over the last few years under your leadership. And I think it comes through in the afterword to the book: you are not just trying to create technology, you’re trying to help others create technology.

Satya Nadella: And that’s exactly right. It’s one of the interesting data points which I write about, as well, which actually comes from LinkedIn. The number of software engineers, digital capable engineers who are getting hired outside of what is considered the tech industry is now more than in the tech industry. That crossover is happening in the last year and a half or so. And so now that means everybody is a software company. And so us then, so our core mission is to really help them build that capability.

TB: After reading your paraphrase of David Brooks, I was then surprised by something that came at the end of the afterword. And that was this sentence, “Borders are realities we should acknowledge. And every country will put their interests first, as they should.” You write this to underscore the importance of local growth and opportunity in countries and regions around the world. But in a geopolitical context, it sounded to me a bit like a capitulation to nationalism, and it seemed to go against that principle of interdependence and the idea of serving society over self. How do you explain that disconnect?

Satya Nadella: Absolutely. I think the thing that we have to recognize is the first phase of globalization, if you want to call it that, after the fall of the Berlin Wall, up to even 2016, if you wanted to say, “OK, that period was amazing, a lot was created.” And in fact I would say a middle class emerged even in Asia. And so the reality is there was a lot of goodness that came out of globalization.

The second phase of globalization has to tackle, though, the inequities that got created in every country. For us to say, “Hey, let’s go back to globalization the way it played out the last 20 years,” it’s just not possible because, first of all, elections are all local. People have to be able to really create that surplus locally. And so that’s one of the things that we as a multinational company have to be grounded in. That’s why I feel so good about Microsoft’s mission. Which is, we can’t go into a country and say, “Hey, it’s all about the top people of the country participating.” No, no, no. In being successful, we have to create local surplus. So that’s what I mean. Borders are real because when we talk about equitable growth, the equitable growth can’t be some global maxima. It has to have a local reality.

The question now is, can we get to a place where every part of the world can grow equally? Not only just grow as a country, but every community has equitable growth. That is the interdependence. For us to recognize that it’s not about one company, it’s not about the West Coast of the United States, or the East Coast of China. It is about the world.

Satya Nadella speaks with GeekWire editor Todd Bishop this week on the Microsoft campus. (GeekWire Photo / Kevin Lisota)

TB: At the same time, you are looking for national if not global norms in areas like artificial intelligence, facial recognition. How can you have those global norms if every country is looking out for its own interests with its own ethics and standards?

Satya Nadella: That’s a great question. Take raw energy transition. We share global resources. Global norms come because of our interdependence. And so the fundamental thing is even in a world where everybody says, “My country first,” the fact is that we share the globe, trade still needs to happen in order for us to have economic surplus. But it has to be fair. Climate is a shared resource. We better have a plan for energy transition as a global community. Same thing on AI ethics. Same thing around cyber. Who are the people who suffer the most from any cyber attack? It’s the consumers of the world, the small businesses of the world. Every government in every country should care about that. Enlightened self interest can sometimes lead to really us coming together as communities and as countries and as even a global community.

Partnering with former rivals

TB: Speaking of economic forces, this is the Samsung Galaxy Note 10 Plus. You prompted me, unknowingly, to buy this phone because you stood up at Samsung’s event and talked about the Windows integration, which has been a pain point for me since switching from a Mac to back to Windows. And this is another example of something that is completely different now at Microsoft. Imagine 10 years ago, if you had said that a Microsoft CEO had caused anybody to switch to Samsung and Android. It’s a totally different world. Can you speak to what this represents for you?

Microsoft CEO Satya Nadella, right, greets DJ Koh, President and CEO of Samsung’s IT & Mobile Communications Division, at the Galaxy Note10 unveiling. (Samsung Photo)

Satya Nadella: I always go back even into our own long history. Hey look, we were always a software company, a tools company, a platform company. We have to put our users first. Thank you for using Windows and switching back. [Users had] a pain point. You need a phone that works well with Windows. That’s what this partnership is all about. What matters to me is what you care about [as a user], not some corporate agenda of mine. That’s the core of how we need to invent things. That’s what led us to even build Office on the Mac first before Windows [in the 1980s]. So I want to reinvoke that core capability. Whether it’s Surface Duo or the partnership with Samsung, or support for PostgreSQL on Azure. All of that is about making sure we’re meeting customer needs and in compelling ways.

TB: Well, I will have some user feedback I can share offline on the Your Phone app on Windows. I think there’s some areas for improvement. We can talk about that later.

Satya Nadella: Absolutely. We should take that feedback.

TB: Speaking of the Surface Duo, Surface Neo, can you explain what the coming wave of dual screen devices will mean for Microsoft?

Satya Nadella: Broadly, we are always excited about a change in form and function of computing devices that can help users. And in our case we care a lot about how we ensure that in this plethora and abundance of devices, how can we as humans spend time on things that matter the most to us? What can we do with that scarce commodity of attention?

I look at the way I use both my Neo and Duo now and I want to carry it with me everywhere. I want to be able to open it up, take notes. It’s a beautiful pen-first experience. It’s a Moleskine-like experience. And so I’m excited about the form factor. And we want to build two versions of it, one on Windows, one on Android. And of course it’s all about expressing Microsoft 365 applications. The device is just that surface for our software experiences and we’re excited about it.

The new Surface Duo., due out next year. (Microsoft Photo)

TB: So you have been using the prototypes. How has it changed what you do in a meeting? Or when you’re walking around campus? How has it changed things for you?

Satya Nadella: Today still, in spite of all of the touch-first devices, you use paper. One of the things I like to do is I like to annotate, I like to write, here I’m able to read and communicate, even on a Teams meeting. That’s a game-changer for me. I want to do a lot of Teams meetings even on my phone. [With dual-screen devices] I can actually have the conversation happening in full video on one screen and on another screen, I can take notes on OneNote. And that combination is super productive.

Espoused values vs. employee experience

Todd: One other thing that really stood out in the afterword was a phrase that you also used in your shareholder letter. That was that the experience of Microsoft employees should match the expressed ethics of the company. And that there is a gap there. That gap has come out in a variety of forms including employees being public earlier this year about discrimination or harassment inside the company. You’ve addressed and encouraged their commentary. Why is that gap not smaller at this point in your tenure as CEO, between expressed ethos and reality?

Satya Nadella: That’s right. Because ultimately the measure of culture is really, what’s that impedance or distance between what is the espoused set of values and culture, and what’s the lived experience? And that I think is why I think it’s an unfinished journey. That’s why I don’t celebrate some destination that we’ve reached as far as our culture. And even a single employee’s experience not being what we espouse is something that we have to address.

I think when it comes to diversity and inclusion, we have to make progress on representation first. And then the fact that representation can only happen if you have inclusiveness. And that’s the hard work we have to do. One of the things that I’m even really thrilled about is, let’s invest even in helping our own employees and managers in 2019 get more equipped to lead diverse teams, and create that core respect inside of the organizations. Create the necessary conditions, if you will.

And one of the things that I’m thrilled about is this manager training that we’ve launched. You have to model, you have to coach, you have to care. And this has to happen with every person in the company. This is one of the things about human nature is all of us want change, except we want the other person to change. Whereas this is the moment for the hundred-thousand plus people at Microsoft. If you want to bring about change, each of us has to push ourselves to do the uncomfortable thing. Which is we have to confront that distance and then bring about change. And that’s what we want to stay focused on.

“Even a single employee’s experience not being what we espouse is something that we have to address,” says Microsoft CEO Satya Nadella. (GeekWire Photo / Todd Bishop)

TB: At the same time we’ve seen a wave of employee activism, especially a new generation of workers coming into the workforce being more open to speaking out about things, such as relationships with government entities that they might not feel comfortable with. Has that kind of feedback from employees changed how you lead the company?

Satya Nadella: I mean the one thing that I feel is super important for anyone like me is to respectfully, and that’s the key word, hear all opinions inside the company. Because you can learn a thing a lot. You can learn a lot from all of the various points of view. And in fact when you go back to that core diversity, inclusiveness, it has to start with it. Where are they coming from? Why are they concerned? What is the source of their concern? And even as a senior leadership team, are you taking those seriously? Are you deliberating? And then of course you have to make decisions. This is not about us, all 100,000 people, agreeing on every issue all the time.

But then even if you disagree, what are the principles? Are we being transparent about what decisions we are making and the principles behind them? That’s the dialogue that needs to happen. Where people need to be able to listen to each other, understand each other, and also be understood. And that to me is where we are developing a good set of practices.

Pentagon cloud deal

TB: In the book you talk about the key trends, the fundamental shifts that are taking place in AI, quantum computing, mixed reality. But a lot of it is underpinned by the cloud. And in the past week, Microsoft won a major new contract, the U.S. Department Of Defense JEDI cloud contract, beating out Amazon Web Services, which some people considered to be the front runner. Some people in the industry were surprised by this, that Microsoft won this contract. Should they have been surprised?

RELATED: Satya Nadella: Staying out of politics, focusing on tech, helped Microsoft win Pentagon cloud contract

Satya Nadella: I go back to our mission. We don’t celebrate the awarding of a contract for us. We want to stay focused on, in this case, on the Department Of Defense, their mission and how we support them. I feel good about the fact that we were able to submit our proposal to their RFP and come out on the top. But this is just the start, and we now are very, very focused on ensuring that we meet their needs.

TB: Do you think that politics, and specifically President Trump’s stated objections to Amazon, played any role in Microsoft’s being awarded this contract?

Satya Nadella: To me, it goes back to, if anything, Microsoft staying out of politics and staying focused on what the customer’s needs are. And there are some core capabilities we have, which were always differentiated. It’s great to see that play out when it comes to how we built the cloud as a distributed computing fabric, and hybrid being core to our design. Those are all things that I think, in the end game, really stood out. Staying focused on our customer needs, and our innovation, and our differentiation, knowing that there’s great competition, is what we want to do.

The paperback edition of Hit Refresh comes out Nov. 5 with a new afterword by Nadella. (GeekWire Photo / Kurt Schlosser)

TB: The Seattle Sounders have a new ownership group of which you and your wife are part. They surprised many in the league by making it to the MLS Cup. Ccricket is easy for you to apply to business, as we know. Are there any lessons that you’ve learned from just even just this short time of watching the Sounders business that you’ve been able to apply to your own?

Satya Nadella: Well, I don’t know if there’s any great lessons I’ve learned. But I’ve learned one thing, which is how passionate, sports in general and team sports in general are just such amazing things in terms of creating energy in communities. And so the joy it brings to people is what’s I think fantastic to see.

TB: What do you think of the Sounders right now? How are you feeling as an owner?

Nadella: I feel great. Go Sounders.

Postscript: Before Nadella left the room, we talked about Microsoft’s new Industry Experience Center, which GeekWire had visited earlier in the day. The facility represents the company’s efforts to develop new technology in partnership with its customers, which prompted Nadella to return to the larger theme of Microsoft’s world view.

“Ultimately, we will be only successful if, in some sense, tech gets commoditized, which is the one thing which is paradoxical about our business model,” he said. “Which is, if it remains a few companies are building all the tech capability in the world, Microsoft don’t exist. But if lots of companies are getting to build technology, then we will be fine.”

In the new afterword, Nadella concludes with an update on his family, another central topic of the book. He writes that one of his daughters is about to go to college, and his son Zain, who has cerebral palsy, has had additional surgeries, and continues to enjoy his music. He highlights his wife Anu’s advocacy work for people living with cerebral palsy and concludes, “No matter how privileged you think you are, everyone has everyday anxieties about their families. We are not alone.”

“Hit Refresh,” by Satya Nadella with Greg Shaw and Jill Tracie Nichols, comes out in paperback on Nov. 5, 2019, published by Harper Business.

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