Satya Nadella Interview ｜ Shereen Bhan In Conversation With Microsoft's Satya Nadella ｜ CNBC TV18

Well, there's so much you know about my guest today, so much has been written about his effort to try and transform Microsoft, but perhaps here's a thing or two that you don't know about him. Delhi is close to his heart because he proposed to his wife here in Lodhi Gardens in 1992. He flunked the IIT examination and went to Manipal. He's probably one of the very few who gave up a green card for an H1B visa so his wife could have the ability to work in the U.S. along with him. Satya Nadella, thanks very much for joining us. And one last fun fact, I heard about a public school where you had classmate Ajay Banga, who now has a MasterCard and Shantanu Narayan of Adobe. Give me a fun fact that we don't know about you so far. I mean, I would say, you know, growing up, I would have dreamt of actually, you know, working in a bank and playing cricket for Hyderabad. Here I am, a CEO of Microsoft in the most unlikely place. You know, let me talk about the leadership lessons that you've written about in your book, and I think I've tried to map some of them. You say that the C in the CEO stands for culture. How do you ensure that culture is not just linked to choosing the corner office? And you write about this in the book that, I want to ensure that it doesn't become a stuffier thing. So what does it mean to you now to, you know, bring inconsistency into the way that the organization acts and thinks? To me, that's really, I think, at the core, which is, especially when an organization becomes successful, that means the idea or the concept that you had has now become a hit. You build all this capability, as well as the culture, to sometimes reinforce the concept. You get even this virtual cycle between the idea, the capability, and culture. But the reality is, at some point, whatever was that novel, interesting new idea runs out of gas. You need a new idea. That's when culture will matter. That culture that allows you to continuously question the status quo. So I went on this quest for saying, what is a meme that we can have? We need to have a cultural conversation inside the company. And that's what led me to Carol Dweck's work around mindset. The simple concept is, if you have a person in school who is a know-it-all, and the other one is a learn-it-all, the learn-it-all will ultimately do better. But isn't that the CEO problem? Isn't that the big deal fixed in knowing it all? That's correct. And, in fact, the idea that you, as a CEO, have to create a culture by first admitting your own fixed mindset. At least, I believe that's the key. In order to have continuous or renewed success, you really have to question status quo. And it doesn't come from a source of knowing it all. You know, you talk about the need to redefine leadership. And I'll ask you that in the context of the fact that you've drawn from your own experiences as a husband and as a father. This empathetic style of leadership that you talk about, do you believe that you would have been able to do this if you didn't have those experiences to lean on? And how important is it? I mean, you know, we've grown up with the idea of winner-takes-it-all, you know, the paranoid survive, et cetera. So when you now talk about empathetic leadership, Jack Ma talked about having the love portion. How is it that CEOs are now seeming to embrace the feminine energy much more? You know, it's probably time. I agree with you there, by the way. For me, for example, when I describe or at least I internalize Microsoft's core business, core priority is to meet unmet, unarticulated needs of customers. There's no way we're going to be able to do that, especially the unarticulated part. If we don't have a deeper sense of empathy, what is it that really customers expect from us? You're not going to be able to go to work and switch on the button called empathy and say, let me now build innovative products that are well-liked and are going to, in fact, surprise customers in good ways. So to me, you have to be able to take your life, what life teaches you. In my case, that's clearly the case, which is who I am as both a product leader or as an organization leader is something that has been shaped by my life's experience. Whether it's the birth of my son or the last interview question of my Microsoft interview, all of these are moments where I feel I've learned to be able to see more of us in them and them in us. And that clearly, I believe, is what's needed for real innovation in any organization. You know, the customer's always been at the center of an organization's strategy. So an empathetic leadership style, how does that make the customer different? You know, in fact, this morning, I was even meeting with some of the folks who are in the front lines at Microsoft Services and Customers. One of them said to me, you know, it's so different. What the expectations when somebody has moved their most mission critical application to an automaker or an insurance company to our cloud, it's no longer that they just bought a product from us. They are dependent on our technology for the core of it. So their expectations of how we show up, how we understand their needs, and what we need to equip our people to be able to do so is so different. So to me, when you say customer centricity, of course, if you're not customer centric, you're not going to be able to do much. But it's the customer centricity as a continuous process, not as a discrete process. That means they learn it all. So it's not like, oh, I sold my customer something. What is it that my customer is going to want to do with what I sold them on a continuous basis? That's the only way to build loyalty. That's the only way to build business. Which is why you decided to include customers as part of your senior leadership retreat, which I believe faced some resistance at the start. It's one of these things when you take the senior most people and say, hey, let's listen to customers. The natural reaction, quite frankly, even I would have had, of course I listen to customers. I mean, that's what I do every day. I don't need to go to a senior retreat to listen to customers. But the reality I wanted to at least strike there was let's have a shared experience of actually talking to customers together. It's not to say that anyone is sort of not doing their job, but it's to be able to live in that shared experience that makes us stronger. So there was some resistance, but also there was, I think, a lot of learning for all of us subsequently. One of the other issues that you talk about in the book is the purpose of differentiation. And you talk about it in the context of the AWS Azure strategy that you adopted today, $20 billion for your cloud services. How critical was that for you to say that, look, Microsoft is about data. Microsoft is about AI. How do we incorporate those capabilities into an area that we're clearly not the leaders? To me, one of the things that has informed a lot of the choices we've made, the markets we compete in and how we compete in, how do we create differentiation, is to live up to our sense of purpose. I think technologies will change. But I think the core identity, if you look back, Microsoft was created when Paul and Bill sort of created the basic interpreter for the Altair. Very recently, in fact, we were talking about and marking some big milestones in quantum computing. What did we do? We, in fact, launched a new language for quantum algorithms. We put a simulator in Azure so that developers can now start learning quantum. So I felt that even in the cloud, we can be the ones who can democratize AI, democratize AI infrastructure so that developers can be successful. So that, to your mind, is the soul of Microsoft, democratization of technology? Correct. Because in some sense, the soul of Microsoft is we create technology so that others can go on to create more technology or achieve more success because of what they have been able to do with our products. We're that ultimate platform and tool creator. Whether it's Minecraft or whether it's Word or Visual Basic or Visual Tools or Azure, to me, they're all things that allow others to create more technology. You know, since you're talking about others, I also want to talk to you about competition. And you have an interesting perspective and take on that in the book. You say that Microsoft is all about the competitive zeal, aggression, combativeness, but that's not your leadership style. I'm sure your leadership style is not accepting the market as is, but how do you encourage a spirit of competitiveness without combativeness or aggression? One of the things, the best pieces of advice I ever got from Steve and Bill was to be my own person and how I lead. And the way at least I look at all competition is, first, let's talk about the things that we can do in a non-zero-sum way or at least not view everything as zero-sum, especially in view of customers. One thing I grew up in is in our enterprise business or our commercial business and realizing that it's not a homogenous world, it's a heterogeneous world. In fact, it's to our advantage if we play well with others, propagate open standards, because then customers will adopt more of it. So I've always grown up in the Microsoft that knew how to both cooperate and compete. And I want to bring those both by. There are some battles that are zero-sum. You know, we compete against Amazon and AWS, but at the same time, we're happy to bring Cortana to Alexa. And that ability to keep those two separate parts and yet compete and cooperate, I think, is what's going to drive ultimately most of it. Let me add the third C to that. You talked about competition and collaboration. Let me ask you about collaboration, because one of the focus areas in the book is also about building partnerships and building partnerships that last and not necessarily obvious choice for partners as well. What's going to drive the strategy when it comes to collaboration? How do you decide that this is not going to be an acquisition, but this is going to be a partnership in the context of the experience that Microsoft had with Nokia, for instance? To me, Microsoft, again, has historically been all about creating platforms. There's no way you can create ecosystems and platforms if you don't have that partnership gene at the core. When I look back, look at what I'm doing even with Adobe now. It's a big partnership for both. A big bet on his part to move to the Azure cloud, bring all of his creative cloud and his experience cloud and document cloud to Microsoft. And for Microsoft to be able to do the integrations and make his products successful on our platform. I think that's what it takes. Building of long term trust with partners is what I think is the real currency for anybody who's in the platform business. You've raised existential questions in the book. If I would ask you today, what is it that will decide whether you should acquire a company or not? What are the parameters that you will look at? I think that whenever I think about acquisitions, I always think about three things. In fact, I'm pretty transparent. And that's what even led to what is now a very successful integration in LinkedIn. One is, do we see the world the same? Which is, do we have compatibility of vision? In that case, with Jack and Reid, they wanted to be able to build this professional network that truly enabled the world's professionals to realize their economic opportunities. We have the professional cloud with Office 365. Bringing those three things together will help us reinforce the mission. The second thing is, can we in fact integrate? Which is, it's not about just assimilation into Microsoft. Can Microsoft be better because of the talent that is coming in? That's why I have all the CEOs of companies that we have acquired join our executive retreat so that we can learn. We're operating, in fact, LinkedIn very differently so that we can learn. So you've got to have a real key system. How is this integration going to work? And lastly, of course, it's got to make sense for our shareholders in terms of value creation. It's so exciting. In the last quarter, LinkedIn has re-accelerated. And to see that it's far ahead of even the financial plans to the extent in terms of it being accretive on a non-gap basis. And to me, ultimately, it's got to deliver value to our shareholders. But that only happens if you can integrate. And of course, if you have a vision that's compatible. So let me just take that point forward since we're talking about LinkedIn. You talk about leadership and the role of a good leader being the ability to look at the external opportunities and connect that with internal capabilities as well as culture. In the context of where you see Microsoft today and the future, do you believe that it will be driven by inorganic growth or largely through organic growth? I think as a spender of $11 billion plus in R&D, the fundamental bet is organic growth. We will always look for inorganic opportunities that make sense for us. We're continuously acquiring talent. LinkedIn was a big one. But we bought many other companies that have in fact been pretty part and parcel of our cloud growth. So we'll always be in the market. But the foundational bet or the foundational investment, whether it's the CapEx in our cloud or the OpEx in our R&D, is about organic growth. And it's great to see the growth that we see in mixed reality or the growth we see in our commercial cloud or gaming. It's another area of deep passion. I'm not at a place where we acquire Minecraft, which is doing tremendously well for us. Let me move and talk to you about the need to redefine the way that we look at multinational corporations. And you touch upon this in your book. You're meeting with Prime Minister Modi, I understand, later today. You know, this need for MNCs to not operate merely by what the headquarter tells them to do. In the Microsoft context, more than 50 percent of your revenues come from outside of the U.S. You talk about the need to create local economic opportunities. How do you see the role of the MNC changing in the current context? I think it's very important. If we ever are to have a long-term business in any country, whether it's in India or in the United Kingdom or in the United States, it's all going to be dependent on what local opportunities and local economic surplus have we created. For example, whenever I come to India, one of my key things to my team that we look at is, okay, who are all the small businesses that are more productive because of something that we're doing? What are some of the public sector efficiencies that we can point to because of our technology? In fact, what are some of the large businesses? Today we announced a partnership with Ola. And it's awesome to see here is a world-class entrepreneur building a world-class business, but you can now make them more competitive, not only in India but worldwide. Those to me are at the center. If we are not able to bring technology or bring products, of course, achieve our own economic success. But if that economic success is not breeding a larger surplus around us, there's nothing long-term stable. Because every country, rightfully so, should ask, what has your participation in our economy done to create local opportunity? And that's what is front and center for Prime Minister Modi or President Trump or anyone else. Are they asking the same questions of you? Very similar. They always will have specific challenges and specific opportunities that are different depending on the context of the country. But when I think about my conversations that are happening, quite frankly, across all spectrum of the politics and countries, it's one universal thing, especially in today's age, that digital technology is playing such an increasing role in every walk of life, in every part of our economy, in every part of the globe. The question is, how do we deal with it? How does that translate into equitable growth? Because that, I think, is the challenge. There is definitely a real need for not only productivity growth and capital to have return, but there needs to be real return for labor. There needs to be real job creation. There needs to be real economic opportunity. You talked about productivity. I'll add the other two P's that the world is concerned about, and that is populism and protectionism. As the CEO of Microsoft, as an immigrant who's made a life for himself, a career for himself in the U.S., when you hear these conversations about visa bans, et cetera, how does that make you feel? I think I remember reading in your book that you left that past while you started your career in the U.S., but you believe that this is going to be an issue for your children, for instance, that they're going to have to deal with racial slurs. How does that impact you? I think that one of the things that's going to be a real currency for any society, whether it's the United States, whether it's India, anywhere in the world, is to have the people who are in your country already feel that they're able to participate in the opportunities that are getting created. Because I think the cohesion of a broader society only comes about when there is growth and equitable growth. I think sometimes there is going to be a reaction, call it populism or what have you, when that equation of equitable growth is broken. So the real challenge is to be able to not only have an enlightened immigration policy, make sure that society has tolerance, society welcomes people who are already there. It's not about even an immigration policy. But ultimately, though, the only way to create stability in that is to create economic growth for everyone. Because when I look back at the United States, at least what I have learned watching the case study, it's the first country where so many people, in fact, people talk about the middle class or the working class aristocracy. That's a phenomenon of the United States post Second World War. And I'm inspired by that. And I think the U.S. has to rediscover it and the rest of the world has to discover it for the first time. Since we're talking about inclusion and equitable growth, I want to ask you about your ability to attract and retain more women in Microsoft because you argue that it is poor business sense to not have women in the workforce. Globally, this is an issue. But what are you doing about it at Microsoft? I think first and foremost, it's about making sure that the culture fosters inclusion. Because in some sense, we need two things to happen. One is, of course, the representation needs to increase. And as the representation increases, we want people to be able to do their best work, find that deeper sense of belonging in the company. It only will happen if the culture is increased. And we have to tackle both. In fact, one of the changes we've even made, so that we can put more money where the mouth is, is to actually change the senior leadership compensation, including mine, to hit numeric goals of representation and progress. So it, of course, is not sufficient. It's definitely one level. But the real change will come about when we feel that we have a culture that allows, whether it's women or whether it's ethnic minorities, to feel that sense of belonging and that sense that they can do their very best work. Let me end then with cricket, because that's what you're passionate about, Satya. You know, in the last three years, what would you say your batting average has been? And Dhoni or Virat Kohli? I mean, clearly, when I think about the two of them, the last thing I want to do is pick amongst two icons. But the point is, both of them have served in leadership. Leadership is about making choices, right? I pick both of them on my side. Batting average? My batting average is zero, because I don't play cricket. I watch cricket. Satya Nadella, pleasure speaking with you. Many thanks for joining us here on CNBC TV18 and wishing you all the very best with your plans here in India and Microsoft. Thank you so much. Well, with that, it is time for us to wrap up this CNBC TV18 special. From all of us here, goodbye. Many thanks for watching.