Reimagining business: an interview with Microsoft chief Satya Nadella
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John Thornhill, FT innovation editor and founder of FT Forums, spoke with Satya Nadella, Microsoft chief executive and the FT’s Person of the Year for 2019. Below is an edited transcript of their discussion.
Their interview touched on how the Covid-19 crisis has affected the world of work, how companies can thrive in the data economy, how cloud and edge computing are transforming business — and what the corporate sector needs to do to help the world reach net-zero carbon emissions.
John Thornhill: How has this crisis affected Microsoft? What do you think is going to be a lasting change? What has just been a passing phenomenon?
Satya Nadella: “The human toll, the impact on our economies, and our societies and outcomes, like education, health have been terrible . . . [yet] in spite of all these constraints, the fact that we’ve been able to sustain the level of economic activity is thanks to . . . the current generation of technology. If cloud computing was . . . not there, I shudder to think what the world’s supply chains would look like, or what the world's ability to deliver healthcare would have looked like. We’ve all woken up collectively, including the tech industry, to say: “Wow, we do have at least this malleable resource and software and digital tech that [allows] us not only to transform and pivot fast to new circumstances, but also gives us resilience.”
These two words “transformation” and “resilience” through digital tech have [been] the big awakening . . . whether it’s a retailer or even a small retailer, who is able to now do kerbside pick-up as a way to continue their business operations or a manufacturer or even a midsize manufacturer being able to do lights-out [fully automated] manufacturing.
We’ve been talking about things like telemedicine for decades, right? I don’t think an outpatient visit will ever start without you starting on your app with an AI bot that then leads to a telemedicine visit and then only will you go to the outpatient ward.
JT: To what extent do you think our increased dependence on digital, now that everything has gone online, made us more vulnerable to the next shock? We are in a bit of a geopolitical tussle between the US and China at the moment, there’s the risk of cyber warfare — what can we do to lessen the risks of this?
SN: There’s no going back in the sense that the digital technology is going to be very much part of our economy, part of our lives, part of our society, and increasingly so, and [none of us can predict] the next tail event. But having more digital technology in our fabric will help us navigate whatever that tail event is, both in terms of our ability to pivot and transform . . . or even resilience.
But that said, you bring up I think, what is the most important topic, given the inevitability of digital tech playing much more of a central role, what do we need to do? We need to build more trust in this technology. So whether it is cyber security, that’s where we call for that digital Geneva Convention, because if you think about it, cyber threats most impact citizens as well as small businesses — the most vulnerable of the population. Same thing with AI and ethics, or privacy, or internet safety.
These are all big issues that erode trust in technology. And now we have to do both, whether it’s legislative work, regulation, or how do we have engineering processes and systems in companies like ours, where we are taking that head on. I think trust in technology, as much as the transformative effects of technology are both first-class issues.
JT: Microsoft has famously been through the regulatory crusher before. Where do you think regulation [of Big Tech] is essential? And where do you think it’s harmful?
SN: There is no God-given right to any company to exist if it doesn’t have its social contract in every country, and every community it’s participating in. So I remain grounded. Microsoft’s impact in the world, our success has to be fundamentally aligned with the success of our customers and the world around us. If we are not able to look them in the eye and say “Look, you are benefiting”, whether it’s a small business becoming more productive or a multinational becoming more competitive, or the public sector becoming more efficient, education outcomes, healthcare outcomes in the UK, or in India or anywhere else, if we can’t deliver that, I don’t think Microsoft should exist or any Big Tech company should exist.
I think that all of the constituents have to come together and say: “Look, how do we as corporations participate in the world with alignment to making the world better, and then succeeding?” That’s why I like the definitions out there, which talk about corporate responsibility more around, how do you solve the world’s problems and create profitable solutions to the challenges of people and planet? I like that definition a lot.
JT: What do you expect from the Biden administration on this score?
SN: I think they will, and like the previous administration has shown, look at it from a first principles basis: how do you build more trust in technology? Because that’s the issue, right? Especially for democracies, like the US, like the UK, I think there needs to be a fundamental legislative framework that allows us to have more trust in the tools and the technologies that we use every day, and preserve some of the fundamental rights like privacy.
JT: Everyone is fixated on the value of data, and one of the main aims of the forthcoming EU legislation on this would appear to be to force some of the Big Tech platforms to share their data to level the competitive playing field. Do you think that data sharing is a) desirable in principle, and b) feasible in practice?
SN: I think that it’s a great place to start, to . . . have a principle that, first of all, whose data is it and who is benefiting because of that data? I’ve always believed that fundamentally, whether it’s on the consumer side, or on the business side, the value exchange has to be such that there is no exploitation by any one company in that value exchange, and there needs to be real competition.
If anything, I would say the consumer marketplace for consumer internet companies, that’s where the high concentration [of power] is. Advertising, there’s really high concentration. Ecommerce, there’s very high concentration. Those are markets that are clear, whether it’s in the US or in Europe and elsewhere, people are going to look at it because I think high concentration is not great for anybody.
Whereas in business-to-business — take this pandemic, take Germany: all of the companies that make up the core of Germany . . . these middle-market industrial, national champions . . . they all sell everywhere in the world. When I go to a dentist in the US, the most likely scenario is that you’re going to have a lot of German equipment in that dentist’s office. All that now is being remotely managed because of preventive maintenance; they can’t have a technician come over. Whose data is it? Is it the German company’s? Is it the dentist’s?
So in some sense, it’s not about Europe. In fact, I would say the EU needs to have an enlightened view of looking at their competitiveness. They should really demarcate what’s happening in the consumer space, which is about the EU’s own citizens’ data, and then what is happening with their companies and their access to data so that they can serve their customers around the world.
JT: You’ve talked about Microsoft being an AI-first company: what is it about AI that so excites you?
SN: We in the technology business are always hyping something new, so the reason I say AI is exciting is mostly because of the ability for us to drive value from one of the bigger resources that we all are seeing, which is data.
Take what has happened, even in this health crisis and the public health crisis we face . . . we need a diagnostic tool that is broadly distributed in the world. How do you do that? The best way to do that is to have an AI bot that can do that self-diagnosis test. The power of it comes from data, but the model architectures in AI that allow you to build that type of application is being transformed. That’s just a small example.
One of the things we talk a lot about is some of the big advances in natural language or image recognition or even multimodal, that’s fantastic to see. That’s kind of called big AI, but I’m as fascinated by the small AI. What I mean by that is a citizen developer today can take somebody else’s speech model or somebody else’s OCR [optical character recognition] model, and build and automate something in the frontline and create more efficiency, create a better service for their customers, deal with the kerbside pick-up. How do I create an application for that? That’s what I think is going to have perhaps as much of an impact, if not more, when it comes to AI applications broadly changing our society and our industry.
JT: Sam Altman, who is the chief executive of Open AI, which is a research company that Microsoft has backed to the tune of about $1bn, has said: “The AI revolution will be more consequential than the agricultural, industrial and computer revolutions combined.” Do you agree with him?
SN: I fundamentally agree with him in the sense that this is one of those technologies that . . . whether it’s in drug discovery, or whether it is in precision farming — any of the hard challenges that we . . . face — if you put AI in the hands of the people who are trying to come up with solutions . . . then I think it’ll have a transformative effect. That is what to me is the most important thing.
Technology by itself sometimes is great, but it’s not the real end goal. The point is, how do we translate it? That’s where entrepreneurs play a role, the state plays a role and the broader society plays a role. So I think we’re at that cusp, but we do need systems that put us all into a virtuous cycle, not a negative cycle.
JT: You’ve often said that Microsoft’s mission is to empower your customers to be able to do things better than they otherwise could, whether it’s providing cloud computing, or edge computing or quantum computing or AI. On AI, do you think it is a centralising or decentralising technology? Will it lead to further concentration of corporate power, or will it lead to a kind of diffusion of power?
SN: Say 10 years from now . . . if we are having this conversation, if all we’re doing is still talking about the concentration of power, then we as a global society wouldn’t have achieved the transformative effects of all this technology. Because, if anything, my hope is that the true democratising power of this next generation of technology — whether it’s the core distributed computing fabric, from the cloud to the edge, whether it’s technologies like AI, or even transformative experiences, like augmented reality and mixed reality — [is to bring] change: change medicine; change agriculture; change manufacturing; change retail; the broad spread surplus that gets created in an economy . . . If that is not going to be achieved, then we would have . . . failed as a global society.
So that I think is the crux of it . . . I think the next 10 years, the tech industry, if we get it right, will just blend itself. This over-celebration of tech has to stop. I hope that we will all be talking about how technology is having a broader impact in and around us, because I — as a citizen of the world — that’s what I’m hoping for.