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Microsoft's CEO on helping a faded legend find a 'sense of purpose'

Satya Nadella inherited one of the most successful companies in history — but one that had lost its shine. He discusses his work to make it relevant again.

James Martin/CNET

Four years after becoming head of the world's top software maker, CEO Satya Nadella invites us to an inside look at One Week, a giant employee fest the company launched at its Redmond, Washington, headquarters to inspire new ways of thinking about their jobs.

It's not the rah-rah atmosphere that marked annual employee meetings under his predecessor, Steve Ballmer. Nadella, who worked at Microsoft for 22 years before becoming CEO in 2014, opted for an event that includes a hackathon, science fair and nonprofit fair. It's a way to get employees charged up about what they can do to help the world around them.

That might not seem particularly novel, except it's Microsoft we're talking about. This is the company that helped popularize PCs, then went on to make billions of dollars from Windows' monopolistic hold over desktop operating systems. It's also the company that  earned a reputation for ruthless politics — both in the PC industry and its own workplace. Nadella acknowledges the internal culture in his 2017 memoir/management guide, Hit Refresh, showing a famous cartoon of Microsoft's org chart with warring gangs pointing guns at each other.

"In '92, we used to talk even about our mission — for example as having a PC in every home and every desk, " says Nadella, who just turned 51, after we toured the hackathon on July 24. "Except by the end of the decade itself, we had more or less achieved it.

"Then what? What's next. And that's when I felt like we may have confused marketing slogans for our mission. So that's why I wanted get back to that sense of purpose."

That renewed sense of purpose was important in its own right. But it would also help him convince employees, investors and customers that the 43-year-old company is still relevant in a world where Apple, Google and Facebook are at the center of the tech industry. For customers, that meant having Microsoft's Windows and Office apps play well with others, even if it's on Apple and Android products. For employees, it meant changing the company's culture, its mindset and its partnerships. But that doesn't mean Nadella is trying to match Google's or Apple's cachet of "cool."

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"You join here not to be cool, but to make others cool," he says. "You want to be cool by doing that empowerment.. It's the result that matters.

Nadella spoke to us about why Microsoft's culture needed fixing, why he thinks immigration remains a competitive advantage to the US and how HoloLens might convince everyone to buy into augmented reality. He also shares the advice he should have given in 2014 when asked what advice he'd give women in tech asking for a raise.

Here's an edited transcript of our conversation.

We're here meeting you at this particular time because you're hosting Microsoft's Hackathon, which was your idea.  All of us in Silicon Valley know what a hackathon is, but what did the hackathon mean to you? 
It's been five years now that we've done this. It's called One Week, which is in some sense the metaphor for the one week that then informs the rest of the year in terms of really getting in touch with the core of this company around innovation. That innovation [is] being driven by a sense of purpose and reinforcing a culture that we aspire to.

So for us, it really represents that start of living that sense of purpose every day, and then also reinforcing our culture.

Each year, I'm pretty stunned always with the passion that people have, to be able to take what is Microsoft as a platform and connect it to the ideas they have. A lot of amazing things have come out of this. Learning Tools, now part of Word and OneNote, which helps anyone with dyslexia read, came out of a hackathon four years ago. EyeControl, which is now in Windows — anyone with ALS can now type with just their gaze — came out of the hackathon.

So it's also been inspiration to mainstream products, but it's not limited to that.

When you took over, you said fixing the culture was your top priority. You even said the C in CEO should stand for culture. Why was that your No. 1 priority?
Two things. The sense of purpose in mission and culture to me are the two pillars, which I think for any institution, any organization, are the enduring pillars.

And then of course you have to express yourself with [in our case] changing technology paradigms every year, because that's constantly changing.

So when we talk about our mission of empowering every person and every organization on the planet to achieve more, [it] can't be just a set of words. It has to in some sense capture the very essence of who we are in all of the decisions we make, in the products we create and how we show up with our customers.

What allows us to do that consistently, and consistently well, is culture. And that's why I said we need to create the necessary condition to live our mission by working on our culture — even framing the culture not as some destination you reach.

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Microsoft CEO Satya Nadella talks with Connie Guglielmo, editor in chief of CNET News. 

James Martin/CNET

I have always said, what's a learning culture? And that's why I was very attracted to this growth mindset, which I picked up from Carol Dweck's work. In fact, my wife had introduced me to it. And it's worked wonders for us. Not by saying, "Here we are, we have a growth mindset." As I like to remind myself, it's my ability or comfort everyday to confront my fixed mindset. That's what we're trying to pursue, which is to be comfortable acknowledging that we are imperfect and we'll always remain so.

But the implication from your book is that Microsoft — I won't say the word "broken," but that there were some serious problems here. What was it that was so concerning to you?
It's interesting you say that, because in some sense Microsoft is one of these companies that have been super successful. One of the things that happens when you're super successful is you sometimes lose touch with what made you successful in the first place.

So if anything I wanted to not talk about what is broken. I wanted to go back to the very genesis of this company. What is that sense of purpose and drive that made us successful? What was the culture that may have been there in the very beginning or in the times when we were able to achieve that success. How do we really capture it? So that's why I think about it as the renaissance as much as about fixing something that's broken.

So there was a sense of purpose that was lost or missing?
I think that  happens. Sometimes it's sort of easy to forget what are the necessary conditions to driving success. And to me, getting back in touch with what were implicit pillars when I joined the company,

I felt in '92 we used to talk even about our mission — for example as having a PC in every home and every desk — very concrete and something that was able to galvanize the entire company. Except by the end of the decade itself, we had more or less achieved it.

Then what? What's next? And that's when I felt like we may have confused marketing slogans for our mission. So that's why I wanted get back to that sense of purpose.

I understand you've been saying Microsoft is not the company for people who want work for a cool company. It's a company where you let other people do cool things.
You join here not to be cool, but to make others cool.

What is the vibe or image of Microsoft you want the world to know?  
It's in our mission. It's empowering.

Any association with this company should be, they put some tools, they put some platforms, they gave me the opportunity to really do something. Whether it's a student writing a term paper, whether it's a startup trying to create a company, a small business that's trying to be more productive or even a public sector institution that's trying to be more efficient and serve its citizens -- [they] should feel that association with Microsoft is empowering to them. That's what I want us to stand for.

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James Martin/CNET

So not cool?
You want to be cool by doing that empowerment. But not just to be able to associate yourself with cool technology. It's the result that matters.

We are in a time, in 2018, when technology's so pervasive in our lives, in our economies, in our societies. I think time has come, quite frankly, for us to really have the dialogue and the question to be asked as well as answered as to what are the real benefits of technology, equitably spread? Not only in our country, in our society, but all over the world.

You've been very candid about how you misspoke when answering a question at the Grace Hopper conference. Maria Klawe asked what advice you'd give a woman who wants to ask for a raise. I'd like to do a reset. Satya, what advice do you give a woman in tech today?
What my big learning from there was, which I wrote in the book, and obviously Maria helped me, and many other woman subsequently have helped me understand. ... Because the answer I gave was absolutely nonsensical because it really did not get to the core context. No one was asking me about my personal experience.

Basically the question was all about, do you as the CEO of a large company understand that women don't need to even ask for a raise. Can you create a system that actually does pay equally? And more importantly than just pay equally, is there even the culture and the system of the organization such that they have equal opportunity?  What I took away from that was, what is the work that we need to do? We've been at that, which is how do we improve representation.

We always had pay equity because that's something you can easily measure and track. The place where we have to to work on and continuously work on is that equal opportunity for equal work. That requires an inclusive culture. That's why we have that as a core pillar, and that's something that we even reinforce in this One Week.

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James Martin/CNET

One of the cool hacks I just saw was you can start right when hiring. When you are posting a job description, is it something that is going to make sure that people who are going to apply for that job, it's really going to foster inclusive hiring?

But I'm asking what's your advice to women?
First of all, [they] should advocate for themselves. They should find other allies, male or female, who can advocate for them and make sure that they don't accept status quo. And I think that that's definitely the first response.

Then the responsibility of people like me, who are leaders of organizations, is to be able to listen to women who are advocating for themselves or their allies, and make sure we don't even have to put them in that situation.

You and many other tech executives have been talking about the value immigration and immigrants have brought to this country That message does not seem to be getting heard. What do you think?
I've always said that I'm a product of these two amazing American things — both American technology reaching me where I was growing up, as well as the American immigration policy letting me even live the dream. And so I always come back to that. That story still today, in spite of all of our challenges, is only possible in the United States.

In some sense, every country does need to think through what is in their competitive long-term understanding. Look at the immigration policies that we've had and what they have led to, which is not only people like me who have come here, gotten educated, gotten jobs, contributed to our economy, but also the soft part of the United States. Being that beacon of hope for the people who most need it [is] what really made the US attractive in the first place for people. So I hope that our lawmakers are always mindful of what really makes America competitive and — quite frankly for that very reason — to make sure that our immigration policies continue to be enlightened in the world.

You were quoted as saying that you are a HoloLens user, that you get up every morning and use it to check your schedule.  Startup Magic Leap has new AR googles that's are being called a rival to HoloLens. Can you talk about the promise of AR?
VR and AR to me is one continuum. It's like a dial for whether it's fully opaque and it's fully immersive [as in VR], or you can see the world and you can see the objects, digital objects and artifacts, on top of it — that's AR.

HoloLens has really gotten traction in a lot of enterprise and industrial settings. Remote work, so remote assistance: Say you're a factory worker and you're trying to fix something hands free but you need the expert to come tell you what to do. HoloLens is the perfect form factor. Training: it's a perfect form factor for doing simulation.

We've now gotten fantastic traction in what we describe as the first-line work. People in factories, in retail, in other situations [who never were issued] PCs or even phones are being handed these $5,000 pieces of equipment called HoloLens because it's making them more productive.  

My use case is to be able to visualize data. I don't use it as much for schedules, but [it's] the best way to have infinite number of screens around you. It's the best multimonitor computer, because you're not limited with the physical capacity of your room to have monitors. You can have as many monitors as you want.

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Nadella listens to two employees talk about their project during last month's hackathon. 

But the most interesting thing is data visualization. The ability to spin around data to be able to learn about the patterns. In fact, with all the big data I always say it's the ability to recognize small patterns that's still uniquely human. I think that there's a real use case there. And then, I think gaming will also have use cases.

So not hype, real to you?
It's like all markets. There's hype, then there is market fit and then there is the real mainstreaming.

At the Facebook hearings, the conversation with Mark Zuckerberg was — regulation, should it be coming, should it not?  Where do you stand on this? Does there need to be more regulation in the tech industry?
As tech becomes more and more pervasive, I think for all of us in the tech industry we should expect — whether it's on privacy or on cybersecurity or even ethics or AI — government and regulatory bodies to take interest in it.

So take GDPR. That is clearly a regulation that came out of Europe that actually does cause all of us to think about privacy as a human right, essentially, and build for it. That's what we have committed to do.

Even take something like facial recognition. Brad Smith, who is our legal counsel, wrote a blog recently saying — look, instead of us trying to govern the government and its users, it's better for governments, especially in democracies, to have a clear set rules on what's the right use of some of these technologies.

I think clearly regulation is one instrument. It's not the only instrument, and we ourselves should have some enduring principles that we use consistently as creators of technology.

To me it's not hypothetical. I live in a world that always will have regulation, And to think that somehow there was no regulation and now there is going to be regulation is not a world that I lived in, and is not a world I would live in.  

CNET's Ian Sherr contributed to this article. 

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