Microsoft CEO Satya Nadella on Bloomberg Studio 1.0 (full show)

[Music] [Music] a year ago the coronavirus pandemic crept into the united states after taking a devastating toll across the globe the early u.s outbreak was centered in washington state just miles away from microsoft's headquarters there ceo sacha nadella made the call that a significant number of the company's 168 000 employees could work from home now his focus is shifting to not just keeping employees safe but keeping them engaged with the rise of microsoft's chat product teams and a new offering called viva this as microsoft stock has continued to rise up more than 500 percent during his seven years at the helm after languishing for more than a decade under his predecessors he shared this key guidance with us three years ago it's not about changing everything it's about changing what needs to be changed and therein lies the trick so to speak since then microsoft's market cap has crossed one trillion dollars now closing in on two trillion but with big tech scrutiny ramping up in washington and rising tech competition in china nadella's next seven years at microsoft will be just as critical joining me on this edition of bloomberg studio 1.0 microsoft ceo sacha nadella sacha thank you so much for doing this it's so great to have you no thank you so much emily for having me it's great to be with you the pandemic has underscored the power of technology in helping companies and governments and families get through this and microsoft teams has been a huge part of that and has been an incredible growth story give us a snapshot of just how much teams has grown through the pandemic we talk a lot about remote work but the reality is more than 50 percent of the workforce whether it is in healthcare or in retail or critical manufacturing uh had to be uh in the at the site and so one of the things that really got appended across industries was how do you connect people so if you have someone on the front lines and then an engineer perhaps working from home how do you connect so the team's growth was not just about knowledge workers collaborating but it was in fact really helping frontline workers and knowledge workers come together to keep business continuity and our society and our economy going in fact i shudder to think even what the economic activity would have been or what the state of services that we all you know you know have today would have been but for the state of uh today's technologies uh and that cloud architecture and teams clearly has been a massive growth story for us but it's mostly because of the context of the constraints and how to overcome them now you're on to what you believe will be your next massive line of business employee experience tell us about your newest product microsoft viva the thing that the pandemic has put uh really shine the light on is how important the experience for the employees is right i mean when you're remote in particular you want to be staying engaged with your business and your company and its sense of purpose and mission you want to be able to collaborate like as i said between the folks on the front lines when the knowledge workers uh you want to be able to actually start learning say as a new employee i join how do i build that knowledge capital by learning from others when i don't have some of the same social structures of the workplace i need to be able to find them online learn from them uh as well as the learning content needs to be delivered more in the you know the workflow tools i use every day we've had to introduce even things like virtual commutes and so on in order to help people with transitions so putting these things all together the employee engagement learning collaboration and well-being uh into one experience platform is what viva is all about uh and i think that this represents a new category creation moment uh if you look at what we've the journey we've been on with microsoft 365 we started with individual tools it became a collaboration suite and now we think it's going to really get into a new space around employee experience more holistically thinking about productivity not just narrowly as output but all of learning and well-being and collaboration so if you spend your whole day in teams or word or outlook are you putting all of those in one place is that what that would mean for the user in fact it's not it's the exact opposite which is to say use the tool that you're using for for example any of your communication needs or deep work needs and then in the context of that let us bring in the other people you want to work with the learning content that's going to make you more productive the well-being nudges you need in order to make sure that you have the transition so that's the main purpose of an employee experience is to not introduce one more new experience that you need to go to but to bring an experience that you need in the tools that you're using every day as part of your work could this be your next 10 billion dollar business what's the total addressable market i believe with exp is you know hr software is there or hcm or human capital management software is there but it's more about really tying what happens in the hr or people operations to the entirety of the business right whether it's in finance whether it's in marketing whether it's in engineering and so we think that this can be like in the years to come in the decades to come we'll talk about it like a crm or an erp class category you have been very outspoken about how employee experience is suffering in the work from home environment microsoft teams data showing we're all taking more meetings more chats more ad hoc calls more chats on the weekends as well what concerns you so much about working from home and this remote work period as it drags on i would say my main thing is to not just have some new dogma about any one type of work right the reality is uh everything in fact coming out of this crisis perhaps or this pandemic we're all going to recognize the importance of flexibility there is uh real reasons why people may want to work from home uh but it might be in different times in diff you know for different people it will be different by geography it will be different by uh business function and so we need at least from a workplace policy perspective as well as the infrastructure in the tooling perspective build for that flexibility so we cannot assume remote everything for all time to come or all things have to happen only in the workplace so i more fall into the camp of let's make sure that we have built in to both the policies and the infrastructure and the tools maximum flexibility because none of us i think will want to be constrained anymore whether it's by the place or the time or the location even what's been the hardest part of work from home for you personally as a leader trying to run this massive company i think for me it's been you know the social capital that gets built uh you know in so many different ways when you're able to see the body language you're able to learn from the cues people uh by watching people uh and some of that social capital is hard to create sometimes meetings can become very transactional uh so to me that's probably been the hardest i'm not saying but that therefore we should sort of think that somehow remote work is inferior as i said there are times when you know remote work can be very productive and but at the same time i think we need to bring in more innovation uh like together more than others to start even bridging the social capital creation uh capabilities do you think work from home could be stifling innovation is it stifling innovation in fact we're studying we're collecting a lot of data and the reality is uh let's take our game studios right the one place where we've seen some challenges is uh that the game studios do have a tough time in work from home to be able to bring people together to in fact collaborate in fact watch other gamers to get the inspiration to create new content so clearly there are some places where the innovation does take a hit but at the same time when i look at what's happening with some of the data around github it's fascinating to see how the world has come together even more so in the open source side to create critical software for very and innovate together so i wouldn't say there's just one answer so if anything i'm taking away is every there needs to be some structural change perhaps wherever there has been an impediment to creativity or innovation one has to go back and ask what is that structural change that will allow us quite frankly the next time there's another tail event and we have to work uh remotely or in with other constraints how can we continue to innovate so i think that all of the solution for every function and every industry is not there today but i think there will be what do you think it is that the tech industry is doing wrong are they too big too powerful and abusing that power i don't think big by itself is bad or but competition is good the unintended consequences of your scale cannot be dealt after the fact they need to be dealt while you're scaling it's been seven years almost to the day as we tape this that you took over as ceo and since then the stock has soared over 500 after languishing for more than a decade crossed a one trillion dollar market cap if you could pick one thing what do you think is the single most important thing that you did right it's actually stunning to me that seven years have passed um i if i had to sort of you know having grown up at microsoft uh perhaps even on day one when i started uh of course it was a completely new job i've now recognized that you know the responsibility of being a ceo is different even that from one step removed uh but i came at it i think emily from that sense of pride in what this company represented for you know uh in the world i always felt that i joined microsoft because of its mission so reinforcing perhaps that mission sense of purpose and then having this culture of being the learned alls has probably been the most important thing ah because they're very talented people uh the opportunity whether it was cloud or other technologies was clear and i think in any company you know you have to go back to the very basics of why do you exist and if you don't exist will anybody miss you being able to ask those questions and answer those questions and having a culture that even allows you to really honestly answer those questions is the most important thing and uh and as an insider at microsoft i always felt uh that and so that is what i started with and that's how i start even my seventh year with what advice would this sacha nadella give that sacha nadella seven years ago i mean the thing that perhaps was the steepest learning curve for me um as ceo was understanding what does it mean to have multiple constituents uh right i mean people talk about it's about customers it's about employees it's about investors it's about other stakeholders and today of course uh multi-stakeholder capitalism is the topic that everybody's talking about but understanding what as a ceo what does that mean how do you really grapple with it and it can't be something that i'll divide my week into multiple stakeholders right in equal quantities it's about harmonizing that into the core of your business model as well as your operations of as a business uh that's probably been the thing uh that i would say having a framework for it i feel fantastic about the work the entire team at microsoft has done around it right because you need to have a business model fundamentally where when you do well the world around you is doing well if that is broken it's very hard to fix even if you have business performance but if the world around you because of your business performance is not doing well that's a social contract that you cannot be put back together so i would say that's the advice i would give any ceo is to ask and you know is something that it's also got to be managed every day it's not something you take for granted now you're now on your third administration uh u.s presidential administration as ceo of microsoft if there was one thing you want this administration to do that would make a difference for microsoft what would it be i think for quite frankly for this administration and the last administration right now the most important thing is how do we get past this pandemic because even as we speak if you think about some of the big challenges we have around even the core logistics of delivering the vaccines the vaccine supply chain so i feel the private sector needs to do its job and do it super well we have many capabilities but even the government needs to do its job and it's really i think if anything we've all come to recognize the strength in our institutions in the private sector and in the public sector and how they all both need to be coordinated and stitched together and quite frankly governments are the most capable coordinating agencies we have and we just need that and more of that going forward the power of big tech is being scrutinized by regulators around the world lawmakers around the world and regular people around the world what do you think it is that the tech industry is doing wrong that makes so many people wonder are they too big too powerful and abusing that power i'll say a couple of things big by itself is not bad but competition is good uh and more importantly it's not just competition but it's that point i made earlier which is you need to have a business model that really is aligned with the world doing well i think that's what's being litigated right which is there are certain categories of products where the unintended consequences uh of the growth on that category or lack of competition in it uh creates issues and so that's what i think people are all looking at and saying hey what's the fix for that but i don't think big by itself is bad or but competition is good and every business in particular the businesses that are large and have high scale the unintended consequences of your scale cannot be dealt after the fact they need to be dealt while you're scaling so when it comes to the d platforming of of president trump for example should a facebook or a twitter google or youtube or twitch have the power to say who we can and cannot hear from and if not who should yeah i mean this is another one of those places where i think unilateral action by individual companies in democracies like ours is just not i think long-term stable we do need to be able to have framework of laws and norms which are societal norms around even internet safety and what is the public square that really is in alignment with a thriving democracy so we just need to get to a stable state in that because otherwise depending on any one individual ceo in any one of these companies to make calls that are going to really help us maintain something as sacred and as important as our democracy in the long run is just no way at least i as a citizen would advocate for now slack has alleged that microsoft combining teams into office is anti-competitive um what's your response to that how does the landscape change now that slack has been bought by salesforce and is part of this bigger entity i think both slack and salesforce have been successful uh for example i always point out that when we think about what they were able to do i always ask the question would slacker even existed if it was not for the free access they had on top of say the windows platform they didn't have to call microsoft they didn't have to go through any of our app stores they didn't have need any uh or you know off our permission uh compared to any of the other platforms that they're available on we perhaps provide the most open platform in windows and even on office 365 you can in fact use all of the apis that we expose integrate with any application uh and people use it if you look at even the usage reports there's slack usage and microsoft 365 usage so and same thing with salesforce so the fact that they're combining will compete with them and they will also cooperate with them and provide them access to our platforms and i think they should measure it by what type of success they've had on top of our platform you worked at microsoft through its own anti-trust battles you remember what that was like it's been called the the lost decade if you will what cultural risks do you believe these companies face even if they're not broken up what's happening on the inside as these investigations play out i don't know if there are real parallels between what happened with microsoft and any of them but i would say i think the core as i always go back is you know if you have a business and a business model where when you are doing well around you people are doing well and that is something that your own employees feel then i think things will work out culturally when that is not true i think it's very very hard because one of the things i feel is as somebody said you got to keep it simple what you say what you do and what you think all need to be consistent you can't sort of have a real distance between those three things and that's what at least would be my advice and to anybody in starting with ourselves why did you want to buy tick-tock i think tick-tock's achieved a lot of success in being able to take a new media format like short form video and create a very interesting property what are your biggest concerns about a rising tech industry in china i think that first of all there is no god-given right for the say u.s tech companies to take for granted that there cannot be other tech powers and tech spheres so if anything rising competition in the world whether it's from europe whether it's from china or the rest of asia is something that i think all of us even quote-unquote in the west coast of the united states need to be more grounded in because sometimes i think we celebrate our own advances far too much and we should be more looking to saying what's happening in the world and how relevant is our technology in the world so from that perspective i'm a more big believer that the world does better when there is real competition across the globe and there is more technology that then is diffused throughout that said national security concerns are real concerns uh and that's for nation states to really you know legislate on uh but i think uh for private companies like ours we should be thinking about how are how good is our technology how useful is our technology around the world and welcome competition wherever it's coming from microsoft tried to buy tick-tock and it didn't happen why did you want to buy tick-tock you know it's it's it's it i think tick-tock's achieved a lot of success in being able to take a new media format like short form video and create a very interesting property we had a very crisp vision of what we would want to do with it and including for example addressing some of the very real concerns around national security but that was last summer and we moved on would you be interested in other social media properties we today have emily whether it's minecraft or xbox live or linkedin or even github uh because it is you know one of the things perhaps that's not as well understood in the world is we do have some very high scale uh prop communities and properties like that that we are engaged in making sure for example what does internet safety look like how is the quality of the dialogue on the linkedin platform what's moderation on xbox live look like uh how can we even think about github and making sure that that community is thriving so to me i'm very very focused on the properties we have scaling them and scaling them without these unintended consequences in particular around internet safety microsoft is now teaming up with gm and crews to commercialize self-driving cars uh you know talk to us a little bit more about what we'll see here in terms of microsoft's mobility play it's actually an interesting combination of gm uh that is an incumbent and cruise that is a new entrant both relying and depending on microsoft cloud computing technology to build their own uh computing platforms and that's what we want to replicate quite frankly broadly in the auto industry as well as in other industries because we think that the model that at least i have is that this is not about one vertically integrated company called microsoft it's about digital technology being much more evenly spread across every tech industry i mean every industry becoming more like a digital tech industry and that's what we are you know intend to do even with these partnerships we're seeing a huge push back against the establishment and centralized power was it whether it is the capital riot or individual investors driving up the price of gamestop or the unionization of tech employees do you see it as a fundamental shift in power from institutions to individuals and how will these trends inform your next seven years as the ceo of microsoft that's a great it's a great question emily and you know i i you know sort of in some sense i'm still learning what this shift looks like but i would say the core principle of institutions and institutional strength that fundamentally distributes power is a good thing it's that's kind of what democracies were all about i mean fundamentally democracies were about institutions that actually distributed power so any institution that centralizes power will have more challenges in the long run because they won't be as resilient as distributed power so from that principle perspective i think that we can take perhaps a lot of hope from what's happening but we'll also have to watch how this plays out so that we really make sure that now we don't swing from one to the other only to sort of recognize that there needs to be more thought given to how we transform sachin adella ceo of microsoft thank you so much for joining us on this edition of bloomberg studio 1.0 thank you so much emily you

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Length: 24min 6sec (1446 seconds)

Published: Wed Feb 10 2021