So we're gonna stick with the sports theme just for a second if you bear with me. I can't run very fast. [ LAUGH ] Well, this isn't ab muscles ripping, but I was doing all this research on you, as one does to prepare for an interview. And there were commencement speech videos of you and then there was this video of you doing this scooter race with the head coach from the Seahawks, NFL team. So what what was going on there? I'm starting to think that my mom was right. The things live forever on the internet. So do- That's right. So It's kind of hard to explain where that came from. But the notion of play, I think, is a really important cultural transformation. And at one time a couple years ago, I rode a scooter out onto the stage for a kickoff. By the way, the person following me rode out in a Maserati, so it was little A bit of a message there to say like let's not take ourselves so seriously. And when I met with Pete Carroll he was giving me some coaching on how to coach and he saw the scooters on the wall. He said, do you want to raise and I was like Hell yeah. And so we, This is in front of your employees? This was this a spur of the moment thing we raced down the hallway and they collected very quickly and then a lot of videos kinda popped up [ LAUGH ] in some interesting places and in the OSHA complaints were really stunning. [ LAUGH ] So I'm, It's a good segue though, into the culture piece and Pete Carroll, the the Seahawks head coach actually has this program and it's some kind of mind training. I'm not sure exactly what it is, but tell us about how you've approached that internally and what this has to do with culture and transformation. Yeah, so culture in my opinion, It's really about how people come together. It's the character of a company. And when you're trying to transform a company, you've got to have culture as a piece of it. But that's not the only thing. I think it's one of the most important things, but its mission, mindset and culture, I think are the three levers that you pull To accelerate any change of any kind, and the culture piece the people piece of it is probably the most important and appealing to everybody sense of authenticity who they really are not the persona that they build, to try and you know, come to work and be the thing that they think the company wants to be. But rather showing up as the person that they really are. And I try and use whatever techniques possible to allow that to happen, to enable them to come and be their authentic self. Because I think that's when you start getting to the real conversation. So an example of a techique would be. Riding a scooter with somebody. It's pretty quick. When you're in heals and you're like you want me to ride a scooter, well, I also have a trampoline in my office, but that's different story. [ LAUGH ] We'll talk about that some other time. It's interesting because that's not like brining your authentic self to work and Some of the other lingo we hear out of Microsoft now and obviously a big emphasis on empathy, scaling empathy. That is not the association that any of us would have had with the company just a few years back. So, what has, That happen, yeah, so [ UNKNOWN ] and [ UNKNOWN ] lays it out really well in this book Hit Refresh but basically when he took over almost six years ago, He saw the company is on the brink of obsolescence. We were sort of stagnating growth was hard to find and our technical capabilities weren't really resonating with the market. And he saw that not only did we need to play in this cloud market, but that we were going to have to very quickly change so much more than just our technical capabilities He redefined the mission so empower every person in an organization on the planet to achieve more. If you're gonna do that, you're gonna probably need to understand what those people and organizations need. Which means you're gonna have to have this [ UNKNOWN ] muscle. I don't think empathy was at the core of our old culture, we're sort of the know it alls. And we wanted to become the learn at all so that we could become more empathic. So you mentioned the cloud infrastructure and you've made a lot of headway there and a lot of headway in general very impressive. When Sachin Nadella became CEO in 2014, the company's market cap was at 315 billion and now it's A bit over one trillion, with a T. So I wonder, though. Can you talk some more about how got anyway goes hand in hand with the empathy piece? Sure. And the culture piece, because Cloud infrastructures seems. Like a little bit separate from from all of them that. All right, well, I think it's a couple things. The first is we're not thinking about our share price because as soon as we start thinking about our share prices when you when you get complacent we're thinking about our customers business outcomes, their goals and what they're trying to achieve. In this digital world, I mean, the world is becoming a computer. Everything is getting connected. We're awash in data and it's a race to figure out who can get insights from their data quick as they can transform their business model. And if you think about your own products, or you think about your stock price You're not spending nearly enough time thinking about your customer outcomes. And that shift that Microsoft made, wow, instead of thinking about our own capabilities and telling our customers what we think they should do, maybe we ought to think about what they wanna do. Because the truth is, Cloud infrastructure is just one of the many enablers. There's a lot of layers of technology in there Is the process of change and bringing people together to innovate on top of a technology platform. That's the hard stuff. Cloud infrastructure. That's I mean, the technologists would argue with me, but that's table stakes. It's that piece on top that actually differentiates Microsoft new from Microsoft, old. So what are you seeing with your customers? Because obviously you do a fair bit both internal and external to the company. So are you. Are you seeing them applying some of the same shifts that you've made on the culture side, not just the technology side? Yeah, well, the ones that are successful with digital transformation, that's exactly what we're seeing. Because again. Tech, not great technology is table stakes. It's how the people come together to drive innovation that really matters. And the customers that focus on innovation are winning and they're asking us something different. I think in the old days, they used to sort of expect us to come with our technology game. Now they're sort of saying, Hey, we noticed that you've changed By the way, we've made mistakes and we've learned a lot and we've gotten some things right. And what we're learning, what I'm trying to drive through the U. S. business is to actually bring that story board, that learning, to our customers because it's valuable. You know, Kate, how do you actually get the entire sales force to think about business outcomes instead of products? Growing what the total pie could possibly be for the company. Please be thinking of questions for Kate because I'll turn to you guys in just a minute here. But I wanna ask you also about some of the employee backlash because this is something that Microsoft is not the only one dealing with that, obviously. Salesforce and Google and several others, we have parents here on stage here tomorrow, are having to grapple with a lot of the same issues and that backlash and protest against some of the government contracts, especially DoD contracts that have been awarded to tech companies recently. So you just Very recently won the bid for a hotly contested $ 10 billion Pentagon cloud computing contract. This is at a time when you just recently had employee protest. Now some employees are protesting this latest contract. What is the key to communicating the decision from the top leadership? With the understanding, of course, and the appreciation for the fact that not everybody will be along with you? Agree? Yeah, and will agree. Yeah, so what I've seen and what I love about Microsoft [ UNKNOWN ], and I've been there two and a half years now. Is we have a process for it. It starts by being grounded with our purpose. I talked about our mission of empowering the world to achieve more that's about driving productivity. But we quickly go to a place of listening to the concern and you know, for Our employees that are concerned about us providing technology to war fighters. It's about listening and understanding how does that conflict with our purpose, our mission, if it does, and we harness the power of thought leaders inside and outside the company to really sort of reflect And then the senior leadership team at Microsoft, makes a call and this call is if we're really gonna be a company that uses a technology platform to enable the world to achieve more. Then we need to provide that technology to our government, that we elected to protect our freedoms. Mm. And that's the answer. And, you know, we make provisions for employees to move to other parts of the business where they don't have to work on services that directly impact that contracting And Sachin Nadella has said that there is this understanding and it's okay if not all employees agree. Right. Do all of the senior does the senior leadership team have to agree and be united on that and where they without decision? I don't know the answer to that because what I see is kind of like this thorough analysis and the logic to get there and I think that that's what's important. As well as the very, very thorough communication with the entire company about how we got to that decision. And that's I think the part to reflect on is that there is a process for assessing and communicating and we also make decisions to pivot away from opportunities I've seen A number of times where employees have put concerns on the board about selling technology to entities where we think there's something nefarious going on, we're extremely quick to assess it and to actually not pursue an opportunity when that happens. So there's lots of stuff on both sides. I think the tech laughs You get one side of the story for sure. Okay, questions for Kate, question back there. Hi, I'm Jackie, I'm with the Gate's Foundations, sp we're neighbors. Question for you we talk a lot about designing for women. And when you design for all, you often design for men. So could you share a little bit about how you think about design whether that's product or services and gearing that specifically towards women Yeah, I think it's a great question. So it's about representation. And that's why we're working so hard to build a more diverse population inside of Microsoft across every function. And I'm the first female president of Microsoft US. [ APPLAUSE ] Thanks. I'm excited about that. You know, since I've come to the company, we've transformed the leadership team. It's more than half female, the people who report to me. And we have three African American women on the team reporting to me. Yeah. Which is only just the beginning. Our CFO is Hispanic And our general council is Indian. So we're working very hard to create diversity because I think you need diversity inside in order to be able to design for all of the under represented populations. Other questeions? Back \ g a couple over here. Hi, Kate Stacey Tank. Good to see you. We came to visit you about a year ago and talked about the transformation work that was happening and I have more of an anecdote and a little bit of a question. But about six months ago, my son was playing hockey and shot a hockey puck into his iPad. Just knocked the time clock over it's such a dramatic. As he was thinking about his replacement device, he said something really interesting to me. He said Mom, I really want a Surface. And it stopped me in my tracks. This is a kid from age three who said he was dying to work for Apple when he was a grown up. And I remember when we ever give Me call you, I am telling you Is this a plan to lure the audience? [ LAUGH ] I also use a surface. It's really interesting. He loves to draw. Yeah, I remember when we were in the conference room with you and I looked around the table there are a bunch of people that were using Apple devices And you said hey, we're device- agnostic. Right. But what I was wondering is, in your quest for humility and being in this quest for learning, maybe it made you better at making products too because you want people to choose the Surface. When I walked into that room and saw the Apple devices, it made me uncomfortable. I was at Microsoft. I wanted to see Surfaces around the table. But maybe somehow through the humility came connection to customer and better products. I think it's a really good point. And I think one of the keys to the success of Sati's vision has been to completely open the Microsoft ecosystem. So it used to be narrow and proprietary and focused only on our products and that's not what the opportunity is in the world. We wanna meet our customers where they are, when whatever device or form factor they want on whatever operating system they want in whatever experience they envision and the reason why we created the service actually, this is more opinion than fact, one of the my beliefs is that the reason that we created the Surface devices Is to help the world imagine what it could be like to really push the forefront of design in the context of what is thought of as a commodity device. And I thought, at the point where we launched service, we were losing a little bit of that innovation in the marketplace. And I think it's back in spades and that's a great thing and yes, I want lots of surface share in the US market and as a whole globally for Microsoft but I think the world is a better place with competitive devices because that's what our customers want. We we do unfortunately need to wrap in just a few seconds here but I thought it would be a good time to mention this quote from from Satya Which was something along the lines of you don't join Microsoft to be cool. You joined Microsoft to help others be cool. Would you say that that kind of sums up what Microsoft is today and are you okay with that? Totally okay with that, I was never the cool kid, [ LAUGH ] So I feel like I'm finally at home. You know, and I think it really speaks to this notion of making other people cool is about abdicating all of your self interest to try and provide what they want. It's about focusing on their outcomes and That's what I'm trying to train the Salesforce to do, and I think we're on a good path to do it, but we got lots more work ahead. Well, thank you so much. I'm sorry we didn't get to all of your questions, but you can catch Cape scootering down the beach later, so Thank you Kate. Thank you. [ APPLAUSE ] [ BLANK_AUDIO ]

Embracing the Digital Era

Tech

Microsoft grew up with the digital revolution, both driving the change and evolving with it. How does the company look toward the next stages of the tech era as ethical issues become more complex and its workforce becomes more vocal and opinionated?