Satya Nadella talks about Digital transformation

So Satya, thanks so much for taking the time to get together here at Minds and Machines. It's a huge conference for us. The big themes we're talking about here really are digital industrial transformation and the mix of tools and culture and things like that. Let's start with just the tools. Microsoft's right in the middle of this and really leading how to use tools, creating new tools. What are your thoughts on just the environment today and how you're thinking about developing tools for the industrial internet? No, it's great to be here. I mean, I love the name of the conference even, Minds and Machines, because I think it captures the zeitgeist of what needs to be changed. You know, we live in this age of these digital feedback loops. I mean, whether it's the asset, whether it's the wind turbine, the locomotive or the engine, you need to create that digital twin and create that feedback loop. But it doesn't stop there. You need to, in fact, take all the business processes like the field service that goes with the asset. That needs to be a digital feedback loop. How you engage your customers needs to be a digital feedback loop. But more importantly, even how your employees work, their skills. It all has to be connected. All has to be connected. And to me, that's why I think we have to go from... I mean, digital is not new. We've used digital technology in every industry in the past as well. But they're no longer these systems of record that are just tracking or even systems of engagement. But they're now these systems of intelligence that are directly impacting the outcome. That's where I think, in our case at Microsoft, we want to provide the tools, the platforms, the technologies that allow every company, in some sense, to become a software company. Every company to become an AI company. That's how I think about our role here. How do you... You mentioned outcomes. And that's been a big transition for us as an industrial company. We, for decades, made things. Incredible engines, incredible locomotives, whatever it was. But our thought process was making things and trying to move to this notion of outcome. And what does the customer actually do with this? And what are they trying to solve? And what are the problems? How do you think about that as you're going to develop your products and outcomes that you're trying to deliver? Right. I mean, I think that's where the power of software, to me, is because it's the most malleable of resource. And it's not just exclusive to just the high-tech industry right now. You're a software company. Every one of your customers is a software company. And their ability to take the digital information around the asset and turn it directly into the insight. I mean, take Urangi Healthcare, as you described it. I mean, there is no machine. I mean, what you do is just not produce a machine that's used to see inside the brain. But ultimately, what is the physician doing with that? The image there is the beginning of what can be the medical outcome, the health outcome. And we know that we need real breakthroughs, for example, in the cost side of it. But it starts by thinking about the machine and the outcome in a feedback cycle. Are you trying to help customers think that through, or more that's for them to understand their own market environment, and you help support with tools? And that is where I think we have to come together as an ecosystem. No one company can do it all. Figure this out. Because if you try to sort of approach it that way, then I think it just becomes the business as usual. There is IT here, and there's OT somewhere else, and then never the twins shall meet. But if we are really going to construct great outcomes, that means the capability needs to be there in every layer, that means in our customers. But they also need to compose. In other words, you don't want to recreate the wheel at each layer. Exactly. And that's where I think an approach, which is more of an ecosystem approach, is the most important thing. Where are we collectively right now? We have these incredible aspirations for digital transformation. In fact, I was going to ask you, as the sitting CEO of an industrial company, what do you think? As an industrial company, where do you see that? Where are we on the digital journey? It's a journey. It's a hard journey. We've been doing this. Jeff Immelt did a tremendous job identifying this six, seven years ago, really. I remember him first coming to the executive team and sharing that vision. We've been at it for a long time. It's hard. Getting to the idea is one thing. Implementing is another. We just released some research today that really bolstered that. We talked to a number of industries. Eighty-five percent of them are saying digital transformation is absolutely crucial and fundamental to my future. Thirteen percent, one-three percent, said they had a digital transformation plan in place. There's this giant gap between the aspiration and the intent to do it and actually doing that. I think it's a range of things. Funding, drawing money away from traditional investment sources to earmark for this, tools, skills, capabilities inside the company, cultural willingness to change. We've been through the school of hard knocks for six or seven years. A lot of what we're doing today and at this conference is sharing how you can make that transformation and how GE can help that. It'll happen, but it's hard work because it's such a profound change, really, in the way the world operates and the way we operate with customers. We're getting there and every week's a better week, but it takes work. To me, even for us, even though we've grown up with software and digital, when you have these technologies that have these fundamental characteristics of exponential change, the way you have to organize yourself to deal with change in terms of capability is the place where you focus a lot of your energy on because your ability to absorb new technology at the space at which you need to in order to be competitively relevant is probably now a universal need. It's fantastic to see you driving GE with that in mind and all of us, in fact, our partnership helping customers, our mutual customers. Together, we get things for customers. One last thing on culture. Your book is a smash success, an amazing book, and really timely, frankly, for me personally, but how do you think about changing culture in a digital era, changing culture in a large established organization, going from a know-it-all culture to a learn-it-all culture? I mean, that was an incredible part of your book. Developing empathy, there's incredible cultural things in your book in addition to the technology aspects. How do you see that and maybe what could we share with others? Yeah, I went on this journey myself, which is trying to search for what's a metaphor that we can use inside of the company to even have a conversation about culture because we were a company that had an implicit culture, but we never talked about it. We would put up some attributes and posters in conference rooms and we'd forget it. I said, okay, what's a learning organization look like and how can we be a learning organization? But just saying learning organization doesn't have the appeal. Did you start the job thinking that thought day one or did it evolve over time? It evolved. Day one, I think I used some of the same words, but really, the influence for me was maybe a couple of years before becoming CEO, my wife had introduced me to this book by Carol Dweck out of Stanford called Mindset. I read the book mostly in the context of my children's education, but in that book, there's this simple concept that she draws out, which is if you have a kid in school who's got great innate capability but is a know-it-all, but somebody who has less innate capability but is a learn-it-all, the learn-it-all will ultimately do better. Always wins in the end. Always wins. That's true for CEOs. It's true for companies. I said, well, this is a great metaphor. We embraced it as everyone can understand it and as not as new corporate dogma. In some sense, the beauty of at least Growth Mindset is you shouldn't do this because you work at Microsoft because Growth Mindset is going to make you a better parent, a better partner, a better colleague. It's taken on a life of its own. We're never going to be done. The other thing I always watch for is to make sure that somehow we don't say, mission accomplished, because there's no such thing. Culture change is a continuous process of renewal. We're in the early days of it, and I hope we keep pushing. One last question. I'm just getting started here. You've got about four years under your belt. If you go back to the beginning and think forward what you expected it to be like and what it has been like, anything notable that's been a lot different than what you expected? Very different. In fact, unlike even perhaps how GE has been organized for all your end-to-end businesses and business units, Microsoft was not organized even that way. Even one step removed from CEO, I had not understood how multi-constituent the CEO's job is. Most people say, oh, it's about investors. Of course, it's about shareholders and investors. It's about employees. Of course, it's about our employees. It's about customers. It is about governments. It is about all of the other organizations, but it's about all of these constituents all the time, and you've got to really harmonize the interests and across 190-plus countries that we operate in. To me, understanding that the job of the CEO is to be able to see it left to right, harmonize it, and then bring a sense of clarity and energy across all of those constituents. It's something that I'm learning. Listen, thanks for the chance to get together. Thanks for coming. Our partnership is so important, and we just look forward to changing the world in the future and doing that together for our customers, and I'll see you around. Absolutely. Likewise. Thank you so much for having me. Thank you.