When Satya Nadella took over as chief executive of Microsoft in 2014, the company was suffering from an image problem. Viewed as lacking in innovation and falling behind its rivals, Microsoft, it was said, was middle-aged and showing the strain.
A Vanity Fair piece about how Microsoft had lost its mojo – and with it an entire decade of progress – put the blame squarely at the feet of then-chief executive Steve Ballmer.
Then came Nadella, and with him, a culture change within the organisation.
“For a company that is 41 years old, the fact that we’re still in the mix speaks to something that we’re getting right. Because usually in this business, especially in tech, it’s very unforgiving. You may have done a great job in one technical era, but you have to be able to renew yourself,” he said.
“Ultimately, what has to resonate are the innovations coming out of Microsoft. But long before the innovations themselves, it’s that cultural shift in how we approach what we do. That’s definitely afoot in Microsoft.”
He cited the change in how the company operates, from Office 365 to Microsoft Dynamics 365, as evidence that Microsoft was moving with the times.
The company’s augmented reality system HoloLens was also somewhat of a surprise, coming out of a secretive project that had been in train before Nadella took over.
Alternative systems
These days, Microsoft is embracing alternative systems, making its products available on iOS and Android, and turning to new technologies as it seeks to make its mark on the ever-shifting tech landscape.
That brings with it its own challenges, whether it’s the ethics of algorithms and artificial intelligence or the new world of privacy and security, and the legislative changes that will require.
“The fundamental thing for Microsoft to get right is having a real-world view of what’s happening in terms of the technology shifts, and that’s what the ‘mobile first, cloud first’ defines,” said Nadella.
“It’s not trying to describe the world as it is today, but where the world is going and where even mobility is not about any one device but the fact there is going to be ubiquitous computing, and the question is what is the mobility of the experience going to look like. That’s fundamentally enabled by the cloud.”
Ireland has a stake in the success of Microsoft. The company employs more than 1,200 people directly at its Dublin campus, and Nadella describes the country as "pretty strategic and critical on multiple fronts", including its contribution to the company as a development centre and regional headquarters for many operations.
“We’ve been here for 31 years now and we have a history and we are pretty bullish about what we’re doing and what our prospects are,” he said.
That commitment will withstand Brexit and the uncertainty caused by the recent EU ruling on Apple’s tax arrangements in Ireland, he insists.
However, Nadella says there will need to be “global tax reform that allows companies like ours to participate in a global economy [and] pay taxes that are equitable for a global operation”.
"We'll work through [this] because I think that's the only way forward. The G20 has that responsibility to come up with the tax regime," he said.
The Microsoft chief executive was in Dublin to announce what the company sees as important developments on cloud computing – that the company has invested $3 billion in the technology in Europe and will begin to offer cloud services from data centres based in France from 2017.
Facing battles
But the company is still facing battles in other areas.
When it comes to gender diversity in the tech industry, Nadella acknowledged Microsoft does “OK” compared to other tech companies - but there is still a lot to do.
“Overall, the situation is not great,” he said. “At Microsoft, we are taking this seriously on multiple fronts. We had one of the most diverse intern classes last year. It was fantastic to see that.
“Our focus now is not only to bring this diverse class but to make sure that the diverse class thrives, even though we are not as diverse on the top. You have to accommodate for that.”
That means strong mentoring programmes put in place, a real interest in both ethnic and gender diversity within the company, and changes to parental leave policies in the company.
“Our goal is simple. We want to represent the world we want to serve. Our products should be built for everybody,” he said. “We can track every progress, we have goals for it, but I think we have a long way to go.”
Microsoft is also having to get to grips with new challenges created by the advances in technology that it is pushing, such as algorithmic accountability and transparency.
“In a world where algorithms themselves are being generated from data, what does it mean for someone who is a provider of digital solutions to be accountable?
“You still have to be because the way those algorithms are being generated from data is still being under control. We’ve got to have a very different way to think about quality and accountability,” said Nadella.
“Similarly on the cloud side, what does it mean to have the right balance between privacy and security? That’s going to require a new equilibrium. It’s not just up to a single company to decide that. It’s, in fact, where the world has to come together with a new set of laws that govern how people’s privacy and security are balanced.”
Toughest challenge
Ultimately though, the toughest challenge for Microsoft will be staying relevant as technology continues to change at a rapid pace. Nadella doesn’t seem fazed by the challenge.
“In 41 years we’ve managed to get a lot of things right in order to stay relevant. In five years or 40 years from now, the question is going to be not only are we riding the new tech wave but doing it in ways that are true to our identity,” he said.
“I think most companies get lost when you try to do things you were not born to do. In our case, our identity is about this true notion of democratising and empowerment, and that’s what I hope we do with every wave of new technology.”
