Satya Nadella on his new book, stepping into Bill Gates' shoes, and what Indian IT industry should do

India Today Group: It is brave of you to write a book in the midst of being the CEO-in the fog of war, as you call it. Normally CEOs wait for their successes and years later talk about it. So why did you do it?

Satya Nadella: The impetus for the book came from not as much trying to recount what has happened or even just talk about the future, but to talk about the process of transformation. Because I realised that so much of what one does as a leader in any context-and also what one does in life as you live it-is deal with change. So, I felt that reflecting on that while you're going through it is, in fact, cathartic and clarifying, rather than do one of those exposed 'look-backs'.

One of the inspirations for this was a meeting with Steve (Ballmer, Nadella's predecessor) maybe six months after he left. When I asked him, "Hey, are you writing a book?", he had a fantastic answer. He said, "No, it's too boring to look back into the past." And that's when it struck me-right now, while I'm in the midst of it. By no stretch am I claiming the journey is done, the transformation is finished or any successes have been achieved. But, I thought, let me reflect on Microsoft's own journey, the moments of transformation, and then our own society. And so that's the three stanzas that were really the impetus for it.

ITG: You talk of the soul of Microsoft and ask existential questions in the book. Isn't that somewhat of an Indian thing to do?

SN: As far as this notion of the soul, whenever I think about companies, a lot is talked about strategy and, obviously, that's super important. A lot is talked about technology, obviously very important too. You have got to get the right technology at the right time, and then you've got to express it with your strategy and execution. But what is not stressed by these two bookends to long-term, real competitive advantage is that sense of purpose, identity and culture. When I look back, we've been a very successful company over 40-plus years. And whenever we've gotten things right on those two sides is when we've achieved great success. When we did things which were not grounded in that sense of purpose, by looking around and saying, "Oh, who else is doing what?" or even a sense of envy, it didn't work. So that's why this invoking the core soul and rediscovering it has been a very big part of at least what we've done in these initial phases.

ITG: You asked the fundamental question-why Micro-soft should exist and do the things it is doing. What is the answer you came up with?

SN: The first product that Microsoft created when Bill (Gates) and Paul (Allen) started the company was the Basic interpreter for the Altair. And at that very birth of Microsoft, it defined everything that we've done and everything that we will do going forward-which is we build technology so that others can create more technology. That's who we are. Sometimes people ask me, "Are you a consumer company? Are you an enterprise company?" We're neither. We are a company that creates technology so that others can create more technology. So, to me, that's who we are: we empower. We talk about our mission as empowering every person and every organisation on the planet to achieve more. And each one of those words has deep meaning for us because we think about people and institutions people build. We can't just celebrate our technology. It has to be celebrating others' success in creating their own technology. That is what I think is Microsoft's identity.

ITG: When you asked yourself why do you do what you do, what did that throw up?

SN: There's a very powerful moment, in my mid-30s, when I was working with Doug Burgum, who happens to be the governor of North Dakota right now. And he said something which completely changed my outlook to how I think about what I do. He said, "Look, you're going to end up spending more time at work (in my case, at Microsoft) than you perhaps will with your own kids so it had better have deep meaning... it can't be something that you do because it's sort of transactional." And when I look back, all of the times that I've had the most satisfaction were not really about any particular technology or product or business success, it was because of the impact of what we did, or what I did around me. And that ability to draw on your own personal passion and philosophy, and take this very broad platform that Microsoft creates, and connect the two, is tremendous. We may never get it right, in fact, you know, frustration is part of life, part of any context, but at least that's the ideal. That's what makes me tick.

ITG: Did you ever think when you started out that you'd be part of a bunch of people who were out there changing the world?

SN: What I think was ingrained into me was a sense of curiosity. That ability to look at things, opportunities given, and to assume that that's amazing. I never remember at Microsoft any job that I had and feel that, "Oh, god, this job is less important than the one I had." I always felt that this is the greatest job, it's the greatest opportunity, I'm so thrilled to have it. It's some combination of my father, my mother, and their influence on me, which was a strange amalgam. But it did create that, where there was never this thing about, "Oh, look for something next." As opposed to, "Take what you've got and really, really exploit it to its fullest, to have the deepest impact." That, perhaps more than anything else, has defined who I am.

ITG: And if you were to speak to your younger self with what you know today, what would you say?

SN: If had to go back, I would reinforce that, now that I have a better understanding of it. Because so much of life is lived in anticipation of something. It's a cliche, but it's the most powerful one, which is that you've got to be able to mindfully live in the moment because that's all you've got. It's a tough one to understand. But that is, I think, perhaps what has made the most difference for me.

ITG: Bill Gates, in his foreword to your book, talks of this being the beginning of the digital revolution. That's a surprise. Aren't we in the middle of the revolution and reaching its zenith?

SN: It's fascinating. I study a lot of these massive shifts that have happened throughout human history. Obviously, the big one is the industrial revolution, because it's amazing to think about what the industrial revolution did. Until 1750, the world GDP in all parts (if you leave some parts of the globe), especially for most parts of Asia, Europe, it was all the same. There was not that much disparity in terms of per capita income and quality of life and what have you. And then the industrial revolution completely changed it. There's this fantastic book by Robert J. Gordon (The Rise and Fall of American Growth: The US Standard of Living since the Civil War), who talks about the rise and fall of American productivity. He talks about how, for example, in 1870 if you were walking in Manhattan, the most likely thing that's going to happen to you is you're going to have horse manure all over your shoes. Whereas you go into 1940, you and I can walk in and feel like, yeah, maybe we don't have some social media and some television, but otherwise, we'll have running water, hot water, plumbing, cars, air conditioning, everything that we are used to and it'll feel pretty awesome. And that just happened in a period of 70 years. And so I sort of say, wow, what's the parallel in the fourth industrial revolution, which is digital technology? Gordon himself talks about the productivity gains which, obviously, are core to economic growth, which are core to an entire society benefitting. In the mid-'90s to the mid-2000s is when that happened and a lot of it is attributed to actually the personal computer or PC in the workplace. Since then, we've been so consumer-led-consumption-led, I would term it-that we haven't had the level of economic prosperity that's been more evenly distributed because of digital technology. So, therefore, from that perspective, I think we need more technology and a broader impact from that technology.

ITG: So what are the next big things in technology that will power it?

SN: There are at least three broad things. One is: how can technology be made such that more of us can access it in more natural ways? The ultimate is when a computer is in front of your eyes and you're not even distinguishing between the real world and the virtual world. That's what we call the mixed reality world. So that's one aspect of fundamental shift and change. Another aspect is intelligence, machine intelligence or artificial intelligence. One of the fundamental things that I talk a lot about is in all of this abundance of computing and technology, what is still scarce, is human attention. The only rescue there, is for something like artificial intelligence to help me focus on things that matter the most to me and to my life and to my organisation, to my family. So, therefore, AI is another aspect that's going to have significant impact in individual lives, organisations, and economies at large. And then the last aspect is if we want to create more of this abundance of computing interfaces and experiences, everything that's powered by AI, you need lots more computing power. You need to, in fact, get beyond even what has been the classical computer, beyond Moore's Law, because we're reaching the limits of physics in terms of our ability to draw more out of that architecture. And so this is where I think something like quantum computing completely changes it. We have a very exciting program at Microsoft, and there are some others also working on it, where the fundamental breakthroughs in physics, math and computer science have to come together to invent, essentially, a new form of computing.

ITG: You mentioned going beyond Moore's Law. Is there a new law that you could think of for technology growth?

SN: If there's a universal law, the one thing that I've realised is that whenever you assume that you've found the last device, the last computer, the most ubiquitous computer, all you've got to do is wait a little and there will be more computing, not less computing. That will be my equivalent.

ITG: So let's call it 'Satya's Law' (laughter). You have written extensively about technology democratising the life of people across the world. Do you think that we're reaching a stage where we are talking now of who is creating and controlling the technology? Is that only going to increase the disparity between different parts of the world?

SN: Quite frankly, that's been one of the big questions I've always had. I always used to be amazed as to what was happening in Aurangzeb's court while the industrial revolution was going on. Like, what must have been the milieu? The key seems to be: what do you do with the technology once you have access? It's that intensity of usage of technology, broadly. In the Indian context, there's this acronym that people use: the ABCD of India, which is Astrology, Bollywood, Cricket and Darshan, or what have you, is the extent of sort of India's interest in terms of use of anything new. You have got to go beyond that. You can't celebrate just, oh, wow, everybody has a smartphone. What are they doing? What is the downstream implication of it? Unless and until there is intensity of usage of technology in a very broad-spectrum way within a local economy, you're not creating the digital surplus. Obviously we want returns in any country that we participate in, but we care a lot about what are the returns for the country itself because of the use of our technology.

There will be countries which are more successful in applying technology and growing their GDP. What's the trajectory that India should follow?

SN: I think it is imperative for every country, for the entrepreneurial class in every country, for the industrial policy in every country to really put the use of digital technology across the entire economy as a front-and-centre priority for their agenda. One of the places where I think that has happened is India. The India Stack is a fantastic way to say, okay, let's take digital technology, make it relevant in the context of giving more access to every Indian citizen to more services, and then reduce transactional costs because that's going to drive economic growth. That, for example, is a good way to shape both industrial policy, shape public sector and how they work and then of course combine that with what's happening in India through all of the entrepreneurial activity. But that's what I think has to happen at scale. And sometimes I think we go to let's be protectionist, that doesn't work because if you don't have access to technology, then being protectionist will only mean you'll get left behind. So you have to be very, very good at being able to understand what is the secular change that's happening. Let's not be in denial of that. Let's make sure the inputs are there, then create more high-value outputs relevant in the context of your own economy, and then the world at large.

ITG: Coming to the Indian IT sector, it looks to be under stress and may well have to reinvent itself. What would be your advice to them?

SN: There are two things I would say. For any individual company, hitting refresh is a very important point, which is not just about being able to catch the next technology wave, but to be able to do that and change your business model. In many cases, it is the harder part because it's one thing to adapt to technology change, but it's fundamentally harder to deal with business model changes because your margins change and you have to be able to sort of really manage through that. That's when being able to even get that permission out of public markets is a very, very hard endeavour, but that's what you've got to do. When I look back at Microsoft in our 45 years-I mean during my own 25 years at Microsoft-the number of existential threats we've had have been different. And, in fact, that's how I measure it, which is every five years somebody should be sort of whispering in my ears that, oh, there's a new person who's going to kill you. And if you don't have that, then there's something wrong. But overall, though, when I look at what's happening in the Indian context, the fact that technology now is more broadly being talked about, whether it's what's happening in the public sector's own adoption of technology with Aadhaar, or whether it's the Indian startups that are, in fact, fundamentally inventing new things for the Indian economy itself. And then, of course, they may export it, but even the Indian economy, uniquely getting digitised and building these large companies out there, is the exciting part. So to me it is about being able to take new technology, creating the intense use of it, and creating surplus. That I think is what happens next in Indian IT. It's much deeper, much broader, the entrepreneurial energy in the country is great, the talent in the country is pretty amazing.

ITG: What should the Indian government be doing to leverage the opportunities of information technology? And where are these opportunities?

SN: If you, as the public sector or the government are, in fact, not using technology to allocate taxpayer money in the most efficient way, then you're not doing your citizens any service. So the use of technology to run the business of government most efficiently is job number one. That what would be my first advice, whether it's in Delhi or in Washington or in London or anywhere. The second thing is, of course, from an industrial policy perspective, knowing what are all the ways for you to encourage technology and technology growth so that you can create more ubiquitous economic growth. I think that is super important. My own feeling is that there is no shortcut to that, and especially in democracies you have to have legislative solutions to what is the balance between privacy and security in any country, that has to be key. And so to me being able to tackle these fundamental issues with the right framework of law that understands and recognises, that is the technology. You can't use a framework of law that is created for the 20th century in the 21st century. That's the fundamental issue. I think that's where all of the dissonance today comes from. In the context of India, privacy is a fundamental right, but at the same time, if you cannot use data to create value for that very Indian citizen, then you're doing that Indian citizen a disservice. So the question of how to enable both sides, I think, is one of the challenges that we as a society and a global society have to overcome.

ITG: On the privacy question, even now banks protect our money, but companies like yours and cloud-based solutions actually protect our data, our identity and much more. So how daunting is this responsibility?

SN: I mean fundamentally when I think about the principles that guide what we do, privacy, security, being compliant with the laws of the land, those are key for us. So when we think about our cloud infrastructure, I think about all of those. So first is to be able to actually have state-of-the-art security-and by the way most people think about security as sort of a one-time thing. It's not, as we all know that security is like going to the gym, you've got to get up every morning and go to a gym every day to stay fit. You can't just sort of watch other people go to the gym and say, oh, I'm going to feel better.

So that's sort of the number one thing on security. One of the keys is the bigger the operational security posture you have, the better capability you have around security. So that's a very big area of investment for us. But we never are sort of satisfied with the state-of-the-art there and we're always pushing the frontier. The second one is on the privacy side. And I think on privacy the key is to be very, very transparent in terms of what is the data, what is it being collected for, what is it being used for. And so to completely put the user back in control, whether it's an organisational user or an end user, more and more I think the European regulation around GDPR (general data protection regulation) is clearly going to define the world's standard on what that means for every individual user. So that's another huge element of what we invest in and what we are working towards. The third aspect, for example, is why have we put in India data centres. We are building essentially these modern factories in India, which are these huge data centre investments we have made. And it is so that Indian data can remain within India's digital sovereignty, so that the public sector can trust it, and then have compliance to any regulatory audits and so on that the government of India wants to run, or even other agencies want to run.

ITG: What is tougher, staying principled or making an exception?

SN: In a slightly immature state of global legislation, and a global equilibrium around privacy and security, it's super important for tech companies like ours to be very principled, recognising ultimately that we are subject to laws of the various countries. We are not above the law. We operate within the context of the various countries and their frameworks of law. But that said, we can't be arbitrary. So, I feel that what is most important is for the world not to be dependent on the morals of any single CEO, or any set of principles of any single company. But we have to recognise the urgent need for the world to achieve equilibrium on most important issues of our times, like what's the balance between privacy and security, to cite an example. That's super-important. It's not just important in India, it is for all countries, and they have to come together and say that we have a joint understanding, like we have with human rights, or climate change, or many other issues. You've got to achieve this, a global consensus on this. And if we don't, we're going to pay the consequences for it.

ITG: Finally, have you ever thought of coming back to India and helping change things directly?

SN: There's no question in my mind that I'm very much indebted and very much grateful for my heritage in India, growing up in India. My connections to India are deep and they never will go away. What I have now is an opportunity to contribute- because of the job I have today and the platform I have today-back to not just the country I was born in, but also the world. And so anything and everything I can do to be able to sort of contribute back to India is something that I look to do.