Microsoft CEO Satya Nadella: How Empathy Sparks Innovation – Knowledge@Wharton

When Microsoft CEO Satya Nadella was a kid growing up in Hyderabad, India his father couldn’t believe how poor his grades were. “My father, who was very, very good academically, always used to look at my report cards and be pretty stunned as to how anybody could be this bad.” But the way his father expressed it, Nadella said, was “endearing” — he told his son that meant he “must have some other real passion.”

Nadella loved playing cricket but at some point realized he probably wasn’t good enough to play professionally. He developed a glimmer of interest in computer science when as a young teenager his father bought him his first computer, a Sinclair ZX80 (an affordable home computer launched by the British firm Sinclair Research in 1980). “That turned me on to a lot of what eventually became a real passion,” he said.

Even so, he failed his entrance exam to the Indian Institutes of Technology. He did earn an engineering degree in his home country, then traveled to the U.S. for a master’s in computer science from the University of Wisconsin at Milwaukee — even though he said he had never been “west of Bombay.”

“It’s fascinating how we [always] think that burning ambition early on is what drives you,” Nadella said. “I think what I had, though, was some curiosity, and that’s what sustained me in the long run.” He also modestly described his younger self as someone who liked to “tinker.”

Nadella recently spoke at Wharton about his new book, Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. In an interview with Wharton management professor Adam Grant, Nadella said he had a somewhat unlikely path to the top job at Microsoft. After 22 years at the company, when he was asked by the board to succeed Steve Ballmer in 2014 — as only the third CEO in the software giant’s history — his response was “only if you want me to be.”

Yet Nadella’s track record as CEO has been widely lauded. Under his leadership, Microsoft has “reversed its fortunes and returned to being a growth stock after stagnating for nearly a decade,” according to TechCrunch. CNN similarly referred to the pre-Nadella years as a “lost decade” and described his success in growing Microsoft’s profitable cloud-services business. It’s also been pointed out that Nadella has turned long-entrenched competitors such as Apple and Google into partners, an approach that appears to be paying off.

“My father … used to look at my report cards and be pretty stunned as to how anybody could be this bad.”

Nadella noted that he tries to avoid the hubris that he says “has brought down empires, companies, and people … from ancient Greece to modern Silicon Valley.” But he does believe in having confidence, as long as one understands the “line between having confidence in your own capability yet having the ability to learn.” It’s an insight for which he credits his high school cricket coach.

Type with Your Eyes, See with Your Phone

In addition to confidence, a CEO must have empathy, Nadella said. This is a quality one doesn’t typically see on a list of top CEO character traits. But in Nadella’s view, empathy is, among other things, a key source of business innovation. He said that although many regard it as a “soft skill,” not especially relevant to the “hard work of business,” it is a wellspring for innovation, since innovation comes from one’s ability to grasp customers’ unmet, unarticulated needs.

Knowledge@Wharton High School

Nadella himself had to learn to be more empathetic in his personal life. When he was 29, he and his wife had their first child, their son Zain, who because of complications was born with cerebral palsy. He candidly described his feelings: “For multiple years I struggled with it: Why did this happen to me? Why were my plans thrown out the window?”

He said that it was only by watching his wife soldiering on, taking the baby to every possible therapy to give him the best chance in life, that he eventually realized, “Nothing happened to me; something happened to Zain. And I had to step up and be the parent and the father.”

Nadella said his experience of having a son with special needs increased his long-held interest in accessibility. He stated that artificial intelligence (AI) holds great potential in this area. “More than anything else, AI completely changes the game around accessibility.”

He said accessibility was a big focus for Microsoft currently, and talked about new products. “One of the things that has been fascinating to watch is, for example, we launched in Windows 10 some new capability around eye gaze,” he said. He explained that where one looks is used as an input mechanism, “which is tremendous for someone with ALS [for example] because they can now type with just their eyes.”

Another innovation he mentioned is called Seeing AI, a free app for iOS launched last year which uses a phone’s camera to recognize objects (including printed text and handwriting) and describes them for visually impaired users. And for those with reading and writing difficulties such as children with dyslexia, there is the Microsoft Learning Tools set built into Office 365 and other applications, touted to help improve comprehension. The user can have content read aloud, adjust the settings to break words into syllables, adjust text size and background color, and other features.

“For multiple years I struggled with it: Why did this happen to me?”

Nadella also referenced Microsoft’s work with AI, holograms, and virtual reality for various professional fields. On the medical front, InnerEye is an AI product intended to help doctors efficiently demarcate cancerous tumors, a process that is notoriously lengthy and difficult to perform manually.

HoloLens, a holographic headset that enables virtual and augmented reality experiences, is being used by the Cleveland Clinic to teach anatomy, according to Nadella. And Boeing is using it to train engineers and to improve information-gathering for pilots fighting wildfires. “Especially for training, HoloLens it turns out is the killer app,” he said. He added that he fundamentally believes that AI can “empower humans to do more, achieve more.”

Grant characterized Nadella as a “technology optimist” and asked if he shared any concerns with those of Tesla CEO Elon Musk and others who have expressed worries about AI lacking human ethics and “this all goes off the rails.”

Nadella responded, “If we abdicate [human control] too soon, then our worst fears can absolutely come true.” He argued instead for establishing guidelines for building good AI — similar to how the tech industry has guidelines for a good user interface — so that bias or other problems don’t accidentally get introduced. He said that if processes are put in place to fend off unintended consequences, then the development of ever-more-intelligent systems will be guided through “routes that we have created.”

Nadella acknowledges, though, that there will be displacement when it comes to employment. He proposed that LinkedIn, which Microsoft acquired in 2016, could help mitigate the problem, saying the site could become “that digital feedback loop, on a continuous basis, for what are the jobs of the future, what are the skills required, how do we deliver that training.”

Microsoft’s ‘Soul’

Grant asked Nadella why he has asserted that Microsoft has a “soul” as evident in his book’s title. Nadella said it referred to a company’s core identity independent of technology trends that inevitably come and go. He said that discovering the core identity involved “existential questions” such as, “What is it that we should do? What’s the sensibility that would be lost if we should disappear?”

Nadella said he also found questions such as these helpful in choosing strategy and deciding what markets to enter because, “I don’t like doing things out of envy. I like doing things [when] we can make a unique contribution.” In Nadella’s view, Microsoft was originally — and should view itself again as — “a maker of tools and platforms,” enabling others to create.

“We aren’t trying to be the cool kid or the cool company.”

Another culture shift he’s focused on is to change Microsoft from a “know-it-all” to a “learn-it-all” company, as he puts it. He observed that when a company has enjoyed great success and has invented many crucial concepts, it has a temptation to believe it has mastered everything. That temptation needs to be resisted.

According to Nadella, the idea for the culture change was inspired by Stanford psychologist Carol Dweck’s work on the growth mindset. He explained that if, for example, there are two students and one has less innate capability, the less skilled individual nevertheless may be able to achieve more by having a “learn-it-all” mentality. “That applies to CEOs and companies [too],” said Nadella. “I think it has been a helpful cultural metaphor for us.”

“We aren’t trying to be the cool kid or the cool company,” Nadella added. “Our sole purpose is to build technology so that others can create more technology. And I’ll let you choose,” he said to the audience. “In 2018, [which is] a more virtuous mission?”