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MARTHA POLLACK: Good afternoon. It's my pleasure to welcome you all to the Hatfield Address, Cornell University's premiere event for the exchange of ideas between the academic and the corporate communities. The Hatfield Fund for economic education was established in 1980 by the Continental Group Foundation to honor its retiring chair, the late Bob Hatfield, Cornell class of 1937, who served as a university trustee.
The Fund supports not only the Hatfield Address and associated events, but also the enhancement of the teaching of economics to Cornell undergraduates. Designation as a Hatfield fellow is the highest honor that Cornell bestows on outstanding individuals from the corporate sector we are so honored today to welcome the chief executive officer of Microsoft, Satya Nadella, as Cornell's 38th Hatfield fellow in economics education. Good afternoon, Satya.
SATYA NADELLA: Thank you so much, Martha. It's such an honor to be with you and to be able to have a chance to be with at Cornell.
MARTHA POLLACK: Thank you. So let's start with a question that's timely. The pandemic has forced organizations to transform with urgency, and has caused long-term structural changes across industries. What do you think organizations must be thinking about to accelerate their transformation out of the pandemic and into the future?
SATYA NADELLA: Now first of all, Martha, I was reading up last evening even about all that you have done at Cornell to navigate this just completely unprecedented set of circumstances we've had in the last year, and it's tremendous to see. I think you built up even, from what I read, a lab which is from scratch and have been doing all this testing. I mean, it's unbelievable to see even how the world has been able to deal with the kind of constraints-- how life in some sense has been maintained, how the first line workers, whether it's in health and other industries, have been able to continue to function and keep our society and economy going-- I mean, it's been amazing.
To me now, as we sit around and look at and say, what's the structural change, two things come to mind, Martha. One is the level of resilience that was there in the economy going into this tail event because of some of the digital technology that-- like the cloud, for example. I even shudder to think what the world would have looked like, how could we have done remote education or remote health or any remote manufacturing if it was not for the current generation of cloud technology or other technology that was available.
And so therefore, one thing that I think we all will-- we can't predict what the next tail event will be, but we are all going to come at that and say look what do we do to make sure that we have resilience built in.
The second thing is the transformation. I mean, of course, the place where everyone goes is what happened with telemedicine. I mean, we've been talking about telemedicine for many decades. It's always been there, except that it never was high volume, whereas now I don't think out of this pandemic any outpatient visit will not start with some form of an AI triage tool on the phone, then a telemedicine visit, and then only will you have a physical visit. And so that's structural change. That changes pretty much all the economics and care protocols of health care.
In retail, contactless shopping and curbside pick-up are going to become norms. And in manufacturing, the fact that you have these digital twins that are now capable of doing lights-out manufacturing. So I think that there is real, deep structural change that will come about. It's not that we are going to live in this highly constrained world, but we are also going to take some of the things that have been learned during this period and not go back to how, say, in the United States at least, the world was in, say, January of 2020.
MARTHA POLLACK: So very much related to that, and specifically related to the kind of office environment you have, what do you think about the future of work? Is there a new normal for that?
SATYA NADELLA: Yeah, in fact, it's fascinating Martha, even just earlier this week we released a bunch of data. It's called the Work Trends Index, because to your point, we been collecting lots and lots of data. And one thing I would say is I want us to be very data-driven because I don't want us to replace one dogma with another dogma because I think, even in the next year, we will understand more what the real change and expectations are. Because the fundamental source of all of this is how do employees of all institutions react to the constraints being lifted? What will they want to come back to and what would they want to retain?
So there are three dimensions, at least, I think about. One is collaboration. If you think about collaboration, like video meetings are very useful, obviously. That was one way to keep face-to-face contact. But we also know work doesn't just happen in a video meeting. In fact, video meetings are very transactional. Work happens before and after. And so building those workflows, even the way we engineered something like Teams was to account for the full workflow versus just the transactional part.
The other aspect of collaboration that has really changed is first line to knowledge worker. So for example, when you have somebody who is on the shop floor of a manufacturing line, but now wants to talk to an engineer who is working from home, they're using all the digital tools. In fact, it's fascinating. When I look at HoloLens pre-pandemic, it was a system that people used for a lot of the business-to-business holographic and mixed reality computing. But the adoption rates went up because they needed-- that was a way for, essentially, an engineer holographically to teach somebody in the front line.
So collaboration, especially between front line and knowledge work is going to be changed. Learning-- of course, you all are experts in deploying systems of learning around remote education. But even inside enterprises or corporations, if you say corporations are just about building knowledge capital, then how do you take learning content as well as expertise of people and connecting it to the jobs being done? So in other words, really making the content and people who things to help people build knowledge capital on a continuous basis.
And the last thing I would say, Martha, is we've learned a ton on well-being. So instead of narrowly thinking about productivity, how do we really think about the overall well-being of any employee, any person? In fact, managers who use data to care for the people that they're leading has been a big element of how I think our work is going to change going forward. So these three things-- collaboration, learning, and well-being, to me, are going to define the change.
MARTHA POLLACK: That's really interesting. How do you think about that as related to new frontiers and technological advancement? Where do you see the boundaries of technology that are going to help achieve those goals?
SATYA NADELLA: Yeah, I mean, this morning I had a great opportunity to visit your Cornell digital agriculture group, and they talk to me about what they describe as the internet of living things. I've not heard that expression before. It is so inspiring to see how, first of all, the multidisciplinary nature of that institute, how they're bringing breakthroughs in multiple disciplines to fundamentally solve still some of the most unsolved challenges around agriculture and hunger and so on.
And so to me, when I look at all of that, being in the field I'm in, I think about how do we remove constraints, Martha? I mean, how can we take the most malleable resource that is software, and use it in the context of some of the challenges of people and planet? That's kind of how I think about it.
In that context, there are, I would at least say, four or five dimensions that are super important. The first is that ubiquity of the computing fabric. If you think about it, even in the context of how do you have that real-time feedback loop between living things in a farm and, let's say, some analysis and insight and predictive power-- it's computation.
And the computation can't be in the cloud. It has to be in the farm. So we need to reduce the cost of the sensors. You need to bring compute to where the data is being generated. So that ubiquitous computational fabric will become more distributed-- in fact, will become more sovereign even, so therefore, you're not centralized.
The second thing I would say is AI. I mean, one of the fundamental-- when I say AI, if I look at what's happening with, let's say, a large scale model that we recently worked with OpenAI to train, like GPT-3, it's just unbelievable to see how these large-scale models themselves are becoming platforms.
So one of the things I'm excited about in AI is on one side, these multimodal models, which are large-scale, take a ton of compute resource. On the other side, I can even be a domain expert using a low-code, no-code tool using the output of this large scale model to do some automation, do some prediction, change health care outcomes, or what have you. So that's, again, super exciting to me.
A third area for me is also, I would say, if the last 10 years of computing and progress in our industry has been about consumption-- after all, we binge watch more, we browse more, we shop more-- I think the next 10 years is going to be about creation.
And when I say creation, I just don't mean it in the narrow sense. I mean people building apps, people building Excel spreadsheets has being my favorite creation tool. I always say, look, think about what it did, to knowledge workers. When you suddenly change your relationship with numbers-- so I look at that and say, at scale, when we do that, I think the next phase of the internet is all going to be about creation and tools and those feedback loops between people consuming and creating.
And then the last area I would say is about economic opportunity, which is how do we create the feedback loop between the jobs, the skills-- and that's where I think Cornell and other universities can do a fantastic job of ensuring, both in school and after school, there is a real-time feedback loop between the skills required and the credentials required to find economic opportunity in what is going to be a changing world. So those are some of the big areas that I would say are the big changes that are coming about.
MARTHA POLLACK: Thank you, and I'm so glad you got to meet with some of our researchers in the digital agriculture project. To me, that's such an exciting project for Cornell. So Satya, you have been talking just now about how technology can be used to help address a lot of the big problems we're facing in the world-- climate change, inequality, job opportunity, and so on. Talk to me a little bit about how you, as a CEO, think about the responsibility of companies like Microsoft to help address those challenges versus all the other responsibilities you have to your shareholders and so on.
SATYA NADELLA: I mean, Martha, this has definitely now become a mainstream topic. When we first started even talking about it, even say, four or five years ago, it was not such a mainstream area, where now multi-stakeholder capitalism has sort of become the norm, and I'm so glad because that is sort of what I think was even the original contract. I mean, people say, it's kind of like everybody has rediscovered Adam Smith. I mean, if you go back and say, wow, that's what he wrote in his first book before The Wealth of Nations one, and said, there's a social purpose of a corporation.
The social purpose of a corporation-- the definition I like is by an Oxford economist called Colin Mayer, who said it's about finding profitable solutions to the challenges of people and planet. And the two key phrases are "profitable solutions" and "the challenges of people and planet." So it's not about, oh, I created a solution that broke the world and then, yes, we were profitable. That's breaking the social contract.
So if you take that as a guide, Martha, we at Microsoft, in 1975 when we were formed, we were a technology company, a platform tools company, that was going to be used by other technologists to build more technology. So if that was a big opportunity in 1975, when Atari was the big computing paradigm, in 2021, we were excited about that, which is everyone is going to be digital. Every company in every part of the world, every institution, is going to have their own digital capability.
So fundamentally, I would say core in our business model-- this is not about ESG on the side-- core to our business model is doing things and profiting from it when others profit, others benefit. So I always think of that as the core equation. With that in place, we do have other responsibilities. How does Microsoft's participation in any community or in any country lead to more inclusive growth?
We talked about the way work is going to change. The fact that HoloLens are being given out to people who are in the front lines in manufacturing means the corporation is deciding that this front line person is now going to be more productive with this technology, and that means it's going to be even supporting their wages.
So to me, that inclusive growth through technology, the ability for us to make sure that we have protection for some of the fundamental rights, like our democracy, like access to skilling like access to the internet. These are all things that we'll need to do work on. Trust is another side of it, which is, as a platform provider, by design we have to ensure-- whether it's AI ethics, privacy, internet safety-- all have to be built into the products.
And lastly, I would say the one finite resource we all have is the planet. And so, Martha, we think a lot of our own commitments. After all, we now are consumers of a lot of energy because of our data center footprint. And so we have now made our commitments around how do we get to carbon negative by 2030? How do we get to zero waste, and water positive, even?
And so the question is, if you do all-- and we need to live that, achieve those goals, and take all the technology we use, and then make that available to all of our customers' partners. So that's how I see-- every corporation is not something we alone can do, but rediscovering, to your core question, that social purpose of a corporation is, I think, one of the most important things we can do.
MARTHA POLLACK: Music to my ears. Tell me a little bit-- you've talked about access to skilling a number of times, and of course, as you mentioned universities like Cornell exist-- we don't talk about it as skilling-- as educating-- but to provide the next generation with the tools they need to be successful. Tell me your thoughts on how universities and corporations can work together better than we currently do? Or maybe you think they're fine, and we don't need to.
SATYA NADELLA: Now first of all, one of the things that is super exciting for me is what you're already doing at Cornell by even thinking about the interdisciplinary nature of-- I would call it-- STEM or computer science education. The agriculture Institute-- that was the fun part of it, or the most important part of it, which is expertise from all places is coming together. Because that's the thing-- if it's about creating one more-- I'll call it consumer internet startup or consumption application, the world, I think, has enough technology already.
But if you start saying let us, in fact, solve some of the hardest problems around the climate or around feeding everybody in the world, and all of those unsolved challenges, then we need more technology, and in fact, if anything, some of the software technology needs to blend in.
So if I take that approach, universities like Cornell are playing a massive role in creating even the curriculum and the space and the room to bring students and faculty together to solve those. Then I would say one other thing that we are very excited about is what we call skills-based hiring. It turns out, Martha-- we just did in LinkedIn study and said, where are the jobs today? What are all the open jobs, even in the tech industry, and right at Microsoft?
We, for example, have tons of I'll call it front line support customer service jobs. 70% of the workers today in food service have the skills to do customer support. There's a 30% missing. It's a critical 30%, but what if they could get a micro-credential on that 30% and apply for the job, pass the interview, and get that job. So that type of dynamism in our labor markets, in our skilling marketplace, and also hiring practices would go a long way to deal with what I think are some of the challenges.
Because I really fundamentally believe-- I think, in democracies, the foundation of the democracy is going to be defined by what happens in labor markets. We know there's going to be real issues around automation. But I don't fall for that lump of labor fallacy because we can create new jobs. We can create people with the skills for these new jobs, and we need systems, policies, and work that all of us do across the entire society.
MARTHA POLLACK: Thank you I'm one last question for you. You're known as being one of the great leaders in industry right now, and I think your comments today show why that is. What advice do you offer to leaders outside of Microsoft, and what advice do you have for the students in our audience who are future leaders?
SATYA NADELLA: Well, it's a hard question in some sense, because I'll tell you what-- I tried to do, even in my own context Martha, in terms of the mirror that I like to hold each day and see how I'm doing. Leaders fundamentally have this innate capability to drop into any situation that is confusing, uncertain, especially in a time like this with the pandemic, and leaders bring clarity to confusing, uncertain situations. I mean, leadership is not about going into a situation that is uncertain and confusing and confusing more. I mean, that's not leadership. So leaders bring clarity.
The second attribute that I think leaders do is create energy, and not just by saying, I am good, my team is good, but it's about bringing all the constituents. So if you say I'm good and everybody else sucks, that's not leadership. Leadership is about being able to create energy, both inside the institution and even outside the institution. And that is innate in leaders.
And then the last thing I would say is perhaps the habit-forming side of leadership is you create success even when things are over-constrained. In some sense, I say leaders are the best solvers of over-constrained problems because they figure out how to unconstrain themselves and their teams. That's the skill set that leaders have innately. And so that ability to bring clarity, drive energy, and create success to me is the bar for me every day. And we're not perfect. This is not about perfection. This is about being able to have that as at least the bar that you try to learn and improve each day.
MARTHA POLLACK: Well, Satya Nadella, CEO of Microsoft, thank you so much on behalf of the Cornell community. This has really, really been great. And I hope that once this pandemic is over, we can convince you to come to Ithaca and visit us in person. We would love to have you there. Thank you so much.
SATYA NADELLA: Thank you so much, Martha. It's such an honor, and I look forward to it.
Microsoft CEO Satya Nadella and Cornell University President Martha E. Pollack discuss how organizations can move forward beyond the pandemic and how technology can help solve some of the world’s most pressing issues.
