Microsoft’s CEO on the Metaverse and Flexible Work

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0:37What propels you? Propel with Gatorade electrolytes. So Satya, thank you very much for joining us. It's great to see you again. Let's dive right in. You know, this program is about the new world of work and there are probably few people who have their finger on the pulse of what is work and what are the platforms and the approaches that we need to work effectively together than you. So I'm really glad you're here. So the concept of work, how we collaborate together, how we innovate is constantly changing as businesses evolve, as technology changes, as employees have different kind of attitudes and empowerment.

1:20Where are we on that journey? What does the near-term future of the workplace look like to you? First of all, Adi, it's fantastic to be with you again. And you're absolutely right. We are coming out of this pandemic or living through this pandemic in its various stages. I think there's real structural change that we are seeing because of what I would describe as two mega trends. One is the trend around hybrid work, which is a result of the changed expectations of everyone around the flexibility that they want to exercise in when, where, and how they work. And then the second mega trend is what Ryan Roslonsky, who is the CEO of LinkedIn term which I like, which is the great reshuffle.

2:16This is about not only are people talking about when, where, and how they work, but also why they work. They really want to recontract in some sense, the real meaning of work and sort of asking themselves the question of which company they want to work for and what job function or profession they want to pursue. So these two, hybrid work and the great reshuffle are the two major trends that are fundamentally structurally changing, I think, everything we do. And it has implications, obviously, for us as a company in terms of what we enable with, say, the digital fabric that allows for hybrid work, allows even for, for example, things like skills based hiring and the connections people need to have with their company and others who work with them.

3:06But yes, it is definitely a time of big change. Let me get a sense of how you would define flexibility. Because on the one hand, flexibility sounds great. Let individuals, let teams decide how they want to work together, when and in what fashion. But then there are the sort of larger corporate company concerns about, well, we want people to be together. We want to create and sustain a culture. And that maybe means people need to be together, a little less flexibility on that. So how do you balance these imperatives? Yeah, I think first of all, I think we should sort of perhaps just get grounded on what are we seeing in the expectations, right?

3:44So for example, when we see all of the data, the reality is close to 70 % of the people say they want flexibility. At the same time, 70 % also want that human connection so that they can collaborate. So therein lies in some sense that hybrid paradox. Interestingly enough, if you look at the other sort of confounding piece of data is, you know, 50-odd percent of the people say they want to come into work so that they can have focus time. 50-odd percent also want to stay at home so that they can have focus time. So, the real thing I would say is right now, it's probably best not to be overly dogmatic because I don't think we have settled on the new norms.

4:32These norms have to settle so that then we can have real causal relations that settle and then we can understand what...

4:57is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus. Propel Fitness Water with Gatorade electrolytes, zero sugar, and vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade electrolytes. Not even the broad contours of productivity, flexibility. But in that context, started to your point, we are taking what I would call a much more organic approach right now. What I would say is what we want to practice and what we want to evangelize is empower, for example, every manager and every individual to start coming up with norms that work for that team, given the context of what that team is trying to get done.

5:49And so that means a manager, for example, if I manage a team of five people, I better know, is there people in my team, you know, with young children who have not been vaccinated because the considerations of those parents will be different. What is the childcare situation? The considerations for people who have the need for childcare will be different. What are the commute times today? So therefore, because the expectation going forward is I don't think anybody wants to get back to 2019 commute times because now the fact that you can be productive remote. So in some sense, we are really saying let's just use an organic process to build up through empowerment new norms that work for the company, to your point, to be productive.

6:32Ultimately, we're in business to be able to produce products and services that really our customers love. Ultimately, that'll define the firm and its performance. But I think to also ignore the fact that there is structural change in the way employees produce those products and services and drive productivity, the expectations have changed. So we have to now find that match. So what I'm hearing as you say this is that you probably don't think we're ever going back to the way we worked before the pandemic, number one, and correct me if I'm wrong, and number two that, you know, the old days, it was there was a temptation to come up with a policy that was consistent and therefore fair.

7:13But you're talking about a much more complex job for managers, for HR, for everyone in the company to be, as you say, flexible, adapting, not any kind of one-rule-fits-all approach to talent? Yeah. I mean, first of all, I also would say this, Adi, which is the economy is a very diverse economy, right? We are talking about even during the height of the pandemic, all the healthcare workers were coming into the workplace, all the retail workers, all the critical manufacturing workers. So to some degree, I want to make sure I stay grounded in my comments that the world and the economy and the society today is much more diverse in terms of its workplace expectations, habits, needs, because we do need our healthcare professionals in the hospitals that we visit and what have you.

8:09So that said, I do think that there is real structural change that with the new tools, right, even take space. So somebody had described this to me, which I love a lot, which is physical space is probably what, since the industrial era, we have discovered as the best productivity tool. There's no substitute. For 200 plus years, we have tuned of the workplace, whether it's a manufacturing line, whether it's a retail outlet, or whether it is knowledge workers coming into an office campus, we have tuned space to drive productivity by bringing people together, having a common sense of purpose, mission, connection, and what have you.

8:50I won't trade that off. But can we use space such that it maps to the expectations of our employees and the task at hand? So, for example, we are redesigning some of our campus spaces. We will still have our campus. We love our campus, except the way managers and teams will use our campus will change. They may have, okay, we want to bring everyone together for a design session, or we want to bring everybody for a crunch time. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block or finally break down that long article you've had open for weeks.

9:38Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. Propel Fitness Water with Gatorade electrolytes, zero sugar, and vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade electrolytes. Mode in building, say, some software product. We want to have orientation. We have a whole bunch of new employees. And when we do that, I think we're going to use space as even a more malleable resource using some of the digital technologies we have.

10:19So I think a combination of space and this remote digital fabric that we have established through the pandemic will come together to give us the tools for flexibility. Now, as all of this thinking is happening, it seems to me employees in the last few years, and especially now, probably are more empowered than they have been. I mean, we talk about the great resignation, and that's partly employees feeling like they have opportunities, they have choices, they're making some choices that are forcing us all to respond as managers. How do you think about the talent equation these days? What does it take to attract and retain talent, kind of given everything you're saying about about the evolution of the workplace, the evolution of the concept of work.

11:04To your point about the great reshuffle, at least as we talk about it, because the thing is people are re-evaluating what is their relationship with the company they work for and the relationship with the immediate set of co-workers and their manager. Like somebody at one point had said to me, Nobody quits companies, they quit managers. I felt like that was one of the best epiphanies I had, at least growing up even at Microsoft, that that is such an important statement because after all, it's the people that I work with that keeps me going at a given place. And it's when that equation doesn't work, I look elsewhere or reevaluate.

11:50So to me, the way I think any one of us, we have to really deeply look at what is the lived experience and culture for anyone? And that connection between the company's mission and the individual's mission and philosophy, right? So I always say, like, if everybody at Microsoft who works at Microsoft reframed it and said, you know, I don't work for Microsoft, Microsoft works for me, just for a moment, like even just as a thought experiment, does that equation compose? Which is, am I able to fulfill, whether it's my career aspirations, whether it is my approach to having impact in the world, somehow if Microsoft is acting as a platform for that, then it's a very different, I feel connected with the mission.

12:38So to me, one of the places where we are very focused on is two points. One is helping managers really, to your point, recruit and re-recruit and retain talent through a framework we call model coach care, right? Everyday practice of great management is super important. That's on the manager side. Then on the employee side, we're doing everything we can to help employees feel that connection to the company's mission and their coworkers. And coworkers, both in terms of strong ties and weak ties, right? Because one of the fantastic things about having, let's say, a campus like the Microsoft campus in Redmond, Washington was you come to campus, you work with your immediate team.

13:21Those are strong ties. You also run into people who are interesting, that you sort of meet and form long-term relationships with, which are weak ties. Unfortunately, in this pandemic, what we've noticed is two data points, which is strong ties have actually gotten stronger. The weak ties have gotten weaker. But our job through a variety of software tools is to make those weak ties even stronger. So it's because ultimately it's those human connections that get people to stay in a place. Without that, you know, without the connection to your manager, without the connection to other employees, I don't think it would work.

13:58So those are some of the considerations, at least, I would think, in the context of this great reshuffle.

14:21Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+. Propel Fitness Water with Gatorade electrolytes, zero sugar, and vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade electrolytes. Talk about the weak ties because I think those of us who believe those sort of weak tie connections can actually be very important for triggering innovation, a sense of culture, collaboration, all that. Talk a little bit more about how you, I think you used the term technology, that, you know, using technology to kind of identify and improve those connections.

15:07Can you talk a little bit more about that? Yeah. In fact, just the data point that I was referencing was, I think, you know, in the data we have analyzed across Microsoft 365 is around 26 % increase in strong ties. So, this is the connection points, whether it's email, whether it's Teams meetings, whether it's any other type of communication inside the team that you work with. So, those are the strong ties. And then the weak ties are people I run into in the water cooler, the people I run into in the elevator, the people I run into walking to the campus, to the bus, or what have you. That's the set of places where that serendipity is missing.

15:48And so one of the fundamental things that we've done is we have a tool called Microsoft Weaver. It's now the new Experience Cloud platform, which we are really, really excited about. Like, for example, today, I'll tell you one place where I strengthen my weak ties. In any meeting now, I observe in chat people commenting that I've never met before, right? In the previous times as a CEO of Microsoft, when I would be in a large meeting, I would, you know, obviously hear from people, but there'll be many other people in the meeting who would not speak. But whereas chat has allowed them to voice their opinion.

16:24And now, oh, not only do I see their idea, but the interesting thing is I can click on their profile. Guess what? When I click on their profile, I go to this very rich profile in Microsoft 365, which tells me everything from their LinkedIn profile, which is their outside profile, to all of the work artifacts that they are working on, documents and presentations. And one of the things Viva does is it also tells me the projects and expertise they have, right? So it's extracted using AI, a rich internal profile, which to me is amazing. To me, now, I now have like, based on one comment one person made in a meeting, I'm able to learn so much more about this person.

17:05So then I may set up a 15-minute Teams call with this person to follow up. So that is a new type of serendipitous discovery. It's not just I didn't run into them in the elevator this time and struck up a conversation, but I met them in an online meeting where they commented in a chat. So that's what we mean by creating software tools and nudges to help with weak ties. Yeah, interesting. So Viva is obviously a product that Microsoft offers. Are there any other, or are there any internal platforms that you're experimenting with now that you use at Microsoft and if they're successful, could be future products or platforms that you could talk about?

17:47Yeah, to me, we're doing a lot of experimentation, but we are in the business of productivity, so whatever we are using internally is also an external product. I mean, that's the good news, at least at Microsoft, for us is we do dog food our stuff, but we also ultimately launch things. But the things that I would say, like this profile thing internally, like another place which has been super helpful is being at work. For example, internally, I just go to the search well, and that's the place, whether I'm trying to find any person, whether I'm trying to find any document or web. So there's one universal search well.

18:20And that ability to be able to get at the entire knowledge base of the company through one search interface, I think is the massive breakthrough because I've always felt that the biggest or most strategic database in a company is the knowledge repository of all communications within the enterprise. And to be able to search. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block or finally break down that long article you've had open for weeks.

19:00Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolytes. That has been just fantastic. Another one that I would say has changed my own experience is meetings now are not just, oh, I go to a meeting and then I have to basically rely on my memory of what happened in the meeting or my rough notes.

19:45Every meeting in Microsoft is recorded by taking permission from all the people who are participants. that it's indexed and I can search it by topic, by speaker. And so it's kind of like a document at that point. So therefore meetings are adding to the knowledge repository of the company. So fantastic. I think that digitization of all of communications and work and turning them into first class artifacts, I think are going to be a phenomenal difference going forward. Yeah, interesting. You mentioned AI a while back. I'd love to hear you talk a little bit more about how companies that aren't necessarily Microsoft will use AI to kind of power effective results within their workplaces.

20:43And maybe, I mean, there are probably things you know about AI that we don't know about yet. So I love your insights on how AI will change the way we work, I guess. Yeah, I mean, to me, the fundamental way, in simple terms, to think about the power of AI is really to take all of the data that we have and have more, I'll call it, analytical and predictive power without analyzing data in silos or predicting outcomes in silos, right? That's the power. AI has the ability to take structured, unstructured information with especially this emergence of what people describe as large, dense models, which are multimodal.

21:24That means there's text in them, there's speech in them, there is images in them, and they're unsupervised. They're very large. And you can now, you can use it for many things, right? I can use it to complete sentences in my email and compose it. I can use it in GitHub Copilot to complete code I write. I can use it even to do machine translation. So for example, that meetings artifact I talked about, just imagine if that was a meeting in France, it was in French where people were talking, but it can be transcribed and I can see it in live captions or in real time translated, or I can go to it and really have the ability to search any meeting in any language.

22:07So really breaking down the language barrier. So I think AI is going to show up as that next level of automation, the next level of intelligence slash prediction that is going to be there in our everyday experiences. And so we are building it in. So even from a company perspective, they'll just show up to you as features and products you use. We also are enabling anyone who can build an Excel spreadsheet can also build applications going forward where they can use these AI models as platforms themselves, just like how you could have a formula that could build on somebody else's calculation and formula.

22:46That's the same way the composition would work even when it comes to AI. So we all want to know about the metaverse and what that's going to look like. You've used the term, others have used the term, and basically it describes kind of a future where we're combining real world with 3D, AR, VR. Help us really understand. Are we headed toward a metaverse, do you think? And what might that look like? Yeah, I mean, first of all, I think that this entire idea of metaverse, which fundamentally comes from increasingly as we embed computing in the real world, you can even. Timberland Pro knows that NASCAR starts long before the green flag waves because behind every race are the doers, the people who show up to the track early and stay long after the race ends.

23:38And that's who Timberland Pro is built for. Durable, comfortable, and professional. These boots perform as hard as you do, on the job and often. Real work, real people, real craft. Visit TimberlandPro.com and discover products that help workers perform at their best. Embed the real world in computing. That's kind of how I think about it. Because in some sense, one of the metaphors that I always use, which is helpful, is there is both an outside in and inside out, right? For example, you can have a space in which there is lots of cameras and microphones, and you can digitize the space. You don't need to wear anything on your head, but you can have intelligence, like in a meeting room, for example, we have now when you go to a Teams room, it will even segment everybody in a conference room into their own square, put them back in a meeting as if they were joining remotely.

24:37That way then the remote participant can find people who are even sitting in a conference room, identify them, get their profile and what have you. So that's a great example of how what is physical has become digitized and you have people are still meeting in a physical space and there are people who are remote, but it's all bridged. In fact, we are now we've one god and you're not wearing anything. And then you can even put on your goggles or like a HoloLens or what have you and go into an immersive meeting where your embodied self as a hologram or as an avatar can with spatial audio even relate to others in that space.

25:17In fact, we have had a metaverse for a long time called Altspace. And Accenture is a great example of it. Accenture has been basically built what they describe as the nth floor in Altspace, where literally anybody across Accenture globally can anytime drop in on the nth floor and meet other Accenture employees. So that concept of being able to be in a virtual space, again, as an avatar, ultimately as a hologram, interact with others, have spatial relationships with others because of things like spatial audio, I think are just other additional forms of what we've all gotten used to today with video-based meetings.

26:02So video transcending to 2D avatars and 3D immersive meetings is probably a practical way for us to think about how the metaverse really emerges. And that could change everything in terms of, I mean, this imperative to have people physically together for all the benefits that that creates. You know, what you're describing, the types of interactions you would have in this, you know, metaverse setting with or without, you know, fancy goggles and things, you know, that's a whole another level. I mean, it makes me wonder if we will rethink how we define the value of being physically together when there are ways to be, you know, hologram interaction or whatever.

26:40I mean, it sounds far-fetched probably to most people, but it actually could be a very kind of rewarding, fulfilling interaction that does almost take the place. Yeah, I mean, it absolutely is. It sort of fills that continuum even more, right? So, for example, in one of these immersive sessions, if you're doing whiteboarding, whether as a hologram or as an avatar, you have people around you and you're whiteboarding. It's just a completely different experience than perhaps today the 2D whiteboarding that you have with video streams. And definitely it's a step towards that physical presence. But I also feel that we should stay grounded, that physical co-presence.

27:20There is no substitute to that. So the bottom line is I look at the continuum of things from email to simple audio calls to video meetings to these new immersive meetings and co-presence and design sessions or what have you to physical meeting. All will give us to your earlier question, more optionality and more flexibility for how human connection and connectivity can be maintained. So given all these changes that are happening in the workplace, and as we experiment and return to work and figure it all out, I'm interested in the question of leadership. What does good leadership look like at this very complicated transitional moment?

28:05It's a great question. It's the entire ballgame, right? So one of the things I have been struck by is that how important, to your point, good leadership is. and I'll even say good managerial competence. So one of the things we started stressing maybe a year before even the pandemic was recognizing that ultimately at Microsoft we'll only be able to shape and continuously reshape the lived experience for our people is by having great managers, right? After all, I've learned through my own career that being a great manager is sort of, you have to learn every day something about great management and leadership.