Microsoft UK&I Chief Executive - Darren Hardman

23:49Darren Hardman:Say something a bit new yeah you mentioned classic in terms of the sort of design callbacks how much of that is a challenge now for I guess the company selling them but also people designing them the kind of explosion of of classic football shirts and people buying retro shirts whether they be on eBay or specific big sites like classic football shirts and things like that too, that that's become a big part of sort of football fan culture. Yeah, from a brand perspective, it's amazing because it just keeps, it keeps your work and it keeps your brand alive over a longer period of time. Football shirts do have a shelf life.

24:27Unfortunately, that's a whole other topic, at least with international shirts. You get two years out of them usually. but I think the fact that people can now see them as something that feels more value because you'll get more life out of it rather than it just goes up in the attic at the end of the season and it's finished with, you know, it's something now, a football shirt that you'd hold on to and perhaps pass on to your kids or something in the future.

24:54Darren Hardman:Yeah, and you touched on one of the controversies which is of course in the club football, them changing the whole time. Hugo perhaps touched on the other one, going out and buying one for his son, that the cost of these things now for people. Yeah, as somebody who's been in the industry for a long time, it's getting harder to justify the retail price, unfortunately. Obviously, there are a huge amount of other costs that a brand incurs beyond just the constituent parts of a football shirt, and they do need to try to make that money back. Obviously, it's partly a marketing expense, I think where it's difficult from a fan's perspective is they do just look at it costs X to make a football shirt.

25:40But if you go to a restaurant, you don't complain that it only costs X to put a steak on a plate. You actually take into account the fact that somebody's cooked it for you to a high standard. And I sometimes think some of that stuff gets missed out of the conversation as well.

25:53Darren Hardman:Yeah. Let's bring it back to a bit of fun then as well. What's your favourite at this World Cup? Curacao away is my favourite. I just looked at that. I've got a big list of them there. So this is sort of a yellowy, goldy colour, isn't it? Sort of almost like a light kind of lemon Adidas kit. And then they've got the stripes on the shoulders. Yeah, it's a lovely shirt. They've used a huge amount of restraint. They could have gone absolutely wild with Curacao and been their first tournament. But they've used a huge amount of restraint, beautiful colours. And also from a biased perspective, it is a graduate of Spark Design Academy.

26:28He designed that for Adidas as well. So who's that? So I won't use his name because it's not the sort of thing that sadly we do. Got you. Fantastic. So someone who's been through your...

26:40Darren Hardman:He's gone on to do that. Yeah, exactly. And someone that presumably took some inspiration off some of your kits then as well while he was training with you. Yeah, I'd like to think so. I mean, certainly some of the learnings that we've brought to it. My co-founder of that business actually designed a Brazil kit that won the World Cup in 2002. so we've got a reasonable amount of pedigree between the two of us. I'm a big fan of this mint France one, the away France one as well, that looks very smart. Yeah, the France away kits have just been incredible over the last few years. Judith, that orange Scotland one looks like it might be a lucky one from the other day.

27:15I'm just thinking, I'm listening to you guys talking about fashion for the last 10 minutes, which is amazing. It just doesn't happen. Welcome to this world.

27:24Darren Hardman:I can't let you go, Rob, without a quick thought on the villa one then as well as both of us as Villa fans. Yeah, it's a nice shirt. I think it's a little bit controversial without the blue sleeves, but last time we had a shirt without blue sleeves, we did all right, got to Wembley and walked away with a trophy, albeit the playoff final. So I think it'll be another one of those that will live or die by the on-field performance. And it's got the added benefit of travelling around Europe this year with Champions League patches on it as well. Yeah, exactly. That always helps. Really appreciate your time.

27:55Darren Hardman:Thanks so much, Rob. Ever invest in something that seemed incredible at first, but didn't live up to the hype? Like those$5 roses at a gas station, or a second-hand piece of technology that breaks in the first 10 minutes? Marketers know that feeling. We optimize for the numbers that look great, impressions, reach, and reacts. But when they don't show revenue, well, that's a not-so-great conversation with the CFO. LinkedIn has a word for that. Bull spend. Now you can invest in what looks good to your CFO. LinkedIn Ads generates the highest ROAS of all major ad networks. You'll reach the right buyers because you can target by company, industry, job title, and more.

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29:30Darren Hardman:Wake Up To Money with Will Bade. Hello, morning, welcome back to Wake Up To Money on Monday the 8th of June where our panel this morning is Hugo Brady, Senior Vice President of Strategy and Planning at the Sports and Live Entertainment Company AEG Europe and Judith McKenzie, Partner and Head of Downing Fund Managers. 85058 is the text number to get in touch with us 08085 909693 if you prefer to get in touch via whatsapp we'd love to know your thoughts on what we're going to chat about for the next few minutes here on the program as well because the boss of microsoft here in the uk is warning that organizations need to adapt faster and make ai skilling a priority if the uk is to see the full benefits of ai darren hardman the chief exec of microsoft in the uk and ireland is going to be speaking at london tech week around the future of work and opportunity in the uk a little bit later on this morning before he does that though delighted to say he's joining us here live on wake up to money this morning darren morning thanks for being with us morning will great to be here thank you talk us through then this this um event that you're going to be chatting about at london tech week just explain i guess a little bit more of your thesis yeah the thesis is that the uk has 18 months to get ready for the next decade and beyond and and that's across kind of multiple, you know, elements.

30:47I think the first thing is we're very focused on making sure that we bring the right investment to the UK, so the physical investment that can power an AI economy of the future. But physical investment alone in data centres, in GPUs, and the right chipsets is only one thing. It's about making sure the UK is a leader in the diffusion of this technology, because history tells us that it not invents the technology, it's how quickly you can diffuse it in your economy. And of course, diffusion is a function of skilling. How quickly can you put the tools and the capabilities into the hands of not just the education system, but small, medium businesses into large enterprises in a way that allows them to leverage this technology to create prosperity for the country.

31:38And I think today's event at London Tech Week, you'll probably hear a lot of focus about how do we ready the UK for that future AI economy.

31:48Darren Hardman:For your perspective, then, what is it that we are not doing as a country? I think we've made a good start. If you look at our own Microsoft data around diffusion, I think the UK right now is about the eighth in the world in terms of the diffusion of AI technology. that's the function of how many businesses and citizens are using AI day to day. I think the challenge, though, is the fact that, you know, other countries are starting to progress faster. You look at countries like South Korea, not currently in the top 10, but their diffusion rate is growing. And so we've got to keep ahead. And I think really, really critically and what is incredibly important to me, I also have a role for the UK government as part of the Department of Science, Industry and Technology's Tech First programme.

32:41I have a role focused on driving social mobility in this AI age and I think making sure as we drive diffusion and skilling that we do it in a way that everyone can kind of have a role. We know in this country talent is everywhere but opportunity is not and making sure as we diffuse ai that it touches all four corners of the uk so that we can bring everyone on the journey and i think that's what defines what an ai winner will be in the world economy how you bring every citizen you know into it and and allow every system to take advantage of of what will be a transformational technology a phase in in the future of not just the uk but across the world yeah certainly want to get into more of that in

33:28Darren Hardman:a moment that the sort of haves and have nots of AI if you like can you give us some practical examples of what is it that South Korea is doing for example you say they're doing it well what are they doing I think it's right through well it's not just South Korea it's many countries but just use them as an example for us because it sounds like if they're doing something that's impressing you I've just wondered what it was I think it starts with the education system so I don't need to think that we in the UK are not focused on this we just got to keep really focused on it. We've got to put the resources and investments into the right place.

34:00And I'll give you an example. So, you know, I spend a lot of time up and down the country in educational institutions, in universities, and we've just got to ask ourselves, are we doing the right things to ready our youth and our workforce of the future? The University of Manchester is a great example of the first university in the world who has deployed our AI assistant tools or co-pilot into the hands of all their students and staff and they're recognizing actually like many universities in the UK, University of Leicester, Durham University or others, that you need to put the tools into people's hands so that as they're going through the education system they're rethinking how these tools assist them in data collection, in analysis, so that they can spend more time applying their own human creativity on top of that data to create an outcome because frankly that's the journey that we're on and that's the type of expectation that the world will place will have in future and so examples like a real focus on kind of rethinking how people use these tools in the education system is part of it another thing I think is just you know the encouragement and the the system that's in place to encourage entrepreneurs and existing business owners to lean into AI.

35:23I think we all know that driving better productivity, bending the curve innovation so that you can create new services and products is going to be what makes our UK businesses stand out in a very competitive global world. And so creating the structure and the incentives to allow businesses and entrepreneurs to work in a way that can bring those ideas to life is incredibly important as well.

35:52Darren Hardman:Well, let's pause at that moment and get the guys' thoughts on that, about what we are and aren't doing and where we could perhaps go quicker. Judith, leaning into AI, as Darren puts it, is that what you're, you know, you look at so many companies across the country in detail of what they're doing. Is that what you're seeing? Are we leaning into it enough, I suppose, from that productivity perspective? Yeah, I think so. You know, I see companies every week from micro-cap companies to mid-cap companies. And the AI conversation is always part of that meeting. And I think even ourselves in Downing, we don't employ anyone now, whether they're 18 or 58, without an interest or ability to use AI.

36:34And it's all part of our appraisal process as well. We've got a little task force group that is looking at specific applications and almost creating them themselves. So I think if you do lean into it, you learn really quickly. I mean, even I managed to create an app for myself last week. I think I could do any programming. Still can't get it to run properly, but even the ability to do that is amazing. And we've got tools within fund management that I think are actually quite scary. They're really good agent analysts and basically it can tell me whether to buy or sell a stock.

37:12Darren Hardman:So is it giving yourself space then to do some of that learning? Is that part of it to what Darren's saying? Yeah, yeah, yeah. So our pioneers within the business, so each team, we've allocated one to two people to join this task force and they get a day a week to basically go off and create things and then come back to the task force group and come back to the business and show what they've done. And that gets people excited about it. Hugo, what's happening at AEG? Well, I think we're kind of looking at very different ways of using it. But I think our kind of key thing for us is the fan and recognising that obviously our fans and consumers are using it a lot and using AI in the best way possible to make sure that they get what they want whether that's a ticket in the first place or then the particular experience when they come to the show.

38:10So I think that's our key focus is the fan and their experience.

38:14Darren Hardman:Presumably for pricing models and things like that, it must be incredibly useful. Well, it definitely does assist with aspects of that. But obviously, you know, kind of there's many factors going on in relation to pricing. And what about when you guys are hiring and not necessarily you doing all of the hiring, but are you talking when you are hiring? Are you are you asking people already as a company what skills they have in this area? Yeah, I think obviously, you know, we're in a kind of creative industry and AI is incredibly helpful in the context of kind of productivity. And yes, it's a primermagric across all industries.

39:00it's a very relevant skill.

39:03Darren Hardman:And is that your worry here, Darren, that too many people are going to be ending up in the workforce or appearing to try and get into the workforce even, not ready? I think there's a responsibility for both government, from educational institutions and employers. I think what I see, because I spend my vast proportion of my time in the boardrooms of the biggest companies across the UK. And what I can tell you is this, is that there is a consistency of responsibility to say, how are we as an employer bringing our workers on this AI journey? You take just the announcement from yesterday, the NHS announcing over half a million of their workers will be using Microsoft's co-pilot AI system tool.

39:56And they're doing that because they recognize that they need to invest in the AI future of that workforce. They need to allow that workforce to build the skills, not just to interact with an AI tool, but as you just heard there, to actually say, this is the challenge that's ahead of me. this is the business process that I want to evolve and how can I use these tools to create an agent that will remove that administration, take that repeatable task and that kind of, you know, element of my job which could be done in a different way to free me up to do other things. And in the context of my NHS example, that's about patient care.

40:36And so those types of activities where you're investing in your people to take them on the journey are incredibly important. And we need that because that's what will drive the diffusion. I think about 42 % of UK working adults are now using AI. That 42%, we need to see that consistently rise and rise month on month so that they're building their skills for the future.

41:02Darren Hardman:It's some piece of work, though, to get people on that journey, isn't it? I mean, as you can imagine, even since we've been talking text coming in on 85058, I think Anne in the Solway Firth perhaps sums it up most succinctly. She asks, what happens to British society and the economy when 95 % of people are unemployed due to AI? People are worried about this. Yeah, I think there's a lot of anxiety in this particular topic. I think you saw from the reports from Alan Milburn last week, a million young people right now, you know, not in work, training or education. and I think we need to recognise that that isn't necessarily driven by just AI.

41:44That's been a scenario that's been playing out since post-COVID.

41:49Darren Hardman:In some sectors it really is though, isn't it? We've heard on the programme sectors like advertising, perhaps entry-level jobs in law, entry-level jobs full stop where people are doing something administrative. That change is happening far quicker than the change that you were talking about, people upskilling on this stuff. Yeah that's absolutely true in this wave of technology transformation like all ways we've seen before the jobs are changing the the difference here is that this AI evolution it's happening much faster than we saw through the industrial revolution or even the the internet revolution and so that's why we're having this conversation today that's why there's a big focus on this topic in London Tech Week to make sure in that next 18 months that I I put out there that were really convicted and focused on readying the youth and the workforce of tomorrow.

42:43And that comes down straight back to this point I started, which is, it's the countries, it's the organizations, it's the institutions that will drive that diffusion via skilling the fastest that will benefit from this. And skilling is a massive agenda for us. You know, the government in their AI Opportunities Action Plan, they talked about skilling 10 million people with AI by 2030. Microsoft alone, we've already skilled one and a half million people for free over the last year. So making sure that all sectors of society, whether it's the education, institutions, small, medium business, and up into large enterprise, so large employers, focusing in on how are we supporting their journey with skilling, with building AI fluency and with building confidence.

43:34So moving from curiosity into the confidence to be able to apply these skills in their everyday jobs. That is what detries diffusion and that's what will support society through the anxiety that obviously exists right now on this journey.

43:50Darren Hardman:Do we need a bit more honesty, though, as well, a bit more realism, I suppose, about what that change is going to look like? It feels like, certainly from my perspective, doing a lot of interviews like this with leaders in various spaces on AI issues and using AI in their businesses, that we seem to sort of consistently be telling people that it's the two things going to happen. We're going to be more productive and it's going to be brilliant. And that's not going to have a seismic impact potentially on the way you work and live. And that's just not true, is it? in the short term it's going to have a far bigger impact it feels like on jobs than perhaps we're telling people right now it's interesting like you know microsoft you know linkedin is part of the microsoft world and um you know they're due to release a report this week that actually just you know tries to quantify some of that tries to um you know position it with the basis of data behind it and what we've seen actually is there are tens of thousands of new ai jobs across the uk and what we haven't seen is any major ai job shocks in the data that doesn't mean to say that jobs are not affected by ai but i think the the focus needs to be how we are looking ahead how are we managing the journey and again back to this next 18 months if we look at the speed of progression of AI capabilities.

45:19We have to put our arms around this in a way. And I just come back to one of my opening points. The big risk for me is that if we don't kind of focus very proactively on making sure that social mobility is at the heart of that thinking, then we have a risk. I think the reality is that, you know, this is a pretty personal topic to me. The result of a lot of focus around social mobility through my own life and I think social mobility has been stagnating in this country for quite a long time and the risk is is that if we are not very focused on how we skill the next generation we risk putting the skilling and the opportunities into the hands of the few and we know in this country talent is everywhere but opportunity is not and there's a risk with a focus on only certain pockets of society we don't bring everybody on that journey

46:17Darren Hardman:to your point who should be doing the pushing then here i'm hearing you kind of talking about i mean is that government is it only government who can do that pushing it's a combination i think we have a responsibility both in the industry and in government and in you know the major employers and also in small medium businesses across the country i think the government is very focused on this is at the core of their AI opportunities action plan you know DC's tech first initiative their focus on you know creating you know free you know technical training across the country I think it's very much a focus but that only touches a certain part of society businesses where we have the large kind of the large bulk of the workforce today it's a massive responsibility for all to be training and building AI fluency.

47:09And we see it. We see you heard examples before. I was talking to the CEO of a big law firm in the UK just last week who was telling me that there was an individual who joined the business 28 years ago as an executive assistant who is building agents using some of our technology, which requires no technical skills, but you just need to understand the processes that exist in the business today. the things that are causing friction if you know that you can use these tools to create agents to remove that friction people are reinventing themselves with the use of this technology and I think it comes down to the risk is if you you get left behind because you are not leaning into the technology versus you know putting your arms around it and saying this is going to be the future this is going to the part of how I need to work in the future I need to be someone that knows how to use these tools and that's what's going to put me in a good position as we look

48:07Darren Hardman:forward from a purely microsoft perspective getting competitive in that space too how do you stay ahead yeah we're very committed um to being a platform business for for ai um from a uk perspective you know we made a commitment to spend 30 billion dollars 23 million pounds over the next four years in the build out of next generation data centers and the operational support that goes around that. Our strategy is very clear in large enterprise, in businesses, in highly regulated industries, you need a secure and observable AI stack. And whether it's like the example you heard a moment ago, someone who has no technical skills with the ability for no code, or people who have a limited technical ability, so low code, or pure, you know, highly skilled developers in the pro code space will have a platform that allows you to build and utilize AI in a safe and secure way, and will bring you the very best of all the different large language model providers.

49:15We won't kind of focus in one, we give you the benefits of all. And so that means that, you know, Customers can feel secure, but also feel good about the fact that as AI matures and as AI, you know, capabilities are added, we'll take those customers on that journey as well.

49:35Darren Hardman:Judith, just from your perspective, data centers, the investment into them at the moment, we were talking about kind of the rush in AI stocks in the first half of the program. This is another area where a lot of investment going in right around the world in a sort of plumbing, I suppose, for these businesses. Yeah, it's certainly something that's been a feature of the UK market over the last three to five years. And also some of the energy sets and data storage and energy storage roundabout data storage. So it's certainly been a feature of the stock market over the last two years. Darren, how easy is it finding and getting, we've talked about planning endlessly on the programme for the right kind of infrastructure that you at Microsoft need for this stuff?

50:17Yeah, so we have some significantly large data centres coming online relatively quickly. In London, we have a big data centre in Newport. These are large physical sites, as you can imagine. And I think the government has certainly helped in the planning space.

50:40Darren Hardman:Is there issues still around connectivity, getting the power to them? I know we're speaking to the boss of Seagrove, FTSE 100 company in this kind of space in data sense, very worried about the grid and connectivity. Exactly. And I think that is the challenge. The big shift we've seen in the last 10 years has been less about planning and much more about connection to the grid, the availability of electricity supply to power these data centres. And so that's where we're working with industry, working with government to ensure that we can make sure that that doesn't hold us back as a nation on this.

51:13And is it at the moment or is that a risk at the moment? I think it's a risk at the moment. I think we are certainly building the capacity and have the line of sight to be able to provision that capacity. We've got a lot of physical infrastructure across the UK. And of course, we have a lot of physical infrastructure coming on stream across the world. In terms of that physical infrastructure, do you sense that there are challenges?

51:39Darren Hardman:You talked about bringing people on a journey around that too going forward. We haven't really seen the scale of these things yet quite. You mean in terms of? Literally having a massive data center in your backyard, I suppose. Yeah, well, you know, we build pretty high powered, you know, high megawatt capacity data centers. And we typically focused on kind of brownfield investments. And so, you know, that's our focus. I think your question is probably more akin to kind of smaller regionalized data centers. And just on this point, by the way, I think where we tend to get questions in the space is around not just the physical build and the, you know, where these sit.

52:28It's around how we build them and the sustainability aspects of that. And, you know, we've got some very specific goals around, you know, by 2030 being carbon negative, being water positive, zero waste. We actually delivered our objective to be 100 percent renewable energy focused four years early. And so we supply and we run all these data centers on renewable energy at Microsoft. And so our focus of both using AI to help us design, you know, the most sustainable data centers for the future is incredibly important, a part of our strategy. You'll see that apply in the data centers that I mentioned, the ones coming on stream in Acton and in Newport as we go forward.

53:14Darren Hardman:Darren, really appreciate your time this morning. Thanks so much for speaking to us. Thank you. Darren Hartman there, the chief executive of Microsoft in the UK and Ireland. And Hugo, give us your takeaways, anything that stood out to you? Well, I think the whole AI thing is very, very interesting. And for us, it's the kind of interesting aspect against live entertainment, and obviously, which is very human creativity. But obviously, embracing AI is important for us all. Judith, anything that stood out to you? I think I struggled a little bit when Darren was talking about that it's not really affecting the grad market I think we've all seen reports haven't we?

53:57Graduate recruitment is down 24.5 % since 2022

54:02Darren Hardman:and we're in the foothills of this which was sort of the point I was trying to make to him around that as well that that is only beginning right? Yeah and we are in the foothills and I think we've this sounds all very altruistic but I think we've all got to take a bit of sense of responsibility to ensure that we are taking on grads that are probably going to be better at AI than we are. What do you guys, in the kind of minute we've got left, Hugo, whose responsibility is it to do some of that skilling that Darren's talking about? I mean, is it companies like his? I think they should definitely help.

54:36I think it's also we should all take on board, and I put myself in the same bracket. I'm actually in the middle of a recruitment process myself, and, you know, recognising that AI is really important. And I almost need to educate myself to ask the right questions.

54:54Darren Hardman:We think we're all on that journey, aren't we, as well? No, thanks so much for your time this morning, Hugo. Really appreciate it. Hugo Brady of AEG Europe there. Big thanks to Judith. Judith, have a great World Cup. Hopefully we'll speak to you again after that first Scotland game. Judith McKenzie, partner and head of Downing Fund Managed. Don't groan yet. It's not even started yet. Big thanks to everybody for listening to Wake Up To Money. Wake Up To Money with Will Bain.

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