How Satya Nadella has led Microsoft’s AI revolution and transformed it into a leading AI powerhouse

Powerful giants such as Lenovo and Microsoft sometimes live and die in an instant.
A change in decision-making by the person at the helm will often affect this direction inadvertently. For Microsoft, this most important role is current CEO Satya Nadella.
From 2017 to 2022, Nadella has been named the “Most Undervalued CEO” by Fortune magazine for six consecutive years. His two “predecessors”, Bill Gates and Steve Ballmer, have even better names in the media: the former is the founder of the Microsoft empire and the founder of the United States. One of the richest people, he has topped various lists for a long time; while the latter is a strongman who has ruled Microsoft for 14 years and advocates high-pressure management.

In contrast, whether it is Nadella’s often-talked-about mantra “Be empathetic,” or his thin figure and slightly Indian accent, he appears to be even less of a leader.
But it was this thin Indian who brought Microsoft back to its peak.
When global PC giants represented by Lenovo and Dell are facing difficult times, Microsoft can always avert danger and even take the initiative.

Nadella twice saved Microsoft from fire and water, first by successfully transforming its cloud computing business and becoming the world’s second largest listed company by market value after Apple. In the AI ​​era, his vision has been verified again.
With the “godly hand” of investing in OpenAI in 2019, Microsoft has firmly grasped the commercialization opportunity of ChatGPT and is firmly on the forefront of this round of industrial upgrading in 2023.

At the end of the year, the infighting incident among OpenAI’s top executives became the largest farce in the global AI industry since the AIGC era. This incident was also resolved without any danger with Nadella’s participation and mediation.
Also in 2023, Nadella finally took off the “hat” of “the most underrated CEO”. Whether it is the stock price that has increased by nearly 60% in a year, or the popularity of OpenAI and ChatGPT, it once again illustrates the new value of Microsoft in the Nadella era.
What exactly has Microsoft done right in these years to be able to steadily ride on two important trends and get rid of the curse of being left behind by the times?

The helmsman who turns the tide
In 2014, Nadella took over the CEO position of Microsoft. This year is already the 39th year since Microsoft was founded.
Nadella mentioned in his book “Refresh” that “big business diseases” such as personnel redundancy, bureaucracy, and rigid organizational structures were the first problems he faced.

The book mentions a cartoonist who once depicted Microsoft’s organizational system as a rival gang structure, with everyone pointing guns at each other. He wrote: The issue reflected in this cartoon really bothers me. But what troubles me even more is that our own people accept this reality.

Rigid architecture is not the only problem facing Microsoft. From Gates to Ballmer, Microsoft’s two CEOs have continued to have a strict and iron-fisted leadership style, and both are famous for their bad tempers.
Nadella once described his views on his former CEO to Fast Company magazine. He said: “Bill is not the kind of leader who walks into your office and praises you. Instead, he talks to employees about 20 things they did wrong today. thing.” Ballmer’s strategy is similar.
Under a high-pressure leadership style, employees’ space for independent innovation is squeezed to almost zero. The stubborn “PC-oriented thinking” of the first two CEOs caused Microsoft to miss many opportunities.
For example, in 2010, Microsoft, under the leadership of Ballmer, gave up its Courier tablet business, which was in the late stages of development, and in disguise, handed over the entire tablet market to others. In addition, he has always had a negative attitude towards mobile Internet companies such as Apple and Google, and has also publicly opposed the open source community and the software Linux.
Moore, a long-term partner of Microsoft and the founder of Intel, once wrote in a book that when a strategic turning point comes, the company’s president and other senior leaders “are always the last to know.” This is evident at Microsoft.
By the end of Ballmer’s tenure, Microsoft’s stock price had begun to slide. Data shows that from the end of 2013 to the beginning of 2014, Microsoft’s market value fell below US$300 billion, less than half of its glory days.
This situation lasted until 2014, when Nadella took office.
Before becoming the CEO of the entire group, Nadella worked in Bing (formerly known as “Windows Live Search”), cloud business and other departments.
After becoming CEO, he quickly elevated corporate culture and business strategy to the same level of importance, and began to improve the company’s corporate culture, including adopting a new performance system, no longer ranking employees by value, and urging the company’s leadership to accept new Technical challenges… According to media reports, the first thing Nadella did after taking office was to call on the entire company to learn the ideas in “Nonviolent Communication” to get rid of the old infighting pattern.
At the business level, Nadella actively embraces the mobile ecosystem and open source community, developing Office software adapted for devices with different systems such as Apple and iOS; on the other hand, he begins to increase the importance of the cloud.
In 2015, Nadella promised that the company’s annual cloud computing business revenue would reach US$20 billion by the end of 2018. Finally, this goal was achieved ahead of schedule in 2017. Also in this year, Microsoft changed the company’s overall strategy from “mobile first, cloud first” to “intelligent cloud and intelligent edge computing.”
During the same period, Microsoft’s market capitalization also returned to its peak, exceeding US$600 billion in 2017.

an important turning point
You can’t step into the same river twice, but Nadella saved Microsoft twice. After returning to the top with cloud computing, Nadella did not stand still, but began to look for new trends.
In “Refresh”, he described his mental journey this way: Predicting technology trends can be a risky move. It has been said that we tend to overestimate what can be achieved in the short term and underestimate what can be achieved in the long term. But we are investing in three key technologies. They are: mixed reality, artificial intelligence and quantum computing.
Among them, AI first became a key technology that allowed Microsoft to once again refresh its historical record. The process hasn’t been smooth sailing though.
As early as the 1990s, Microsoft had begun to develop AI technologies such as speech recognition. Microsoft Research, established in 1991, even covers the three popular AI directions of natural language, speech and computer vision. However, because the PC business represented by Windows and other products is in a dominant position, AI research and development has not received enough attention for a long time.
Even the change of concept took a lot of time.
For example, in 2009, when Deng Li, a researcher working in a Microsoft research laboratory (who later became a speech recognition expert and an academician of the Canadian Academy of Engineering), wrote a report trying to apply for the purchase of an NVIDIA GPU chip and supporting servers for AI training, he My boss thinks this is an unnecessary expense and “don’t waste money.”
Microsoft once missed out on a cost-effective AI investment because it felt that AI was unnecessary and too expensive.
In December 2013, Baidu, Google and Microsoft were brought together in a dramatic way.
The executives of these three companies, without knowing each other’s identities, participated in the bidding for a company remotely – in other words, it was more like an auction for the highest bidder. The three giants sat at their computers in Beijing, California, and Washington, and sent the bids to the acquiree via e-mail – much like a telephone bidding that should have taken place at Sotheby’s.
The acquired company is a small company that has just been established with only three people, but one of the founders is Geoffrey Hinton, the winner of the Turing Award and the “grand master” who educated AI scholars such as Yang Likun. Just earlier in 2013, Hinton led two of his students to achieve a performance leap in the neural network, allowing the latter to recognize pictures of common objects such as flowers and leaves.
Therefore, it can be said that what the three major manufacturers are bidding for is actually Geoffrey’s vision and strength in AI research.
Considering that each of the three participants has strong financial resources, this should have been a suspenseful auction. However, the truth is always surprising.
When the quotation reached US$20 million, Microsoft chose to actively withdraw, turning the next price-raising game into the home court of Baidu and Google. Baidu was the first to bid and was determined to win. According to reports, Baidu founder Robin Li personally guided the acquisition.
However, when the quotation reached US$44 million, despite Baidu’s intention to continue to increase the amount, Geoffrey chose to actively stop it. His poor health precluded a cross-country voyage, so an American company was the best option, and Google won.
This is like a metaphor: By recruiting top talents such as Geoffrey, Google has enhanced the strength of its AI R&D center “Google Brain”. Since then, it has continued to increase investment and even built AI chips. In 2016, it launched AlphaGo, which became recognized The most powerful AI manufacturer.
Baidu has never given up on increasing investment in AI research and development. It also has multiple layouts and is not willing to lag behind.
Microsoft, which believes that $20 million is “too expensive,” has long been excluded from the field of AI, which is regarded as the future.
In 2014, Microsoft released the intelligent chat robot “Microsoft Xiaoice” and the intelligent assistant “Cortana”. However, many attempts have failed to receive a positive response from the market. XiaoIce was eventually spun off into an independent company in 2020; in 2021, Cortana, which is available for iOS , Android and Harman Kardon Invoke speakers, also stopped serving.
Frankly speaking, Microsoft has not been regarded as an AI company for a long time.

The landmark event that broke this situation was its investment in OpenAI in 2019. Interestingly, Ilya Sutskever, one of the founders of OpenAI, was one of the students in Jeff Hinton’s three-person team.
Microsoft’s investment of up to 13 billion US dollars in OpenAI is not so much that it is paying for its mistakes, but that it has finally found its own path to AI development after years of tortuous exploration.

Microsoft’s AI ambitions go beyond OpenAI
On the poker table of the new era, OpenAI has become Microsoft’s trump card, but it is not its only trump card.
On November 15 this year, Microsoft announced more than 100 new AI-centered products and features at its home Ignite conference.
It can be seen that in addition to integrating GPT into almost all products and promising that “all OpenAI innovations will become part of Azure AI and available to everyone,” Microsoft has also demonstrated its practice in the field of AI over the past few years. The “internal strength”.
For example, Microsoft finally launched its own self-developed chips: AI chip Maia 100, and Arm architecture-based CPU chip Cobalt 100. These two customized chips will provide computing power for its Azure data center.
At the conference, Microsoft CEO Nadella and NVIDIA CEO Jensen Huang also jointly announced that in addition to hardware cooperation, the two companies will also join forces in software and officially introduce NVIDIA’s AI factory services to Microsoft’s cloud service Azure.

Nadella also highlighted the data platform “Microsoft Fabric” launched by Microsoft for the first time in May this year, and said that since its release, Fabric has carried out more than 100 feature updates and expanded the ecosystem with partners. Used by more than 25,000 clients including Milliman (consulting firm), Zeiss, London Stock Exchange and Ernst & Young.
Before you know it, Microsoft’s business layout has covered the three major elements of AI, with computing power, algorithms, and data being fully developed.
In addition, Microsoft’s investments in AI are increasingly extensive.
On December 2, Microsoft announced that it would invest in UK AI infrastructure. Microsoft will spend £2.5 billion ($3.2 billion) over the next three years to expand its next-generation AI data center infrastructure, expected to bring more than 20,000 state-of-the-art GPUs to the UK by 2026.
Secondly, Microsoft will also invest in extensive AI talent and education programs, as well as strong AI safety and security measures. Overall, Microsoft will use this investment to expand its data centers in London and Cardiff, and potentially expand to northern England.
Nadella once said in an exclusive interview with the media that he has experienced four major changes: first, the dominance of personal computers and Windows, then the rapid development of the Internet, mobile and cloud computing, and is currently experiencing the fifth major change. It’s artificial intelligence.
In fact, what Nadella is saying is that if you cannot adapt to new technological shifts, you may lose everything.

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