New Delhi: Satya Nadella, the CEO of Microsoft, has cautioned staff that the company may lose its relevance in the quickening era of AI. In a recent internal town hall, Nadella said that he is “haunted” by the story of Digital Equipment Corporation (DEC), a once-dominant computer manufacturer that collapsed after failing to react to new technologies.
“Our industry is full of case studies of companies that were great once, that just disappeared,” Nadella told employees. He
Added “some of the biggest businesses we’ve built might not be as relevant going forward.”
Nadella also revealed a personal connection, disclosing his first computer was a DEC VAX, and that he had aspired to work for DEC at one point in time.
Fear of Missing Out on the Next Shift
Nadella said that Microsoft can’t risk a repeat of history. The company previously missed the mobile revolution, which Bill Gates referred to as his “biggest mistake ever”. Then, now, with AI changing the way technology is utilized, even a key product like the Office suite—which Microsoft makes roughly a fifth of its revenues from—could be impacted.
“Some of the margin that we love today might not be there tomorrow.”
Employee Worries about Culture
The CEO’s remarks also came as employees raised concerns regarding Microsoft’s workplace culture. One employee referred to it as “colder, more rigid, and lacking in empathy.”
Microsoft has eliminated thousands of jobs this year, including 9,000 in July, which has hurt morale. Nadella conceded that the company can “do better” to regain trust and empathy among employees.
“I deeply appreciate that, the question and the sentiment behind it. I take it as feedback for me and everyone in the leadership team, because at the end of the day, I think we can do better, and we will do better,” according to an audio obtained by CNBC.
The Big Message:
While reflecting on DEC’s decline, Nadella said, “All the categories that we may have even loved for 40 years may not matter.” No company is immune to decline. Microsoft will need to adapt to AI but also pay attention to its employees and culture.
Conclusion:
Satya Nadella’s admonition serves as a reminder that even leaders like Microsoft cannot rest on their laurels. The downfall of DEC illustrates just how quickly success can morph into obsolescence if organizations don’t change at the same pace as a new technology. For Microsoft, as with others, the emergence of AI presents its biggest opportunity and its biggest threat. To thrive in this period, Microsoft must balance innovation with empathy to ensure products remain relevant while also re-establishing trust with its workforce.
