Have Complete Thoughts
Technology moves incredibly fast. To build enduring value, we need to make leaps, and also have complete thoughts before those leaps.
Last week, @satyanadella posted two thoughtful articles, The Infinite SaaS Factory, and Models as Insider Risks in the Super Intelligence Era. They are both worth a read, as are his other articles since his inaugural A Frontier Without an Ecosystem is Not Stable in June.
It made me think back to a past conference, where he provided one of the most fascinating conversations of the event. In short, he lamented that technology companies do not build enough enduring franchise value and sometimes wishes he worked in a different industry. Technology changes so fast. It is hard to keep up with every bit of change, but if you don't, something can completely disrupt you in one or two decades.
As part of Satya's career, he has helped Microsoft make leaps in response to technological changes. The PC era would carry Microsoft for a long time, but MS-DOS, the Office suite, and many other applications needed to shift to a client-server architecture. Windows NT and Windows 95 were significant changes that made that happen. However, in the same week Microsoft was celebrating the launch of Windows 95, Netscape had its IPO. Shortly after, Microsoft would assemble a small team to launch Internet Explorer to challenge Netscape. The race for the internet was on, and Microsoft would initially win the browser war only to lose search. When Satya took over as CEO, Microsoft was also late to mobile/cloud, and it took a decade for Microsoft to shift their applications to the mobile/cloud and win enterprises to Azure. Today, he wants to ensure Microsoft leads the AI transformation.
Satya shared that technologists have a substantial pre-existing condition called NIH (Not Invented Here). He points out various tools are available to founders, CEOs, and management.
First, building a lot yourself might be strategically important, but Satya encourages his teams to have a complete thought. Most technologists start with the product, and you have to, but it is not just about the product. You need to connect it to the strategy, your right to serve the customer, your distribution advantages, your business model, your right to win, and what you will have when you win. He used Internet Explorer as an example of lacking complete thought. The whole strategy was to build a better product and have better distribution so customers would come, but then what? Microsoft had correctly predicted that the operating system would be the most strategic layer for PCs. They thought the equivalent, a browser, would serve the same purpose for the internet, but search became a more critical "organizing layer" than they understood. They should have seen that from the browser data.
Second, Satya also mentioned that partnerships were invaluable from the beginning of Microsoft when they partnered with IBM to create MS-DOS, to working with PC manufacturers to pre-install Microsoft software, to partnering early with OpenAI. Google's early success also came through partnerships with ISPs and internet portals. Young startups tend to shy away from partnerships with large tech giants due to the power imbalance, but some of the iconic companies of today leverage partnerships early. They did so carefully and thoughtfully.
Third, there is swallowing your pride and paying up to merge with or acquire another company. Sometimes, you must acknowledge that another company has you beat, and it is better to join forces with them. Once that happens, Satya asks if they have the brand permission to complete such a transaction, how they can be a better owner for the company, and what joining forces allows both sides to accomplish. These conversations are always hard. They are a lot easier when you have answers to those three questions. This framework led Satya to win over LinkedIn, Github, and Activision.
Finally, Satya praised Apple for always having complete thoughts before their leaps. Apple did not waste valuable resources to beat Yahoo, Palm, Blackberry, Phone.com, or Microsoft CE. They waited until they had a winning strategy and had such complete thoughts that they won coming from behind in mobile.
In summary, technology moves incredibly fast. To build enduring value, we will need to make leaps. We can and should use all available tools to make leaps: build, partner, and buy. Most importantly, have complete thoughts before leaps.
