All kinds of companies develop and use technology to make operations more efficient and their products and services more attractive to consumers.
Speaking at the recent AT&T Business Summit, Nadella offered advice for companies looking to make a digital transformation.
"One of the things I think about a lot is: If we use this term that every company is a digital company, every company is a software company, what does it mean?" Said Nadell. "How to create the digital strategy in any business, across verticals or industries? The formula I think of is what I describe as & # 39; technical intensity. & # 39;"
First, he said, companies must be early adopters of new technology to run their businesses, so they don't waste time or money later trying to get behind the curve. Companies must then develop the ability to develop their own "digital IP" and build exclusive software and tools that only their customers can access.
"You will not get caught up in using your scarce resources on what is really something that can be available as a commodity. You will take in the commodity and build your own IP," Nadella said.
The final piece of the puzzle, Nadella said, is that companies need to develop technology that both they and their customers can rely on ̵
Nadella said he thinks of it as a math formula: "Technical adoption" times "technical ability," multiplied "to the power of trust."
"This is what I feel every company needs to do to become a software company," he said.
Nadella said that fuel for other people's digital transformations has been part of his vision for Microsoft since becoming CEO. in 2014. He said that as only the third CEO in Microsoft's history behind Bill Gates and Steve Ballmer, and the first without what he called the "founding status" of the company, he felt he had to establish a sense of purpose that would define his leadership .
"That's what brought me all the way back to the origins of the company," Nadella said. "We were a tool company, a platform company … If we stick to what we were really meant to do, which is to make technology so you can make technology, we'll be fine. So that's why I went back to say, "let's have it and be proud of it, and let's be rooted in that sense of purpose." "
Nadella said there are three major technological shifts that companies today will have to leverage in the coming years to succeed as digital businesses: the ability to have powerful computing capabilities on many different types of devices, artificial intelligence that will make sense of all the data generated from that computing, and the fact that people all have multiple devices that interface with their different senses, like smart speakers and augmented reality glasses.
"These three trends are composite – computing is everywhere, all experiences are driven by AI and we live in a world of multiple minds, multiple entities," Nadella said. "And the question is: What does it mean for retail? What does it mean for hospitality? What does it mean for health care?"