Christian Schätz, COO Microsoft Deutschland – the Future of AI, Cloud Adoption & Fostering a “Learn-it-All” Culture

[MUSIC] Leading corporate transformation. The podcast by V. Ha'ul Autobysime School of Management, powered by PWC. On the transformation of companies and their culture, from decision makers for decision makers, or from entrepreneurs for entrepreneurs. [MUSIC] Hello, everybody. This is Sajjan Arzjan. Welcome to another episode of Leading corporate transformation, the V. Ha'ul Podcast, powered by PWC. Today we are in beautiful Muni, and even more beautiful Microsoft rate characters in Germany. And as always, I'm joined by Gori. Gori. Hi, Hi Zerden. Hi, everyone. A warm welcome from Mayant. It's great to be back. And especially today, we have a very interesting guest with us. And I really look forward to our talk. So just quickly, myself, I think most of you know me already. But under transformation consultant in the round. So I will ask a lot of questions around transformation. And transformation is the key because, let me quickly introduce our guest today. It's a great honor to introduce Christian Schatz, who is the COO of Microsoft Germany. Christian, thank you very much for having us today here in Munich at the Microsoft headquarters in Germany. Thank you both. Thanks for having me. Excited to be here. Yes. And it's great, of course. Speaking with Microsoft, I think you're an fascinating company. You are one of the most important technology global players in the world. Some would say the most important. But let's talk about this. So nevertheless, it would be good to just get a little bit of intro on Microsoft and of course, on yourself. Christian, over to you. OK, thank you very much. My name is Christian Schatz. I'm the COO here at Microsoft in Germany. I've been at Microsoft almost 25 years, two weeks to go from my 25th anniversary. So a lot of the things we're going to talk about today. I can proudly say I live through it myself. Maybe a little bit about Microsoft. I think most of it is known there is hardly a person on the planet that doesn't touch us. And it's a nice bridge to our mission. We are here at Microsoft. Our mission is to empower every person in an organization on the planet to achieve more. And in my role, particularly this also applies to Germany on how we enable digital transformation for the country, but also how we deal with security, compliance, sustainability, our local regulations, and also how we ensure, let's say, resilience, transformation, and also the recently growing topic of sovereignty. Yeah. I mean, if you look at the planet, and if you look at the different epic centers of the world, I think we all would hope that Europe is one of it, but it's getting tougher and also especially for Germany. If you put the Microsoft Germany, let's say, or Microsoft Germany into context of the global set of Microsoft, how important is Microsoft in the German Microsoft business for Microsoft overall? It's being the CEO in Germany. It's obviously a super important and relevant market, but no, in a more serious statement. Microsoft Germany is really a strategic hub for the company. It empowers and works with the biggest economy in Europe. And it's also a signal from us as a company, the reason a year ago announced that Westings 3.2 billion dollars in data center infrastructure. We are investing in training 1.2 million people in Germany on AI literacy and really getting the company, the country and society ready for this AI transformation ahead of all of us. Great. So I'm really dying to get to the AI parts of our conversation. So give us an overview of AI from the point of view of Microsoft and then let's dig into the whole AI space. Yeah, I think the way we look at AI, it's not there to replace human capability. It's there to augment human capability. We are very, very clear on that one. That's why we also call the product a co-pilot. It's not an autopilot. It's there to help us get work done. It's not necessarily there to replace our work. It can help replacing repetitive work that we all are not super motivated of doing. And we all like to outsource that stuff. But our goal is not to eliminate the human and build a world where machines talk to machines. That's simply not the vision of AI. We think about how we embed it into anything we do as a human being, particularly the information worker, if you touch a CRM system, your email or whatever, you have your helper on the side that gets things done for you that would have taken you personally a much longer time to get there. I'll give you a practical example. When we prepared for this podcast, and you said contextually, this is directionally what we might want to talk about. Historically, I would have had to click through some information sources to make up my structure in my mind of what we're going to talk about today. Nowadays, I just say to co-pilot, I'm doing a podcast that's going to last for an hour. This is contextually what we're going to talk about. What would you suggest to cover from a content perspective? And I get a relatively well-developed preparation that I can read through once or twice and just become better equipped to talk to you. Did you have to fact check? I did not have to fact check. And the beauty of a generator, if I AI, the more you use it, the more it gets to know you. And I also ask it to prepare a little bit about, if I'm asked about myself, what I think we will do later in the conversation. How would you describe me based on my interactions with how you see me interacting with other people? And one of the more interesting prompts when we got into the journey years ago was teams were creating prompts that said, analyze my behavior from my chat, from my emails. What star was character would I be and why? And you get some really nice descriptions, obviously, there's a fun aspect to it. But you also get a very clear tailored feedback that actually shows your own behavior and actually helps you to think about the one or the other thing that you do. Maybe I want to change that. So, share, please share what character was it. I was characterized as Obi-Wan Kenobi. That's not a bad one. That's a good one. We do see that a lot of discussion is going on the impact of AI on business processes. A lot of your German clients are still looking and debating for the efficiency gains that can be achieved. And the investment size of it, can you dig a little bit deeper into the question of how will AI change really the way of how companies are operating? So, I love the question because this is we are ourselves in this transformation. And the way we think about it 20 years ago, I would have said we eat our own dog food. Nowadays, we're a bit more sophisticated. So, we are customers, zero is how we put it nowadays. So, we start with ourselves. And the frame we have given us is how to become frontier. How do we become a frontier firm using AI, embedding AI into your processes? And there is no plug and play recipe out there as the technology is too new. Right, so here. We build a lot on the history where we have learned. So, we started with what I call traditional AI, a statistic machine learning based models that were built for a specific purpose. We shifted our forecasting to machine learning years ago, for example, and got much better results with much less effort out of it. However, this is a tool that's built for this one single purpose. When we now think about how can Gen AI evolve this experience? This one thing is to generate your forecast, your view of the business for the future. But then it's also about once a data set is available and once you try to take decisions on the future on how you go to market, there's also these analytics piece. And historically, you had this data set, you looked at it, you had a bunch of questions, you flew it back at some analytics teams. They worked for three days, built a new axle version of it, and you had a discussion and over iterations, you got there. Now, Gen AI is enabling us what I frequently said to see if those imagine a world where you have a natural language conversation with your European system. So think about the richness of information that you have available in your company that is hard to access, and you access it via a natural language. And this is what Gen AI is partially already making available today. And this is how we really look at it. And the other thing we look at, technology is not the answer for everything. So the way we start our circle is, we look at what is it actually that we're trying to achieve, which has typically to do with a customer. Then we mapped the process end to end. One of our principles is never automated crap process. So once we have mapped out the process and really understand the process, we look, is there any flaws in it that need to be fixed before we even go the next stage? Then comes the question, do we apply technology, yes, no? And if we apply technology, is it more traditional environment or is it an AI environment that we apply to it? Once we take the decision to apply technology, we also want to measure the outcome. And we have a very simplistic way of looking at this. Applying that technology needs to lead to either more revenue or less cost. Otherwise, it's not really helpful. And that way the certain closes and then we go into the next process. So we approach it very much from a process driven environment, looking at our data available and making sure we gain efficiencies and benefits from it. I can give you a more practical examples. So AI is powered by GPUs. GPUs is a very scarce resource today. So we as well had to take the decision if we enable 100,000 people in our sales force with, let's say, a co-pilot. So you touched on it. Many companies struggle with how do you actually know if it's doing something good or not? Now, our customer serial data shows that if we look at the sales force holistically and we benchmark against the starting point of the individual, we see a 6 to 7% uptick in sales side or shortage. And we also see a 8 to 10% higher revenue that generate as they did before they used Gen AI. So some tangible data where we can see it. Another way where we, in a most sophisticated way, apply it, most organizations out there have some sort of customer support or service organizations. And they typically, depending on business, spend between 5 and 12% of the revenue on that. We are no different. So what we did is we looked at how can Gen AI make this service more efficient for the customer, get better results to the customer and also make us more efficient in how we deliver the service. So the way this works today is, let's say, we get a problem description in. AI is already on it listening to the problem or reading the problem which have a way it comes in. If this is a problem we have never seen before, it automatically routes it to the highest level available engineer to the highest skilled person to find a solution. Once this solution works, it's embedded in our algorithms. The next time a customer comes in with that problem, it gets forwarded to a regular skilled, let's say, support engineer. And he or she gets the solution that was already developed directly on the screen and can work the customer through it. Or if we are, let's say, at a 90% or 99% sure this is the solution, an agent which has shoot the solution in almost real time back to the customer. That way we get a lot more efficient on how we run our processes. And it's also cost saving very significant. But it's, the big fear is always that the technology is going to destroy jobs and technology is going to take work away from humans. I think about it the other way around because first of all, it's not that easy to find people who want to work in that environment. We have a global shortage of talent already and it's going to worsen in the coming years. So making the existing people more efficient and being able to deal with an increasing demand level with the same amount of resource or with the same amount of people I don't like about resource with people. Sorry for that. It's a very clear case on where we see clear R.I. by using the technology. So these are also the most promising areas for AI. Or can you think about next generation AI opening up even more dramatic opportunities? Oh, there's, I think we are scratching the surface because first of all, we haven't really fully understood everything it can do. And then the speed it evolves, the capabilities it evolves. If you look at it on a six-month basis, it's, I don't know by what factor the capabilities evolving. It's very hard even working in an environment like here to keep up with it. So I think from a adoption perspective, and this is where the human comes into play, I look at it, I would differentiate between two things. There is what we call the co-pilot. So this is AI helping you to do your job. And then the next stage is basically an agent who is a virtual team member in your organization. And the definition of an agent is the agent does the job for you. But there's these two aspects of AI. Making you more productive, making you faster, better, getting quicker to higher quality results. It's the co-pilot side of the house. And I believe the agentex side is the one where we haven't really scratched the surface of what we can achieve. And you're the COO of Microsoft Germany. And of course, you also look at costs. And you have been the CEO before, we will talk about this later. But if you look at efficiency gains, is there something you can share? Of course, there's a lot of talk, how much efficiency this really will allow and how to release it. But from a CO perspective, you have grown very crazy. Where you're able to have, let's say, a stable back office structure while growing or how does it translate? We have been. I think that's one of the best ways of looking at it. Can I accelerate my top line growth while maintaining my workforce? Or not growing the workforce at the same level? When I look at my 25 year-force history and going a little back into my finance days. In the first 10, 15 years I was with the company, we had pretty much a direct correlation between head-count growth and finance and revenue growth. And then once we started to get really serious, not on AI at that point in time, but really digitizing processes, going much more efficient in the way we do stuff. We were able to actually grow revenue by 292% over the next decade and the head-count in finance grew 6% during the same period. Okay. A lot of it was obviously done through automation and moving into shared service and another practical example out of shared service. When we moved into shared service, this journey started in 2004. We started with having local shared service centers. We started off with Warsaw serving Germany in 2004. I was the project lead back then. And the reason we picked also is we needed a hub in Europe that can handle European language. And the reason we needed that, our processes were language-constrained. They were not designed to function in a single language. So once the environment was stable from the business process outsourcing, we started to work our way through each process to eliminate the need for local language. And once we reached a tipping point, we were at 80%, 90% without local language, we could actually get more efficient and ship it to a global center, which is based in Chennai nowadays. And if you asked me before Janai, or the efficiency is still left here, I would say look somewhere else. That would have been my natural reaction. Because the way those centers operate is you have for each test you have a so-called desktop procedure that helps a new hire to go through it to do a specific task, close it, move on to the next one. Now Janai came along and we had Janai and agent work through the desktop procedures. Once the agent was done, it created a lot of automation and we eliminated 500,000 plus hours out of the highly optimized shared service. - 500,000 hours. - On an annual basis. That's impressive. That's impressive. No, as I said, no we speak here. Here comes the efficiency. So it's really exciting and I want to stay here for a while. You probably had a very good overview of other regions and other countries outside Germany. How would you describe the AI adoption rate in the corporate Germany, is there any companies elsewhere? I think what you find in Germany, I wouldn't describe Germany as a naturally first adoptive market. We have seen the same in the transformation to cloud Germany took a little bit longer for various reasons. I think there is a very, very strong engineering culture in this country and that engineering culture helped to get the country into the biggest economy in Europe. It can be an inhibitor at the same time because the flip side of it is the over engineering side of the house. When you look at the evolvement of Janai and you touched before on the system, it hallucinates once in a while. In the early stages, yes, nothing functions perfectly. I see a lot when I talk to customer, they want this 120% solution to start with. If we are not there yet, let's wait until it's available. What I try to explain to our customers is, look, there is not that inflection point in time when it's perfect. perfect and when you install it because over the next six months the world will have evolved. So it's also, I often get the question, can I throw JNII on my non-standard data? And I said, yes, you can. The question is, what do you want to get out of it? Is your data in order? The output is always as good as the input you feed a system, right? The other thing I think that is a good thing in Germany. We are highly regulated labor market. So we are involving workers, councils and so on. And I think the discussion there is often a fear-based discussion coming back to, is the technology there to replace the human or is the technology there to augment the human? We are working together with our workers, council to help customers bring their workers, council and have a discussion on how do we use technology for the good and how doesn't it become a threat for the employee, which many workers, council, see out there? And let's be open. Any technology can be misused or can be used in an unintended direction. And the more you have an open conversation about it, the better it goes. I for my personal environment here, my view is a workers council and a leadership team have a large overlap in what is their mission and why are they here for? Because we are people driven company. Our success is dependent on people. So our biggest asset is people as well. So how do we make people more efficient and secure the future on the companies of high interest to the leadership team and is also of high interest to the workers, councils? Now you have some naturally built-in conflict points as well where you're not in the same boat. But in general, if you get to this point in time where you say direction, like we want the same, it's a very different discussion. I see this a lot when I go out and talk to customers in the market. It's often more a fight versus a collaborative approach. And it's a lot of fear based. You want to do something to me versus you want to help me. Discussion. No, that's too. You know, I always like to say we need to be on the same page when it comes to the workers council and management and the owners about building better companies with consistent long-term returns. That's what it is about. Just maybe switching a little bit at the topic, looking at Microsoft, we need to speak about cloud and data. So, can you speak a little bit about the importance of the clarification for your business and a little bit about how you apply it here in Germany or your customers? Is there anybody not your customer? Well, you will understand that I can't give you specific customer names or examples, but obviously cloud and AI have been the driver for the momentum the company has seen over the last decade I would say. So when you look at the last earnings, publicly available, we crossed 281 billion in revenue. Say it again. 281 billion in revenue. That's a big number. For Azure annual revenue, which we historically didn't really share with the world. Now for the first time we did, the platform is past 75 billion as of Q4 last year. And the most mind-blowing number for me always remains that outside of all the top line, when we look at the investment speed, alone in the last Q4, we invested 30 billion dollars in CapEx. That's about a CapEx run rate of 1.4 billion a week to share. And this obviously is also from a transformational point of view. Has been a challenge now. It's not so much anymore, but when we started, let's say to build data centers, when I joined Microsoft, we had Windows, we had Office, Flight Simulator, a couple of games. The Xbox did not exist. We were barely starting out with the server business. So it was a different business model we were designed for. So from our environment perspective, now when you enter into cloud and you need to maintain data centers and you need to maintain a supply chain for data centers, that's something we had to build. We had to invent. We didn't have it. When this journey started out, and this is where transformation comes into play because the way you did things in the past don't really get you to your future anymore. And we realized we had to change. Also mentally, and I think Satya put this best when he took over. He told the company, basically he said, "We need to evolve from a group of people who knows everything, towards a group of people who wants to learn everything." And we were very much sitting in what is referred to as the "no-id-all" culture. So in the old days, we had business reviews with A3 or legalist, the English paper size for it, with 280 data points on there. And if an expectation that you can explain every number on there, not necessarily you took a great business decision on it, but you needed to be able to explain it. So it's not a very productive way of doing things, but we had to evolve from that. But the cloud business is interesting in the sense that you see massive capex and osmos every day, but at the same time, data centers on the one hand, but at the same time, it's a very, very competitive business. So the margins are strong coming down, as far as I can follow. So you're not alone in this world. You have you name it. Everyone is out there. Where do you see the future of cloud? I believe particularly when I look at Germany, we are still not through with the cloud transformation, not even starting with the AI transformation. Germany is still a market that has a lot of on-prem data centers in place. In the way we approach it as a company, we are not focused only on let's say cloud infrastructure data and apps, a word of it. We are really looking at it from an end to end, a few by providing security solutions, by providing hybrid solutions, by providing our modern work solution. So we really have a portfolio, or even covering ERP and CRM system, where we can go end to end world to world with any company and enable them, which none of our competitors frankly can do. This is the way it helps us to scale. So it's end to end. But nevertheless, if you look at the German economy, if you look at German companies, how good are we in adoption? So coming back to this question again, if you say cloudification is still in a beginning stage, you see everybody understood the message and now they are just on the move, or is it still some educational work? I don't think there is a black and white answer to that. There is a broad adoption happening in the larger enterprise space. I would say the larger enterprises have all concluded on a cloud journey. You always have a couple that say, as one of our leaders puts you, I want to hug my servers. For the majority, it's a multiple shift, right? It's the move from CAPEX to OPEX, which is usually a discussion on the CFO side. I think what really is the one that makes people understand is the availability to scale to your needs that you don't have on your own data centers. The security solutions we can provide is impossible to build yourself. Our systems globally have a trillion signals a day. Your own security system, whatever you use will never be able to be at the same scale. So from that perspective, I think people understand the benefit. Now when it comes to how companies are run, there is different buckets, I would say. You have, to the one hand, this best-of-preet approach where people like to go from each shelf and put a gazillion amount of systems together. Very hard to maintain. We are more in the, let's say, a best-of-sweet approach. Very simple analogy I would put there is a goal to a market of your choice by 10X. 10X and two hands and see how many you get home or put them in a cage and transport them this way. That's our picture of how we think about it. And I think the other thing is, in general, you have still not an end-to-end IT business strategy integration in many organizations. So how does IT and technology complement your business strategy to achieve your business goals? Or what transformation and needs do you have in your business and how technology is going to evolve that? Is the discussion that's happening in two different rooms of the house, but the two rooms are not super well connected off? I couldn't agree more. That's what keeps us awake as, of course, consulting any good idea, any magic trick you can share. There is no magic. I think it starts with, first of all, the needs to be believed that I do a technical deployment to transformation, a project, whatever. it is, it needs to be grounded in what is the company trying to achieve. And then a lot of it is also how do you, the bigger a company gets, the more internal stakeholders you have, the more conflicting interests you have and bridging and aligning those conflicting interests. Takes a while. We think about it in a, historically, when you look at the software business, you were talking to one room of the house, which was the IT department. The way we think about it today, particularly when you think about, let's say, the I transformation journey, that's much more business decision maker discussion, like on the example I touched before with the person who owns services and support. You can have the same discussion in the marketing department, you can have the same discussion with the finance department. But it really starts at the business decision maker level and then finds it way back to IT, just historically, it started in IT and you tried to influence business decision out of IT. Yeah, so do they even speak the same language these days then? Most of them do, I would say yes. Most of them do. So one of the things that we often teach in a business school is, if you are in a technology world, then it's not about, you know, competitions not about your company versus another company, it's between ecosystems. So I want to talk a little bit about so-called partner ecosystem. What do you mean by that? How do you cultivate the ecosystem and what kind of differentiation does it generate for Microsoft? Excellent question. I think the reason Microsoft has grown to the size it is today, it wouldn't have been possible without our partner ecosystem. If we look at Germany itself, we have 30,000 partners we work with and it's a complementing effect for any dollar or for every we generate is seven dollars generated in the partner ecosystem according to studies. And when you look, let's say we started out as a company with a bold vision that said a computer in every office on every desk in every home. If you think about the population and the size of this country and so 70 plus million people, you have thousands of companies, we have the way we think about it, we have top enterprises, medium-sized companies which is the backbone of the German economy. And then but you also have small and medium businesses that have between one and five employees. And if I think about a small medium business, the landscape in Germany, it's three and a half million small and medium businesses. The only way to transact for us is via partners. We would never have the capacity to have to cover them all. So it's an indirect sales model. And even when we look at the mid-sized companies, that's still three and a half thousand. That's also we are three thousand people here that's also there getting us to our limits. And obviously you have many companies that are hidden champions, that are really market leaders globally in their niche. And they typically have global operations. And that's working with them and working for them is a relatively people-heavy topic that you cannot scale without a great partner ecosystem like you are part of the query, right? Yeah, of course we are. How you build business together. There's this concept of sell with and sell to. Can you explain this to us? Well, that's really a bit an internal term. So when I think about selling to a company, then it's more like what do we need to provide the company with for having a super efficient IT environment, forgetting the business strategy done and so on. When I think about sell with a company, it's more like joint ventures. When we go into a joint venture with another corporation that uses our technology to build a solution for the market, it typically runs, let's say on our scale, a little back end of the action. But the solution is built by the other company and is also marketed by our company. This is the sell with approach. Okay, got it. So you used to be a CERFOR, now you are a CERFOR, how did you handle the transition? Oh, I'm in the middle of it. It's a bit more than six months to date and in the new seat, I have been a CERFOR when all my history at Microsoft, I've run operational roles, I've been the lead of our licensing department for five years. So I had a couple of touch points, but I think the key differentiator is really with on the CFO side, you're very financial driven and your focus is very financial on the COO side. You literally look at three dimensions. Obviously you look at the financial performance together with the CFO, but you also have the topic of customer outcomes or customer satisfaction, which I will where you want to call it. That's a big topic on my job. So how do we build satisfaction, trust, worthy relationship and long term relationship with customers and also operational excellence or cloud resiliency supply chain. It's really the end to end dealing with the company that's in this role. It's the challenge and there was also the motivation on why I moved ahead. We touched it in the beginning, but maybe a follow up question on this one. So you are representing Microsoft in Germany, but of course as a COO, you need to navigate the balance between the global corporate strategy and the local execution. Can you give us a little bit inside? How does this fit together and how do you navigate through this? Oh, absolutely. Microsoft has a what we call a one Microsoft approach that is guided by a global strategy by a single mission statement that we all live and breathe by. But at the same time, there is some local autonomy needed particularly for critical markets like Germany. So when I look at the regulatory frameworks, they are probably a bit more complicated than in other markets. On the other hand, when I go to other countries, everybody says it's complicated. Okay, so you also have customer expectations that you could say they are unique and you also have a lot of regulation that you need to watch you data boundary, the whole discussion around sovereignty. How do we ensure data doesn't leave the country, doesn't go to the US and so on. So translating the global direction of strategy into the local needs is a big focus of what my team actually does. I don't do it myself. So the good news is it's possible because you know, we like to say we are a superpower in Europe and especially in Germany when it comes to compliance, right? Regulation, bureaucracy. But you can manage, as you say, the global strategy into the local requirements and move the German entity forward. Absolutely. And that's part of my role. And I think at the company level, we have reached a good understanding that this is needed. That's not always the case and this also evolves over time. So many, many years ago, I was sitting in meetings. We did a test run in Idaho. So we are really sure it works for you as well. I have in the comments like this, like 15 or 20 years. So we have really grown up as a company and we see that being a global company with a strong local footprint and also with a local trust is super important for what I would call our license to operate in the market. Because if you look at the services and the solutions we provide, they are super important for a customer, right? So if they don't work, the customer has a big problem. So our license to operate is really built on trust. And that's why we put this emphasis on local needs, on non-local markets. Okay. So what do you find super exciting is this here then? And if you were to measure your own success, let's say, how would you measure it? Oh, questions today. Very tough questions today. You are in Microsoft, you know? I need to see how I answered that my boss might listen to this. But you sometime. No, but joking aside, I think it comes back to the three goals I looked at before it starts. Obviously the role is more internal focused than external focus. There's a CEO, obviously, I have an external touch points and I care a lot about customer trust and delivering a secure, compliant environment for our customers. I'm also here to make sure that we are organized most efficiently as a company. So a lot of my, let's say, impact is determined by the decisions I influence or some of them I take by myself, depending on how we allocate the available manpower, how we allocate the availability of dollars to address our go-to market and what success we're going to get back from it now. Physically, it has just started so far. I would say it's going good. I'm no reason to complain at this point in time. However, we will only know by the end of the year. This good quote I like to make, which says you can be a lifelong employee if you are a lifelong learner. You refer to this continuous learning culture that you have. What's your thoughts on this? it's one of the reasons that kept me for so long in this company. When I joined I was in my mid-20s and my mental model back then was I changed employers every two years and let's look how it is here and then move on. However there was a couple things that were really different first of all. In the last 25 years I've rarely felt I'm the smartest person in the room which put some sort of pressure on you and you have this constant, this constant nudge that you need to keep up. It's actually fun to do something new, to learn something new, with going to work and do the same thing over and over and over again. I would be in a very different job if that was my desire. I think it also helps us evolve and also from a leadership perspective I strongly believe leaders who are really deeply and genuinely bored into learning do a better job developing their organization and building the next generation of leaders. Do you also expect that's why I gave that quote? Do you also expect that from people working at Microsoft? Is it something where you say you need to learn, you need to change roles, you need to change or get out of comfort zone to stay with us? I would say yes. We are not forcing people to change role like on a let's say two, three, five year or anything, it's term like that but it's deeply grounded in our values and it's part of your DNA. It's part of our DNA nowadays. This shift to going from know it all, to learn it all and also one of our strong cultural values is the growth mindset culture that anchors around these topics and there is no way around it. Cross mindset is of course I think most of the listeners might know it but can you give a little context what does it mean? The way we design it for Microsoft means being self-aware, being open to feedback, being encouraged to experiment and learn from mistakes or not being centered around, let's not look stupid and as a consequence don't evolve but really be open to try new things to ever really focus on progress versus perfection. When we are at our best the way we put it, we really welcome challenges and we treat mistakes as learning opportunities and our overall trajectory where things where where they are and where they need to be headed is kind of built into our natural language and when we talk about how we evolve. You said that you are with the firm for 25 years, that means you are more or less patient zero. So now it's a perfect segue to your personal career. Let's speak about yourself, Kusen, the person behind the responsibility. You actually had a very interesting start into your career. You started in hotel economics and Munich and then you switched to technology, you switched to Microsoft. So give us a little bit of background, what have you done in the beginning of your career and why have you switched years then? Well first of all thanks for asking about my personal journey. I truly started off in a hotel actually and I was not a very convinced student and my academic career didn't look really good when I was 16 so I dropped school and I did an apprenticeship in a hotel and I worked for a couple of years in the hotel environment and then I realized okay without further education this might not be the life I envisioned for myself. So I went back to hotel management school and got my bachelor in hotel management. From there moved over to the US and worked for a very large resource in South Florida. I ran labor cross control and payroll there for a couple years. So this is how you got into finance. This is how I found my way into finance and to a little bit the corporation world and when I came back I always found Microsoft a fascinating company. I didn't really knew that much about tech. It was I think August 2000. I wasn't too happy with the job I had back then and I was scrolling to believe back then it was step stone. It was really the beginning of the online job market and there was a job posting on a financial analyst role at Microsoft and I said well what's listed there I can do it. So I dropped in my CV and three days later I had a contract that was in the middle of the dot com bubble and they were desperately looking to fill roles. As I said I figured let's have a look at this for one or two years and I liked it a lot and I stayed and I look back at how I bridge the hotel world to technology. It's really around two things that helped me a lot. The most important thing I learned in the hotel business was it's all about customer experience because once you lost the customer it's very hard to bring him or her back and the second one is really about operational efficiency because you're typically understaffed so you need to be super efficient and get stuff done and if you don't get it done there is always a direct consequence because the customer will feel it. So you get this focus on people, on customer and that's honestly super relevant in the job I do today as well and what really then made me stay was this move into super fast-paced moving technology world that was just reinventing itself every other year. If I'm here 25 years it feels like I've worked at 25 companies because of reinvent ourselves. It was so foreseeable at that time that Microsoft is so so reinventing itself so much and becoming such a different business today than they were 25 years ago. It was not foreseeable for me. It was however an environment that I felt very welcomed in that I felt like I can develop as a person where I found sponsors and supporters and I was constantly given more challenge, more responsibility and that was still one of the best ways to grow. I have to say thank you to some of the people who took chances on me back then and this is how it developed. So it was not really a IK mean and I had this vision to sit here today and be the CEO. However what helped me is probably three or four years in the company. I sat down with the CFO back then, my Skipper level boss and I said to him I want your job. What do I need to do? Boat move. And he said to me, wow let's have a conversation. He gave me a couple practical feedbacks on behavioral items I need to work on. I'm not going to repeat them here but he was spot on and then he also said if you want my job, here's a couple experiences that I think you should be going through to qualify and when I had the conversation with him in 2004 I was thinking about 2010 I'm going to be there. Then I learned a painful lesson that when you're in a fast growing environment that grows 15-20% every year that the job grows with you. So you need to outpace the growth of the role. So it took until 2020 until I finally got the point of the aspect. However from let's say how I took my development decisions having that North Star was helpful because in a global company like this there's always opportunity coming along and having a North Star where you can basically use as a filter is this opportunity going to help me getting closer is that experience going to help me getting closer to this North Star? Yes, no. It was always a good filter for me. So then let's stick to that. We have a lot of young listeners and some of them are probably very to death because of AI. So what would you advise to them? So if they want to be as successful as you know you have become throughout your path. Let me follow up on this one because you took an MBA during your career and if you combine this so the question is how do you prepare as a young person today for the future? It is a very difficult question because my experience is not necessarily the best plan forward because it is two decades old, right? But let me give you a couple notches that I feel were important for me that helped me personally on my journey. First of all I did my MBA when I was already working at Microsoft and I did this in parallel. So I worked full time at the company and I had a distance learning program. I'm not sure I would choose to set again because there was two and a half years of not having a private life. I would probably nowadays go into one of those exact programs and do this in nine months full time also. But what I would always recommend is having a certain level of practical experience before doing the MBA. Why am I saying this? The concepts you learn are much easier understood and also much easier used in your work going forward when you have a context of a real experience versus you can learn the theoretical concept. But it's much harder to bring it to reality if you haven't really done your first couple of steps. I give you an example. One of the tutor mark assignments that I call I had to write there was always the same pattern. You had the see you reabind. about a certain topic, then you had to write a paper about applying that theory to the organization you work in at the moment. And that always forced me to think about the company in very different ways. And I always say, doing the MBA experience helped me understand the company. Because I had the concept now from an academic point of view applied to the things I'm doing here. So that's for the MBA. I would always recommend it, but I would recommend to work a couple years and then go back rather than do bachelor master sequentially at university. And then from a future perspective, I said, we believe in, or also I believe in AI is there to augment and not to replace. So there is always the saying someday, AI is going to take your job. I would say no, a person that's actually very well skilled on AI is going to take your job. If you want to go, if you want to play the fierce full corner. So the other thing that I think has been true in the 80s has been true when I did my early career stages and will be through 20 years from now is I call it the GSD get stuff done. So I've seen a lot of brilliant minds that can explain the problem from 50 different angles and analytically brilliant, close the speech and don't have one practical solution on what to do about it. That's not necessarily helpful in any environment. So people who get stuff done will always be valued and it's always going to be seen. And a very good piece of advice I got from one of my former managers, she said to me in the absence of leadership, lead. So don't wait for someone to give you a direction. If you identify a problem, grab it or when it bring it to solution, that will always be recognized. And I think it was relevant in the 80s and it will be relevant 2015. So, but let me follow up on this one. Looking at Microsoft and looking at the people that you hire, looking at the people that you promote. Do they more have a technical background? Is a more general business background? Can we say something about that? Absolutely. I think generally we are more looking for mindset than for precise skill in general. Now there is very specific super technical roles where we obviously want the technical expertise. But typically I hire for potential and not necessarily for role because there's many things I can teach and learn, particularly in a fast place, fast changing environment. But there is certain behavior patterns, then there is soft skills, emotional intelligence. They are much harder to develop when they are not there. So I much more look for how is the cultural fit, how is the person positioning him herself. Obviously you need a solid foundation to build on. But what that foundation is can be flexible. Yeah, you know, there is, I remember this quote from Siodor Rousel, and he said, "The problems differ from generation to generation, but the qualities needed to solve them remain unchanged from worlds and two worlds." And that's what he said. And it seems like it still is true. I would say so, yes. So you talked about soft skills. What is the most important soft skills if you want to be more precise? If you were to single out one. If I single out one and I apply this to the organization I'm working in, this is a multi-dimensional matrix organization. So a soft skill you need to have is you need to be able to collaborate cross boundaries and you need to make connections. And let's say have a mindset of building on each other's work versus an internal competition. And that's easily said. It's not that easily done. So having this ability, a boss of mine one said to me, the further you advance in your career, the more important it is than you can get to results engaging with any type of personality is super important. I've seen a lot of subject meta experts that were absolutely brilliant in their subject meta expertise and they had a super strong ability to annoy people to a level that they didn't want to work with them. And that gets in a way of getting stuff done. So you need to, with all brilliance you have, if you can't bring the organization, the people with you, it's very hard to get results. I usually had more time, very true. Final question on your career. If there would be one advice to your younger self, what would it be? One advice to my younger self. This may sound awkward but I don't really have that moment where I would say to my younger self is, and this is what I did for the last 25 and even earlier is follow your guts. A lot of decisions I took were more from a solid gut feeling versus an analytical review of things. And follow my gut, follow my heart has worked out for me super well. And if I met my younger self, I would probably re-encourage myself to keep doing that. Well, nice, nice ending. Let's go to the book then. Yes. Final question, Christian, which is the classic question we always like to ask. Is there something that is truly inspiring to you? It can be a book, it can be a podcast or a movie. Is there something that you came across and got you get your attention? So there is probably one example from my most recent vacation. I read a novel that did something that happens to me very, very rarely. Typically when I'm like 20% into a book, I have two or three scenarios on how it's going to end and one of them is usually it. The one that comes. On this book, I was like 10 pages to the end and I still haven't figured out any of it and it kept rapidly changing. And the book is called The Enigma of Room 622, written by Joel Digger, who is a Swiss writer based in Geneva. The original was released in French, but it's available in German, English and many languages. And it was hard to put it away. It was really got my mind going and captured me totally. In a way. In a way. Okay. It's rolling to the end. Opened. Exactly. And maybe more from a business thing, obviously, I've gone through many, many conferences and I've been handed so many business books of which I read some and some are sitting in a shelf untouched at home to be very open. But the one I actually read and actually made a difference was the infinite game by Simon Sinek. And that's it's talking about leading with a long term mindset. And this is why it's so appealing to me in a fast paced environment and particularly in a stock-noded company, very often over focused on getting the current order over the line. And I've always been a person who does everything he I do, I do it for the long run. And I don't believe in quick victories. You can squeeze a result quickly, but building something sustainably that doesn't, that in my definition needs to function when I'm not there, is harder done. And I felt I really liked that book, the infinite game because it touches on many aspects on how to do that. So it's a people's business, huh? It's all about the people, even in an AI world. So time is up, then. This was great. Thank you. Thank you. Great, great pleasure. Thanks for having us here in your headquarters in Germany, Munich. It's a nice, open day for the public. Yes. It's really beautiful. Everyone should come and see it. We do want to know how they want to know how they want to know how they want to know how they want to know. No, it's really nice here. So thanks, Christian. Thanks for having us. So thanks to all your listeners. Please stay tuned. There's more to come. Christian, of course, is a benchmark, but we will try to follow up accordingly. Thanks, everyone. Take care. That was leading corporate transformation. The podcast by Vika U, Autobysime School of Management, powered by PWC. Editorial team, Anika, Luke's Rerek, and Ziemann Göhler. (upbeat music)