Fostering an innovative, open-minded, and collaborative corporate culture – one that gives employees the means to pursue new ideas and the freedom to abandon them if they don’t work out – has a greater impact on business success than any one product a company can make, Microsoft Corp. founder Bill Gates and CEO Satya Nadella said during a Sept. 20 discussion at the Emerging Cascadia Innovation Corridor Conference in Vancouver, B.C.

As leader of one of the world’s largest tech companies, Nadella said he spends a great deal of time considering the indicators of long-term success, and has concluded the one he places the most faith in is a business’s innovation culture.

“(Innovation culture) is a better indicator than any one specific product effort that you may have at any given time, because you’ve got to sustain that innovation,” he said. “You can’t be static… you have to be on a quest to create that ideal learning organization.”

Accountability is also important, Nadella said: employees must be willing to check their egos at the door and be willing to learn about anything, rather than assume they know everything.

“Most people sit around inside an organization and say, ‘I don’t have a culture problem. It’s that other team, or other person,’” he said. “But the reality is it’s each one of us individually.”

Inspired by the work of social and developmental psychologist and Stanford University professor Carol Dweck, who created a technique for developing a “growth mindset” based on the observation that some people are “know-it-alls” and others are “learn-it-alls”, Nadella encourages every Microsoft employee, including himself, to become a “learn-it-all” by recognizing – and working around – their hidden biases.

“If you have somebody who’s a know-it-all and… a learn-it-all, then chances are that the learn-it-all will trump the know-it-all,” he said. “That applies to boys and girls at school, it applies to CEOs like me, and it applies to everyone inside of Microsoft.”

Investing in research is another important component of success, Gates and Nadella said, with Gates talking about the genesis of his personal research goal at Microsoft to have 30 per cent of all computer science graduate students either visit the company or serve as a fellow at one of the company’s research centres.

Simply put, Gates acknowledged that Microsoft has greatly benefitted from outside research conducted by the government and other corporate labs: For example, it was Xerox that developed the Alto, which was the first computer designed to support a graphical user interface (GUI)-based operating system back when it was released in 1973. AT&T Labs Inc. (formerly Bell Labs) developed Unix and conducted research into voice recognition. The list goes on.

“So we thought, ‘boy, we’d better be inventing some of this stuff, and not just benefitting from what other people have done,’” Gates said. “And as we became large enough and could afford it, we went out to universities.”

The company’s investment has paid off handsomely, Gates and Nadella said, with Nadella citing the example of Skype Translate, which allows two parties to communicate over Skype in real time using different languages and was developed with a mix of internal and university research.

Finally, for enterprises with international reach, having a global mindset is key, the two leaders said.

“I wouldn’t be CEO of Microsoft if it were not for the democratizing force of Microsoft technology reaching me where I was growing up,” Nadella said. “I think, ‘Wow… What caused a multinational company to create the kinds of products, and have the kind of go-to-market approaches that made them accessible to a middle-class kid growing up in India?’”

“That, I think is something every one of us who’s a multi-national company needs to think about,” he said.

As CEO of Microsoft, Nadella mentioned that he has travelled extensively and noticed a consistent pattern whenever he meets with partners who are trying to bring Microsoft’s platforms into the public sector and small businesses.

“Every country cares about the productivity of its small business community, and the only way businesses are going to become more productive in a non-linear way is through the adoption of digital technology,” he said. “It’s not going to happen because of all the work we do, it’s going to happen because of the thriving ecosystem we build.”

If enterprises wish to remain in business for the long term, Nadella said, they need to think about the local impacts of their actions: whether they are creating a local opportunity, and whether it can be enhanced with their global expertise.

“I believe that’s the only way for multinational companies” to sustain themselves, Nadella said. “Because if you’re just participating in countries and all you do is extract rent, that’s not sustainable. You have to create local opportunity.”

Indeed, Gates noted that this year has brought a couple of surprises for people who take it for granted that voters and the population at large recognize globalization as a net positive for humanity, speeding up innovation and bringing prices for the most cutting-edge products down.

“Of course, you might be able to manage the displacements caused by globalization better than you do today,” Gates acknowledged. “But the fact that people net see it as a bad thing, and then vote for something like a Brexit… saying ‘we don’t like change, we want to set back the clock, we want to be more local in our thinking’ – that’s a huge concern, because… the amazing things that can get done in areas like IT and health have all been predicated on there continuing to be a global market where the best ideas are shared.”

“So I think we do need to step back and say, ‘are we doing enough in communities?’ ‘Are people seeing these benefits?'”

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