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In his recent interview with McKinsey Simon London, Microsofts CEO Satya Nadella talks about innovation, disruption, and organizational change. Few powerful points by Satya about Building Culture on Purpose, the benefits of Customer empathy to innovate and the call for a non-zero-sum approach to Digital Business Transformation. Worthwhile Reading and can be applied to more Digital Business Challenges!

Culture and Innovation: at some time,  the original idea of the company might run out of gas and you need a new capability to go after new concepts. The only thing that’s going to enable you to keep building new capabilities and trying out new concepts long before they are conventional wisdom is culture.

Business units versus Capabilities: to optimize productivity, organizations introduced business units and gave them all they needed to be operationally successful. In the digital world, where digital capabilities go across business units, those “silos” can limit your innovation significantly. It is critical to carve out, how to organize key capabilities for the full company, while still benefit efficiencies from specialized business units.

Metrics and Compensation: Traditional retrospect scorecard work for known businesses, but are weak to measure progress in new capabilities. Similar for compensation systems, which are typically optimized to monetize the existing business and something is causing conflicts with new Digital Business shifts to services models for instances.

Empathy and Purpose: The war for talent puts pressure on companies not just to focus on extrinsic motivation (paycheck), but build a strong intrinsic motivation stack, giving the company a common purpose or “soul” that is so strong, that talents want to work for a company, a company with a strong purpose. Empathy for customers will allow to spot un-served customer needs ahead of product driven companies – hiring employees with empathy for customers value generation will differentiate successful companies.

Turning Artificial Intelligence into value: AI will be a core technology and capability in the future… but it needs data. Every company will need a good strategy to organize its data across all data sources and silos so it can be used to create value.

Resolving the innovators Dilemma: Many new business models come with lower margins. Hard to transform this kind of businesses if you think about just replacing the old business with the new; better is to rethink your categories at all, and rethink what your business can be given all the digital capabilities.

Be open for new perspectives, rethink your category of business and use technology to build strong ties to your customers and do not allow “technology religion, nor business-model religions.”

Read the full article here: McKinsey&Company

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