When it comes to the realm of artificial intelligence, Microsoft CEO Satya Nadella doesn't just view it as a mere technological advancement. Instead, he envisions a complete overhaul of how businesses construct, market, and structure themselves.
Speaking at GitHub Universe, Nadella emphasized the necessity for business leaders to brace themselves for a triple threat: a technological transformation, a shift in business strategies, and a reorganization of their core frameworks. He described this amalgamation as a unique challenge unlike any other faced by the industry.
Embracing a Novel Production Paradigm
According to Nadella, CEOs who triumph in the era of artificial intelligence will be the ones who grasp the intricacies of the new production landscape. It involves understanding how work evolves when intelligent systems, not just humans, generate code and knowledge.
"The crux lies in grasping the new production function," he stated. "It's akin to rewiring yourself – unlearning poses the greatest challenge. Learning is simple. However, unlearning and relearning can be considerably tougher."
The Era of Marginal Cost Software
Over the years, Microsoft has adeptly navigated through significant transformations – from the advent of the internet to the transition to cloud computing. However, the realm of AI brings forth a novel concept: the advent of genuine marginal cost software. Here, each new unit of output, spanning from code to design to content, can be crafted with minimal costs.
"This marks the inception of marginal cost software – not merely akin to the cogs of the SaaS realm, but genuine marginal cost," Nadella emphasized.
Pivoting Business Models and Mindsets
Nadella drew parallels between the AI transition and Microsoft's own arduous shift from its highly lucrative server business to cloud computing in the early 2000s.
"We have weathered through challenging business model transitions," he affirmed. "Transitioning from a server business with a 98-99% gross margin to the cloud, where the margin was uncertain, presented its own set of hurdles."
He cautioned against clinging to outdated models, even if they continue to yield profits. "Given the binary nature of this shift, one must traverse to the other side," he advised.
Embracing Unlearning as a Leadership Skill
Nadella's counsel to CEOs is to regard organizational adaptability as a paramount capability. Mere learning is insufficient; unlearning holds greater significance.
He highlighted the younger cohort of engineers who have been immersed in coding alongside GitHub Copilot as a glimpse into the future norms. "They represent the first wave of developers accustomed to GitHub Copilot as a standard tool," he remarked.
In essence, Nadella's discourse served as both a cautionary tale and a roadmap: triumph in the AI era hinges on reconstructing one's approach to production, costs, and talent from the ground up.
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By: tspirlet@insider.com (Thibault Spirlet)
Title: Microsoft CEO Satya Nadella’s Expert Advice on Mastering AI’s Transformative Shifts
Sourced From: www.businessinsider.com/satya-nadella-ai-is-ripping-and-replacing-how-companies-work-2025-10
Published Date: Wed, 29 Oct 2025 11:01:51 +0000
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