César Cernuda: “Every challenge is an opportunity”

Microsoft’s transformation to a devices and services company


As the Mobile World Congress 2014 got in full swing this week in Barcelona, Asia-Pacific Microsoft President Cesar Cernuda discussed the company’s new device and service focus with an audience of alumni at IESE.

The native Asturian, who these days lives in Singapore, said that Microsoft has spent the last nine months transmitting its new identity to the world, in a bid to offer a "family" of electronic devices that will empower the user.

Reorganize to change

Microsoft is taking a four-pronged approach to its transformation: redesigning the company organisation, implementing training, deciding on incentives, and defining its culture and values.

Company reorganisation has led to a new One Microsoft Structure, a facet which might have already been bubbling away beneath the surface but which is now being actively fostered. "It’s all about people," said Cernuda, "and there’s nothing worse than a B person hiring a C person. You must hire someone you think can do the job even better than you can."

Former CEO Steve Ballmer has just been replaced by Satya Nadella, relatively young for the role at 46 and an expert in cloud computing, to which Microsoft is committed. "Microsoft is not new in the cloud, though," insisted Cernuda. "Office 365 is the fastest growing product ever in the company’s history."

Embracing the challenge

In business, every challenge must represent an opportunity, Cernuda insisted. He refuted the idea that we are simply living in a post-PC era and therefore at a PC dead-end. After all, holding such a view would render Microsoft obsolete; it is a company which was born in 1975 from Bill Gates and Paul Allen’s vision of placing "a PC on every desk and in every home."

Instead, he said, Microsoft had to embrace this challenge and decide how to penetrate the mobile phone market, in a world in which new devices (from the smartphone, to the tablet, to the fablet and beyond) are constantly coming into play.

Microsoft believes that by synergising the various communication devices and services that are and that will become available to us, it is in fact making them less intrusive in our lives and ridding us of any dependency on them. "One day we will return home and go into the kitchen and the fridge will just tell us that it’s missing milk," Cernuda gave the example.

A healthy company with a $70 million revenue, Microsoft is aware that it is not necessarily perceived as such. Cernuda admitted that Microsoft had work to do when it came to how innovative the consumer side perceives it to be. To this end, the company has invested more than any other in the world in R&D ($10 billion a year), and Bill Gates is spending 30% of his time in that sector.

Skype, Cernuda pointed out, represents an example of Microsoft’s ability to transform. It bought the internet phone service for $ 8.5 billion in 2011. There are many innovation successes that Microsoft has yet to share with the world. This, said Cernuda, would be the company’s next challenge.