Watching how CX initiatives play out in practice highlights a recurring issue: everyone knows they need to transform, but few know how to lead that transformation without breaking what already works.
Then along comes Satya Nadella, treating AI not as a shiny new tool but as an existential threat that demands nothing less than a complete reimagining of how Microsoft operates at every level.
According to internal documents obtained by Business Insider and interviews with Microsoft leaders, Nadella is pushing the software giant through sweeping organizational shifts designed to consolidate power around AI leaders and radically reshape how the company builds and funds its products.
For CX leaders watching from the sidelines, Nadella’s approach offers a masterclass in what it takes to drive transformation when the stakes couldn’t be higher.
The “Learn-It-All” Leader Gets Technical
Nadella has made a decisive move that should resonate with every CX leader struggling to balance strategic vision with operational reality. He appointed Judson Althoff as CEO of Microsoft’s commercial business, explicitly to free up his own time to focus on the technical work necessary for his AI ambitions. Also, in an internal memo, Nadella wrote:
“This will also allow our engineering leaders and me to be laser focused on our highest ambition technical work, across our datacenter buildout, systems architecture, AI science, and product innovation, to lead with intensity and pace in this generational platform shift.”
This is a leader recognizing that understanding AI at a technical level is now a core competency for anyone steering an organization through this transition. For CX leaders, the parallel is clear: you can’t transform customer experience with AI if you’re relying solely on vendor pitches and analyst reports.
What would your frontline agents tell you about where AI could actually help versus where it’s creating friction? What insights are your quality analysts sitting on that could reshape your automation strategy?
Breaking the Production Function
The most profound shift happening at Microsoft is what Nadella calls reimagining the “production function,” the fundamental way the company creates, builds, and delivers products.
Asha Sharma, Microsoft CoreAI product president, explains that for decades, software development worked like an assembly line. Scaling production required scaling inputs: people, time, resources.
“AI breaks that relationship,” she said.
“AI agents, data, and intelligence now act as scalable units that can generate software, insights, and decisions without a corresponding increase in engineering hours or budget. The marginal cost of creating something new drops dramatically, meaning teams can now spend more on “judgment, taste, and problem-solving.”
This concept translates directly to customer experience. For years, handling more customer interactions meant hiring more agents. AI fundamentally changes the economics of service delivery, allowing you to scale personalized experiences without proportionally scaling headcount.
Intensity, Urgency, and the “IC Mindset”
Nadella recently told Microsoft executives that they all need to “work and act like Individual Contributors in our own orgs, constantly learning and unlearning.”
“I chuckle a bit each time someone sends me a note about talking to a friend at an AI startup, about how differently they’re working, how agile, focused, fast they are,” Nadella wrote.
“The reality is that this work is also happening right here at Microsoft under our noses! It’s our jobs as leaders to seek this out, empower it, cultivate it, and learn from our own early in career talent who are reinventing the new production function!!”
There’s a challenge in that message for every CX leader. Are you cultivating the people in your organization who are already experimenting with AI? Are you creating space for them to move fast and share what they’re learning? Or are you stifling innovation by demanding it flow through traditional approval channels?
Nadella’s emphasis on “intensity and urgency” isn’t about working longer hours. It’s about recognizing that the pace of AI development has accelerated to the point where the old rhythms of business no longer apply. When Nadella joined Microsoft, AI foundation models were released every six months. Then every six weeks. Now the cycle is even faster.
The Middle Innings, Not the Early Ones
Nadella has shifted his language from saying Microsoft is in the “early innings” of AI to the “middle innings,” signaling that the window for getting this right is narrowing.
For CX leaders, this framing should be sobering. If you’re still in the “let’s explore AI” phase, you’re behind. The organizations winning in customer experience are already past exploration. They’re in execution mode, learning by doing, iterating rapidly, and building organizational muscle around AI deployment.
When Nadella joined Microsoft, AI foundation models were released every six months. Then every six weeks. Now the cycle is even faster. In customer experience, we’re seeing the same acceleration. AWS released AI-enhanced email workflows for Amazon Connect. Salesforce deployed Agentforce across the IRS to handle taxpayer cases amid staffing cuts.
The Leadership Evolution Question
One of the most striking revelations from the article is that Nadella is having direct conversations with executives, essentially asking them to sign on for the transformation or leave. The pressure is real. Some Microsoft veterans are deciding whether they want to stay and commit to “the mountain of work” ahead.
This raises an uncomfortable question for CX leaders: are you the right person to lead your organization’s AI transformation?
It’s not about competence or experience. It’s about appetite. Do you have the energy and commitment to fundamentally rethink how your organization operates? Are you willing to learn at the pace this moment demands? Can you create the intensity and urgency needed without burning out your team?
From Insight to Action
The real test isn’t understanding Nadella’s approach. It’s deciding whether you’re prepared to apply it.
Start by asking where you’re spending your time. Are you deep enough in the technical details to make informed decisions about AI deployment, or are you relying on summaries from vendors and consultants? Identify the people in your organization who are already experimenting with AI and give them air cover to move faster.
Most importantly, recognize that this is a “tectonic AI platform shift,” as Nadella’s internal memo described it. The organizations that thrive won’t be the ones with the best AI strategy documents. They’ll be the ones that moved with intensity and urgency while others were still debating whether to start.
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