The more brands invoke the unmet, unarticulated needs of consumers by showing empathy, the more they will innovate.
That's the view of Microsoft CEO, Satya Nadella, who spoke at this week's Adobe Summit on the way 44-year old Microsoft has worked to transform to retain its position in the top echelons of the tech company table, and the criticality of culture and learning in his approach.
To enact business transformation, you have to get two things right, Nadella said. The first is exhibiting a first-class world view of where your industry is going, where technology is going and what you can do with new tech trends.
"But the tougher part is to adjust to the harsh realities of the business model shift. I always think technology shifts are easier to deal with than business model ones," he told attendees. "Getting those two things right, long before people give you credit, is what you ultimately get measured by."
In striving to keep Microsoft's market dominance, Nadella said he turned to the customer purpose behind its mission and culture as a north star.
"In tech companies we have to get a lot right - we need to understand where the world is going, bet right long before convention wisdom exists on tech trends, and produce products customers love all. All that is a given. But what is the real source of inspiration for getting those right and necessary conditions to get your strategy right?" he asked.
"One is sense of purpose, the other is culture."
When he joined Microsoft in the early 1990s, Nadella said the mission was to place a PC in every home and desk. By the end of 1990s, that mission had more or less been achieved in the developed world. In looking for its next big purpose, Microsoft settled on empowering every person in the organisation on the planet to achieve more. This gives the company a deep sense of meaning, Nadella said.
"It informs how we choose to be, how we show up in the market and the products we build - that sense of empowerment is what we seek, whether it's with the institutions or people," he said. "But then culture is so important. If you are going to keep reinventing yourself, you need that learning culture."
Key cultural aspects include embracing continuous learning and shifting from "being know-it alls to learn-it alls", Nadella said. He referenced Carol S Dweck's book, Mindset: The Psychology of Success as a source of insight.
"Maintaining that posture more than anything else can help us," he said. "One of the hardest things to do is predict with high precision what consumers are going to like or consumer behaviour out into the future. That's the case for anyone - B2B or B2C. The expectations are going to keep changing and you have to keep up with it."
It's also about empathy, something Nadella saw as core to innovation. "The more we can invoke our ability to meet the unmet unarticulated needs, that's the source of innovation. And that source comes from having a deep sense of empathy," he said.
And Nadella believed CMOs and CIOs are perfectly positioned to drive this capacity to innovate. In doing so, he described the need to fail fast and have 'no regrets'.
"This is about how to build long-term systems - such as the Open Data Initiative [ODI], Experience Cloud, data lake - and create that experimentation harness on top of these systems. Then the key is to build the social side that embraces rapidly continuously experiment," he explained.
"A measure we try to create internally is how quickly people are rewarded for disproving their hypothesis. You have to give credit to people who proven themselves wrong.
"I see the CMO and CIO as uniquely capable of creating that no regrets system in their organisation."
Nadella also discussed key tech trends and how they're applying to all organisations today. Top of the list is computing being more distributed and ubiquitous.
"What's interesting is the digital transformation it's ensues," he said. "Pick your sector of the economy it's all being transformed by the availability of computing power.
"But it's not just what technology can do, what is it that you can with it? This is all about the experiences you create and personalisation you drive, with trust, so your business can deliver what it's fundamentally all about."
Nadella then cited three layers of intelligence-driven tech transformation. The first is computing being distributed to the edge.
"Whether it's autonomous vehicles or warehouses, the most interesting things are happening at the edge," he claimed. "The second thing is when you have a lot of compute power, you do artificial intelligence, and reason over large amounts of data to create these next-generation experiences.
The last is the experience layer. "It's no longer about natural interface into one device," Nadella said, noting Microsoft's Hololens as one of these "instinctual user interfaces" coming onto the grid.
"If you take that and apply to retail, you see online and offline being blended into one personalised shopping experience. With manufacturing, where there is a lot of tech intensity. We're putting so much compute in the factory floor, so with all the sensors out there, you can run things at the edge and ensure your production lines are that much more efficient and quality is there. In financial services, people are creating new products.
"That spectrum of innovation that's being unleashed is what I describe as 'tech intensity' - every company in every industry is taking these world-class breakthroughs and instantly converting them to products and services that change experiences in their industry."