STAGING A SECOND ACT: MICROSOFT How does one of the most successful companies of the 20th The company’s outlay on R&D increased by 43 percent from 7 century reinvent itself for the 21st? That was the question $11.4 billion in 2014 to over $16 billion in 2019. Microsoft Microsoft faced as it sought to bring new life to its thriving understood that it had to quickly reposition itself from selling operating systems business. incrementally improved “software in a box” to perpetually Since the appointment of Satya Nadella as CEO in 2014, updated software as a service. In transforming and continually Microsoft has refocused on organic innovation. The company growing its core business, Microsoft has kept up its profitable especially seeks to find the place where unmet customer legacy Windows business. And this has given the company a needs intersect with today’s advanced “technology curve.” healthy platform from which to invest in cutting-edge Nadella notes that “when those two come together, magic technology. In addition to investing in AI and cloud computing, 6 the company is developing innovations in areas ranging from happens.” The art of innovation is finding that precise “holoportation” to instant voice translations, and even an HIV intersection point. vaccine.8 Microsoft’s capital expenditure stands at 11 percent of revenue—eight percentage points higher than the industry average. 18 BREAKING THROUGH DISRUPTION