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Microsoft Cloud growth fuels second quarter results | Stories

Results include a net charge of $13.8 billion related to the Tax Cuts and Jobs Act

REDMOND, Wash. — January 31, 2018 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2017:

  • Revenue was $28.9 billion and increased 12%
  • Operating income was $8.7 billion and increased 10%
  • GAAP net loss was $(6.3) billion and non-GAAP net income was $7.5 billion
  • GAAP diluted loss per share was $(0.82) and non-GAAP diluted earnings per share was $0.96
  • GAAP results include a $13.8 billion net charge related to the Tax Cuts and Jobs Act (TCJA)

“This quarter’s results speak to the differentiated value we are delivering to customers across our productivity solutions and as the hybrid cloud provider of choice,” said Satya Nadella, chief executive officer of Microsoft. “Our investments in IoT, data, and AI services across cloud and the edge position us to further accelerate growth.”

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

  Three Months Ended December 31,  
 ($ in millions, except per share amounts) Revenue Operating Income Net Income (Loss) Diluted Earnings (Loss) per Share
2016 As Reported (GAAP) $25,826 $7,905 $6,267 $0.80
2017 As Reported (GAAP) $28,918 $8,679 $(6,302) $(0.82)
  Net TCJA Impact 13,800 1.78
2017 As Adjusted for TCJA (non-GAAP) $28,918 $8,679 $7,498 $0.96
Percentage Change Y/Y (GAAP) 12% 10% (201%) (203%)
Percentage Change Y/Y (non-GAAP) 12% 10% 20% 20%
Percentage Change Y/Y (non-GAAP) Constant Currency 11% 10% 20% 20%

GAAP results include a net charge of $13.8 billion related to TCJA, which is excluded from our non-GAAP results.

Microsoft returned $5.0 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2018.

“We delivered another strong quarter with commercial cloud revenue growing 56% year-over-year to $5.3 billion,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “Strong execution from our sales teams and partners is driving growth across our businesses.”

Revenue in Productivity and Business Processes was $9.0 billion and increased 25% (up 24% in constant currency), with the following business highlights:

  • Office commercial products and cloud services revenue increased 10% (up 10% in constant currency) driven by Office 365 commercial revenue growth of 41% (up 41% in constant currency)
  • Office consumer products and cloud services revenue increased 12% (up 11% in constant currency) and Office 365 consumer subscribers increased to 29.2 million
  • Dynamics products and cloud services revenue increased 10% (up 9% in constant currency) driven by Dynamics 365 revenue growth of 67% (up 68% in constant currency)
  • LinkedIn contributed revenue of $1.3 billion during the quarter with sessions growth of over 20% for the fifth consecutive quarter

Revenue in Intelligent Cloud was $7.8 billion and increased 15% (up 15% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 18% (up 18% in constant currency) driven by Azure revenue growth of 98% (up 98% in constant currency)
  • Enterprise Services revenue increased 5% (up 3% in constant currency) driven by Premier Support Services

Revenue in More Personal Computing was $12.2 billion and increased 2% (up 2% in constant currency), with the following business highlights:

  • Windows OEM revenue increased 4% (up 4% in constant currency) driven by OEM Pro revenue growth of 11%
  • Windows commercial products and cloud services revenue decreased 4% (down 5% in constant currency) due to the impact of a prior year large deal
  • Gaming revenue increased 8% (up 8% in constant currency) driven by Xbox hardware revenue growth from the Xbox One X launch
  • Search advertising revenue excluding traffic acquisition costs increased 15% (up 15% in constant currency) driven by higher revenue per search and search volume
  • Surface revenue increased 1% (relatively unchanged in constant currency)

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Carolyn Frantz, deputy general counsel and corporate secretary, and Chris Suh, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on January 31, 2019.

 Non-GAAP Definition

TCJA Impact. We recorded a net charge of $13.8 billion related to TCJA during the three months ended December 31, 2017. As of December 31, 2017, we have not completed our accounting for the tax effects of TCJA. Our net charge is provisional based on reasonable estimates for those tax effects. Changes to these estimates or new guidance issued by regulators may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. Our accounting for the tax effects of TCJA will be completed during the measurement period, which should not extend beyond the second fiscal quarter of 2019.

We have provided non-GAAP financial measures related to TCJA to aid investors in better understanding our performance. We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

New Accounting Standards

We adopted new accounting standards related to revenue recognition and leases effective July 1, 2017. The prior periods presented here have been restated to reflect adoption of these new standards.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding the company’s performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

  Three Months Ended December 31,  
 ($ in millions, except per share amounts) Revenue Operating Income Net Income (Loss) Diluted Earnings (Loss) per Share
2016 As Reported (GAAP) $25,826 $7,905 $6,267 $0.80
2017 As Reported (GAAP) $28,918 $8,679 $(6,302) $(0.82)
2017 As Adjusted (non-GAAP) $28,918 $8,679 $7,498 $0.96
Percentage Change Y/Y (GAAP) 12% 10% (201%) (203%)
Percentage Change Y/Y (non-GAAP) 12% 10% 20% 20%
Constant Currency Impact $124 $(26) $6 $0.00
Percentage Change Y/Y (non-GAAP) Constant Currency 11% 10% 20% 20%

Segment Revenue Constant Currency Reconciliation

  Three Months Ended December 31,
 ($ in millions) Productivity and Business Processes Intelligent Cloud More Personal Computing
2016 As Reported (GAAP) $7,179 $6,758 $11,889
2017 As Reported (GAAP) $8,953 $7,795 $12,170
Percentage Change Y/Y (GAAP) 25% 15% 2%
Constant Currency Impact $34 $49 $41
Percentage Change Y/Y (non-GAAP) Constant Currency 24% 15% 2%

Selected Product and Service Revenue Constant Currency Reconciliation      

  Three Months Ended December 31, 2017
Percentage Change Y/Y (GAAP) Constant Currency Impact Percentage Change Y/Y Constant Currency
Office commercial products and cloud services 10% 0% 10%
Office 365 commercial 41% 0% 41%
Office consumer products and cloud services 12% (1)% 11%
Dynamics products and cloud services 10% (1)% 9%
Dynamics 365 67% 1% 68%
Server products and cloud services 18% 0% 18%
Azure 98% 0% 98%
Enterprise Services 5% (2)% 3%
Windows OEM 4% 0% 4%
Windows commercial products and cloud services (4)% (1)% (5)%
Search advertising excluding traffic acquisition costs 15% 0% 15%
Surface 1% (1)% 0%
Gaming 8% 0% 8%


About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

  • intense competition in all of our markets that may lead to lower revenue or operating margins;
  • increasing focus on services presenting execution and competitive risks;
  • significant investments in new products and services that may not achieve expected returns;
  • acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • a change in our ability to earn expected revenues from its intellectual property rights;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • the possibility that we may fail to protect our source code;
  • the possibility that we may not be able to protect information on our products and services from use by others;
  • cyber-attacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
  • disclosure of personal data that could cause liability and harm to our reputation;
  • abuse of our advertising or social platforms that may harm our reputation or user engagement;
  • outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
  • potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;
  • laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, or fines against us;
  • the dependence of our business on our ability to attract and retain talented employees;
  • claims against us that may result in adverse outcomes in legal disputes;
  • additional tax liabilities;
  • quality or supply problems;
  • exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
  • catastrophic events or geo-political conditions that may disrupt our business;
  • adverse economic or market conditions that may harm our business; and
  • changes in our sales organization that may impact revenues.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of January 31, 2018. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

For more information, financial analysts and investors only:

Chris Suh, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

Employers pull back on hiring of tech talent for H-1B jobs

U.S. employers’ hiring of tech talent for H-1B jobs slowed significantly after the November 2016 election because of uncertainty about the fate of the visa program for skilled foreign workers.

That insight and others came from a new report from Hired, a job marketplace software vendor, which sifted through hundreds of thousands of data points from companies’ requests for interviews with candidates for H-1B jobs. The company also surveyed 362 tech workers.

H-1B revamp

Four months after he took office, President Donald Trump announced plans to reform the lottery system used to award H-1B visas to give preference to the most highly skilled workers such as software developers and engineers.

While no changes have yet resulted from Trump’s executive order directing four federal agencies to report on how to tighten the H-1B program, uncertainty immediately hit tech hiring for H-1B jobs, according to the Hired research.

The San Francisco-based vendor flips the job-seeking process by providing employers with top candidates whom companies then request interviews from. Hired also releases periodic reports based on its data, such as one on the impact on hiring due to the United Kingdom’s Brexit vote.

H-1B jobs down after election

The company’s H-1B data showed that foreign tech workers’ interview request rate dropped in the fourth quarter of 2016, just after the November election.

Interest in tech H-1B jobs rebounded in the first two quarters, though, likely because while there is still uncertainty about the future of immigration reform, things have stabilized to some extent, Hired CEO Mehul Patel said.

Mehul Patel, HiredMehul Patel

In any case, Hired’s data analysis also shows a 46% decrease in companies’ interest in tech talent candidates for H-1B jobs from first quarter 2016 to first quarter 2017 and a 37% decrease from second quarter 2016 to second quarter 2017.

“We were really looking for a before and after view of what happened with the election,” Patel told SearchHRSoftware. “What we saw already, without the regulations even in place, was a massive drop in interest in foreign workers by U.S. companies.”

Some agreement on H-1B jobs

At the same time, in a companion survey of 362 tech workers in June, Hired hit on a few somewhat counterintuitive insights.

We were really looking for a before and after view of what happened with the election. What we saw already, without the regulations even in place, was a massive drop in interest in foreign workers by U.S. companies.
Mehul PatelCEO, Hired

Strikingly, while Trump’s hire-Americans-first stance has informed his position on H-1B reform, the tech worker survey found that most American tech workers think immigration brings more innovation and needed diversity to the technology sector.

Meanwhile, the survey revealed that non-U.S. citizen tech workers overwhelmingly (75%) said there is not enough qualified tech talent in the U.S. to meet demand — the main rationale behind the H-1B program.

However, only 24% of American workers reached the same conclusion, though 48% of the American respondents said they didn’t know.

On the issue of whether the H-1B visa program as currently structured is working, U.S. and foreign workers concurred to some degree, with sizeable percentages of both groups saying the program is dysfunctional.

H-1B dysfunction

A key critique of the way H-1B jobs are apportioned through the visa lottery, from the political right and left, is that big outsourcing companies that mostly supply lesser-skilled workers have been favored by the process. That has come at the expense of highly skilled workers the program was originally intended to supply.

In the Hired poll, 44% of U.S. workers said the program isn’t working, compared to 64% of foreign workers who said the same.

Tech talent undersupply

Pitched debate over H-1B, meanwhile, is occurring amid the backdrop of what is widely seen as a major shortage of U.S. technology workers that is expected to mushroom by 2024.

Because of that tech talent pinch, support for the H-1B program has been strong from Silicon Valley tech giants like Google and Facebook to big employers in manufacturing, finance and retail.

“You’ve got the long-term issue of chronic undersupply of technology workers,” Patel said. “The U.S. can solve that in one of two ways. One is a long-term fix with education policy and more homegrown talent, but that’s multigenerational and takes many years.”

“The second, and this is how the U.S. has traditionally handled this, is immigration policy,” Patel added. “But if you clamp down on foreign workers, you do end up exacerbating this issue.”

Work in the .future | Gimlet Creative

In the final episode of this season of .future, we hear how our jobs continue to evolve in the modern workplace. Many of us still spend 40 plus hours in a physical office, but the internet and new digital communication tools  are changing how we collaborate and communicate.

This story brings you voices that explore work philosophies of the past, job practices of the present, and the digital office spaces of the future.

Show Notes:

You can check out Ram Devineni’s filmography at his IMDB page: http://www.imdb.com/name/nm3128813/

This episode features:

Ram Devineni — Documentarian

Anton Andrews — Director of Office Envisioning, Microsoft

Ben Waber — CEO of Humanyze

Janice Marturano—Founder of the Institute for Mindful Leadership



RAM DEVINENI: Hi my name is Devineni, Ram Devineni and I am the James Bond of I.T. professionals.


But now I’m a documentary filmmaker

CRISTINA QUINN: That’s quite a career leap to make.

RAM DEVINENI: Thank you. It is!


CRISTINA QUINN: Ram had been working in IT for Citibank for a decade. It wasn’t a bad job, but it wasn’t very creative. He was responsible for managing storage and backing up data. It’s a respectable job, but he wanted more.  

RAM DEVINENI: I got bit by the documentary filmmaking bug. I wanted to be in the arts, be a documentary filmmaker. But I had one single problem, and that was a full time job.

CRISTINA QUINN: So he decided to do both. He bought a really nice camera, scheduled some vacation and jumped on a flight to Mumbai. Why Mumbai? Because that’s where a group of people were about to attempt to make India’s largest human tower and Ram wanted to film it.

RAM DEVINENI: Just imagine 300 people stacked on top of each other shoulder to shoulder about five or six stories high. And it’s this massive beautiful artistic creation of just human beings.

CRISTINA QUINN: It’s also terrifying. You stand on someone’s shoulders, who’s standing on someone else’s shoulders, who’s standing on someone else. When it goes wrong, people fall from two or three stories up — onto a crowd below.

But Ram wasn’t scared — he was transfixed. He wanted to keep shooting, and learn more about human towers. He wanted to follow the story to its roots, in Spain.   

But that problem of his day job cropped up again.

RAM DEVINENI: From there, my vacation time ran out that year, and I wanted to continue filming.

CRISTINA QUINN: So Ram decided to take advantage of something that a lot of us already do at work — but in a very extreme way.  



CRISTINA QUINN: I’m Cristina Quinn and this is dot-future, a branded podcast from Microsoft and Gimlet Creative, about making the future happen.

Because the future doesn’t just HAPPEN. It’s the result of a series of choices that we’re making right now. You can wait for the future to come to you … or you can engage with it, and get ahead of the curve.  

Today we’re talking about the future of a place where many of us spend most of our waking hours…work.

Welcome to dot-future.



CRISTINA QUINN: So back to Ram’s plan. Or really—an “arrangement.” Ram asked his managers at Citibank if he could work remotely, from home. And they said yes, assuming by remote he meant – at his midtown Manhattan apartment.


But Ram began living a double life as an EXTREME telecommuter. During the bank’s working hours, he’d be online– with no one back home the wiser– that he was jumping around the globe and making films.

He went to Spain, to shoot the human tower. He traveled to Ukraine and began filming the Maidan revolution. And he went back to India, to Delhi, to do a story about a serial killer. All the while, leveraging the time difference.

RAM DEVINENI: I was working literally the whole night for Citibank and then during the day when my job was done I would be jumping in the car and heading to jail to talk to two cannibals serial killers.

CRISTINA QUINN: Ram covered his tracks by always delivering his assignments. He never missed a conference call. And occasionally he would play ambient noise of New York City in the background of calls, to make it sound like he was still at his apartment.

And it paid off. Ram’s work was featured on the BBC and Al-Jazeera. He even won a Sundance Grand Jury Prize for one of his films.


CRISTINA QUINN: Did you ever feel like maybe you know I should tell my boss that I’m going to live in India for the next six months?

RAM DEVINENI: I mean technically you know the agreement was I had to work out of my home. Now the concept of home, and I’m quoting unquoting here—is very flexible. I mean home could be a home is where you make it.


Ram is a VERY extreme example of something that’s happening all over. Because of the cloud, automation, and artificial intelligence … we’re going through a redefinition of our relationship to work.

A redefinition of where work is, what productivity looks like, how we handle information, and even why we work.


ANTON ANDREWS: Productivity is a deeply emotional thing and most of our lives we spend at least eight hours a day at work most of us and yet you know it it’s happening in this world that is changing around us in very dramatic ways.

CRISTINA QUINN: This is Anton Andrews, he’s the director of “Office Envisioning” at Microsoft.  And the dramatic changes he’s referring to are both what our workplace looks like — and how we do our work.

Anton leads a team that explores how new technologies make work easier.  And he’s tasked with leading the conversation around the ethics of some of those technologies.

His team has built an entire office at Microsoft, where they can show off new technologies. They’ve reenvisioned everything — from what you should expect from a dry erase board, to what you might expect from the floor.


ANTON ANDREWS: So, come on in. So when we look at the concrete floor that we’re standing on right now, we see a communication tool and we think that the work place should be designed in the same way that we design our other communication tools, which are the ones we carry in our pockets.

CRISTINA QUINN: So, are you talking about even making the floor an interface? Please say “Yes.”

ANTON ANDREW: The floor is an interface. And the idea is not so much that the floor is somehow just the active floor. But the idea is that we can plan and design the floor.

CRISTINA QUINN: Anton’s saying that where you position people and objects makes a huge difference in how work happens and how productive people are. For example, in Anton’s “office of the future,” there’s this dome in the corner that looks like a wooden igloo skeleton. It’s a prototype of a conference room.

ANTON ANDREW: This is made of acoustic felt. The idea is that again we look at the future of meetings. And we wanted to test a couple of things. One was, we know that your current meeting rooms are rectangular. There’s a big table in the middle that dominates the room.

CRISTINA QUINN: But this room is circular. There’s no clear “head of the table” — the thought being that the shape of the room will break down hierarchies, and remove obstacles from anyone with good ideas at the table. It’s a physical environment that’s supposed to foster creativity.

And the room removes digital obstacles, too. As soon as we walk in, we press a button and we’re greeted by a digital assistant named Cortana.

CORTANA: Hello, would you like to join your scheduled meeting?

ANTON ANDREWS: Yes please, join the meeting.

CORTANA: Would you like me to participate?


CRISTINA QUINN: Anton demos how Cortana can work in a teleconference meeting: The screens placed around the edges of the room connect us with a remote office through a video call.

Anton ticks through the features of the room. Using artificial intelligence, Cortana can transcribe everything that’s said in the meeting. She can recommend documents that you mention in passing– and attach them to the transcript.  And, she can gently remind you the names of the people you’re teleconferencing with.

But more importantly, what Cortana is doing is helping manage a transition that we’re going through at work — all of us.


Anton says we’re transitioning from a time when information was scarce — to a time when information is abundant.  WAY too abundant.  


When information was scarce, we might have had to figure out who had a report we needed, and then wait for them to mail or fax it to us.  Or maybe we wouldn’t even know that the report existed, and we’d wind up duplicating someone else’s efforts. But, in the future, Cortana might be able to show us documents just based on a couple of clues from our conversations. And she might know about reports we don’t even know about, that are relevant to what we’re working on.

It’s a super helpful idea — but also, maybe a little…unsettling? Cortana recording what we were saying, showing us information, it got me wondering … what about privacy?


Anton has an answer for that — he says this prototype has safeguards built in.

ANTON ANDREWS: We think about this is something that you decide whether you want to turn it on or not. In the first place. So I very explicitly invited Cortana into the meeting

Bringing up the question of privacy is one of the reasons for this prototype. This demo, this digital assistant, this entire office — have been built to raise this very question, and others.  Questions about how to ease the flow of information between colleagues, and lower the barriers to collaboration.

Obviously the answer is better communication, which is what this prototype is designed for. But the entire workspace itself also keeps in mind the need for people to occasionally work privately, for maximum productivity.

ANTON ANDREWS: Putting the control at the fingertips of the actual participants using it is something that’s very important to us. There are two needs: There’s a need for privacy and there’s the need to do your work in a better way.

CRISTINA QUINN:  Anton points out that we already make an implicit bargain when we walk through the doors of the office — work, is for doing work.

But he acknowledges the need to do some of that work privately, in order to be more productive. So, his team is thinking about how to make the workplace more than just a place where we store our bodies while we make widgets for the boss. They’re trying to make it a place where the main job is sharing information.

ANTON ANDREWS: Why go to work? What is the work place for? We think the workplace is still critically important just not for the reasons that it used to be and those reasons.

CRISTINA QUINN: And what were those reasons?

ANTON ANDREWS: Traditionally you know the workplace was about controlling your employees it was the Panopticon.


CRISTINA QUINN: Ok so…the Panopticon. The Panopticon is an idea developed by 18th and 19th century social philosopher Jeremy Bentham—where individuals, whether employees or inmates, are constantly being monitored by a watchman.

So imagine a circular building and all the workers or inmates are placed against the walls, perhaps in cubicles…But in the middle of that building is the watcher, looking at your every move, or the move of the person next to you, and the person next to them. And you don’t really know if you’re personally being watched at any given moment. It’s management by paranoia.


Bentham claimed it was a “new mode of obtaining power” — by manipulating people’s minds.


ANTON ANDREWS: The way we think about productivity today which is this very old school mechanistic efficiency driven view of productivity where people are just cogs in a machine and all of your software and hardware and work environments and so on are really about milking maximum efficiency out of the system. And that is not a sustainable path forwards obviously but it’s also no longer a strategy that works. If companies want to survive in today’s environment.

CRISTINA QUINN: Obviously, most of us don’t work in an actual Panopticon but Anton brings it up because it represents a management style that technology is quickly rendering obsolete.

Anton believes that in the future–what’s going to make you successful in the workplace won’t be because your boss is watching you and making sure you meet that quota. Success will come from problem solving, collaboration, being comfortable with the unknown…

ANTON ANDREWS: The larger construct is actually a shift from certainty and knowledge stability to uncertainty and instability, essentially. If you think about middle managers hoarding information the reason they did it was because that information was valuable. Knowledge was valuable. Knowledge was power, and holding onto it made sense because it didn’t change much. At least it didn’t change much in weeks and months. You know maybe it changed in years. Now it’s changing in minutes.

CRISTINA QUINN: Anton describes this changing world — and thus the future — with an acronym, borrowed from the military: VUCA.

V, for volatile

U, for uncertain

C, for complex

And A, for ambiguous

ANTON ANDREWS: This is increasingly true for all kinds of productivity networks, is increasingly true for businesses. It’s true for startups. It’s true for NGOs. It’s true for governments that the environment that you’re operating within is increasingly volatile and unpredictable.

CRISTINA QUINN: VUCA challenges the straightforward, top-down world of the Panopticon — and it requires an entirely different approach in the workplace.

ANTON ANDREWS: The strongest organization today, and going into the future, will be the one that is most able to adapt to a rapidly changing set of circumstances in the world around it and is the one that’s able to make best use of all that live data and live information coming.


BEN WABER: We need people to be creative. We need us to execute these extremely complex projects that are just unprecedented in human history.

CRISTINA QUINN: Ben Waber is the CEO of Humanyze. Humanyze helps companies figure out how well their teams are collaborating to make them more productive. They do that by collecting data about social interactions. And one of the tools they use is a smart ID badge.

BEN WABER: Essentially what we use is really a next generation company ID badge. Think of a regular ID badge, it typically has RFID in it. We’ve added additional sensors to those ID  badges specifically microphones to look at how people talk about what they say Bluetooth to look at location. Also, an accelerometer look at motion, posture, those sort of things. And by combining those we can look at who talks to who understand the network within a company we can look at things like how much do you dominate a conversation? Do you talk 90 percent of the time or 10 percent of the time or change your tone of voice related to stress and even mirroring in our posture to look at how engaged we are in a specific conversation.

CRISTINA QUINN: Ben acknowledges that this might sound creepy — but the information that the smart IDs generate is analyzed at a team level, not the individual.

BEN WABER: Importantly with with all this data we don’t give individual data to companies everything is aggregated at least a team level and with their badges that’s also done on an opt-in basis.

CRISTINA QUINN: The service that Humanyze offers helps companies figure out what’s working and what’s not working. Once they figure it out, they can implement better practices — like collaboration — more widely.


CRISTINA QUINN: Because collaboration is really the bedrock of productivity. After all, humans have been collaborating since before we even had language.

BEN WABER: We evolved for millions of years to interact in a face to face environment. That’s obviously even when you know our ancestors who were some variety of apes had this kind of interactions. And what that means is that humans have become extremely responsive to small changes in facial expression, small changes in the way we speak.


CRISTINA QUINN: But getting data about interactions is really DIFFICULT. We’ve been pretty much operating on serendipity.

BEN WABER: If I bump the hallway or if I see you, I’m like, “Oh, I forgot I got to get back to about that thing.” Those are the sorts of things where if I’m working remotely, they’re lost. It’s not to say that you should never work from home or never you know work from a coffee shop. I mean the data is pretty clear that yeah if you are working from home one day a week it doesn’t have much of an impact. But as you start to get three four days a week it has a pretty significant impact on your team, not just you, it’s on your team.


CRISTINA QUINN: Ben’s goal is to collect data about these serendipitous interactions, so that workplaces can foster more of them. According to Anton, it’s an example of artificial intelligence helping us have MORE human experiences.


ANTON ANDREWS: Human beings will need tools for thinking and they will need to be augmented by AI on the one hand and by the human network on the other hand. And this will allow you to do better work, create better content, create better innovation, use data in smarter ways, and work towards more effective outcomes rather than simply work more efficiently.


CRISTINA QUINN: The technologies that Anton and Ben are building, are for the workplace of the future. But —There is something you can be doing right now to help navigate the abundance of information that you encounter everyday at work. Just… let it go..



JANICE MARTURANO:  I think that technology has actually outpaced our understanding of how to skillfully use it.

CRISTINA QUINN: Janice Marturano is a mindfulness expert. She founded the Institute for Mindful Leadership. But she didn’t set out to become a guru. She was a classic 21st century juggler. She had a fancy job — a VP at General Mills.

JANICE MARTURANO: This was really tiring way to live. I was a professional woman at a very high level, had children, and had many blessings in my life from that perspective. And I was exhausted almost all the time. And I also had a sense that even when people were telling me that I was doing a great job at something, I always felt like that really wasn’t my best work.

CRISTINA QUINN: But Janice was burning the candle at both ends. On top of her job, and her family, she was taking care of her ailing parents. She just couldn’t stop being tired. And she was worried it was making her a bad boss.

So she decided to make a change. She took a workshop, and got hooked on this idea of training the mind to be present — not worrying about what has passed, but really focusing on what’s in front of her RIGHT NOW.

She got so into mindfulness that she made helping people become better leaders, and managing the transition to this chaotic new future, her job.

Janice says, to be a good boss, what you actually need to get good at– is creating space for your employees to get away from technology…

JANICE MARTURANO: We know from neuroscience that innovation requires spaciousness of the mind and yet when we’re so full of the To-Do list of the day in the calendar that’s back-to-back meetings. There is no space so how do we begin to learn to cultivate spaciousness even in the chaos.

CRISTINA QUINN: And another thing good bosses do is foster kindness.

JANICE MARTURANO: Compassion means deep understanding. It’s not sympathy or empathy but deep understanding.


CRISTINA QUINN: At first glance, Janice’s mindful workplace might seem like the opposite of Anton and Ben’s workplaces.  There’s less focus on machines, and more focus on people.

But they both represent a big shift in the way we’re working:

They’re dumping the old Panopticon style of top-down management.

They’re opening up silos, and finding new ways to define productivity — beyond making a few more units per hour.


Whether it’s artificial intelligence in a conference room, or a smart ID badge, new technologies will help us communicate more, and collaborate better — ultimately making our work more meaningful.

Because, in the increasingly volatile world of the future, our ability to make meaning at work will be job number one.




Dot-future is a co-production of Microsoft Story Labs and Gimlet Creative.

This episode was produced by Garrett Crowe and Katelyn Bogucki with help from Victoria Barner and Francs Harlow. Creative direction from Nazanin Rafsanjani. Production assistance from Thom Cote and Ben Kuebrich.

We were edited by Rachel Ward and mixed by Andrew Dunn. Schmidt. Our theme song was composed by The Album Leaf. Additional music from Whaltho, Marmoset and Bobby Lord. Technical Direction by Zac

This is the final .future episode of the season. Make sure you stay subscribed to the show so you can be the first to hear any announcements and new episodes. Thank you all for listening, for sharing your feedback and leaving those iTunes reviews. We’ve loved sharing these amazing stories with you so stay in touch. You can check out the latest from Microsoft at microsoft.com/stories. I’m on Twitter @cristinatquinn and Gimlet Creative is @gimletcreative.

I’m Cristina Quinn. Thanks so much for listening!