Digital DiversityA Microsoft TechSpark Initiative

Jerram Lindsay | Sophie Carran | Brianna O’Regan | Nigel Turay

The Team

Jerram Lindsay | Sophie Carran | Brianna O’Regan | Nigel Turay

Defining the concepts and problems

What is CSR?

What is strategic CSR?

What is artificial intelligence?

What are the concerns surrounding AI?

“The more closely tied a social issue is to a company’s business, the greater the opportunity to leverage the firm’s resources, and benefit society”

Strategic overview

Microsoft TechSpark

Digital Transformation

Rural Broadband

Digital Skills Development

Career Pathways

Non-profit Support

TechSpark is an initiative by Microsoft aimed at fostering greater economic opportunity and job creation

TechSpark aims to engage in local challenges and to implement and learn from digital initiatives that help accelerate growth

Strategic overview

Microsoft TechSpark

Diversity is crucial to achieve the goals and objectives of TechSpark and democratize AI

Diversity

Diversity & inclusion –what’s the big deal?

Diversity + Inclusion = Success

Gender diversity increases ROA in high-tech and knowledge-intensive industries

Racially diverse teams compete more intensively and perform better

Age diversity positively impacts on corporate performance and decision making

Diversity in artificial intelligence

“We need diversity of thought in the world to face new challenges.”

Tim Berners-Lee Founder of the World Wide Web

Technology should be developed by a population as diverse as its users

88% of all I.T. patents have male-only invention teams

Failures of AI due to lack of diversity

Trends in computer science

Gender

Computer Science College Graduates 1991-2015

Male Female

37%Computer science graduates

were female in 1984

57%College graduates are

female

18%Computer science graduates

were female in 2015

0% 20% 40% 60% 80% 100%

Science

Engineering

Technology

Women who leave STEM related jobs

Quit Stay

41%Women quit their jobs in

STEM fields

17%Men quit their jobs in STEM

fields

20%Leave the workforce

Trends in computer science

Race & age

53.4

%

13.8

%

7.5%

4.1%

3.7%

2.7%7.

4%

4.0%

1.1%

0.6% 1.1%

0.6%

White Asian Hispanic Other Black Multiracial

Computer Science Graduates by Race & Gender (2015)

Male Female

12%AP computer science exam-

takers of colored descent

26%U.S. Workforce comprised of

Black and Hispanic

13%Computer science workforce

Black and Hispanic

-0.1%Decline in computer science

median age per annum

40.8Median age of the computer

science workforce

42.2Median age of the U.S.

workforce

Trends in computer science

Job market

500kUnfilled computing jobs in the

U.S. in 2016

43kU.S. computer science

graduates in 2016

1mUnfilled computing

jobs by 2020

0200400600800

1000120014001600

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Unfilled Computer Science Jobs vs Computer Science Graduates 2010-2020

Unfilled computing jobs Computer science graduates

14.9mJobs created by AI

by 2027

30%U.S. workforce will need to switch occupation by 2040

24.7mJobs displaced by AI

by 2027

Introducing LEAH

Learning.Education.Aspiration.Hope.

LEAH connects

Available on multiple platforms to scale across individuals, communities and geographies

=

Identifies opportunities for older generations to acquire skills for

a changing economy

Connects with reskill/on-the-job

programs and formal education

Provides job assistance services

and support

Connects youth with activities and programs related to future career opportunities

Guidance on tertiary education

pathways and personalized career

outcomes

Supports and mentors youth throughout the

process

Strategic alignment to the other TechSpark focus areas

Digital Skills Development

Non-profit Support

DiversityRural

Broadband

Digital Transformation

Career Pathways

Benefits to Microsoft

Investing in the under-represented population grows the economy, Microsoft’s total addressable market and Microsoft’s bottom-line

Talent

Builds future resilient skills

Market share increased

Releases full potential of AI

Stronger brand reputation and goodwill Community

engagement

Positive media perception of

Microsoft and AI

Greater diversity drives innovation

EmployeesImproved job satisfaction

CustomersImproved customer satisfaction

ShareholdersIncreased shareholder returns

CommunityIncreased community prosperity

Under-represented groupsMore opportunity and representation

GovernmentStronger economic growth

Impact on stakeholders

Is this realistic?

Potential strategic partnerships

Potential roadblocks & barriers

Lack of adoptionSolution: strategic partnerships

Low perceived impactSolution: target high-need areas

Resistance to changeSolution: educating potential users

Concerns about privacySolution: publicize and strictly follow ethical AI protocol

Loss of autonomySolution: promote the message the AI is a microphone, not a voice

Quantifying the problem

43%US Middle skill workers

without employment

87%Adult population who recognize the need for

continual learning

30%Talent

gap

10%China’s prediction regarding

growth in GDP due to AI

$72mIncrease in FTE

employment worldwide by 2025 due to AI

41%Women

Leave jobs in STEM

Quantifying the impact

5%Middle skill workerswithout employment

95%Adult population who recognize the need for

continual learning

5%Talent gap

+10%Growth to

Microsoft’s bottom line

+$3mIncrease FTE

employment in US by 2025 due to AI

20:20Bring female

exit rate in line with male exit rate by 2030

The bottom line LEAH will positively effect the lives of people around the world, and help overcome the threat of disruptions from AI

LEAH will consider the future in a way that humans cannot

LEAH is AI that prepares people for the AI future

Learning.Education.Aspiration.Hope.

Appendix directory

Appendix 1 – LEAH alternativesAppendix 2 – Types of CSRAppendix 3 – McKinsey value driver treeAppendix 4 – Strategic alignment of internal factorsAppendix 5 – Internal and external considerationsAppendix 6 – Extended benefits to MicrosoftAppendix 7 – Selecting partners Appendix 8 – Triage of problem solving methodologiesAppendix 9 – Stakeholder considerationsAppendix 10 – SWOT analysisAppendix 11 – Porter ’s 5 forcesAppendix 12 – Pareto analysisAppendix 13 – Stakeholder hierarchyAppendix 14 – AI expanded Appendix 15 – Implementation timelineAppendix 16 – Cost comparisonsAppendix 17 – Further financial analysisAppendix 18 – Microsoft business overviewAppendix 19 – Strategic Alignment with TechSpark

Appendix 1LEAH Alternatives AI Product Long-term

support Suggests career pathways Draws on future macro trends

Scalability to a range of users

Educational planning

LEAH

VMock

CareerGuide

Aleks

CampusNexusCRM

1

2

3

4

5

Appendix 2Types of CSR

Value creation (strategic CSR)• Promotes sustainable business model• Integrates business into the community• Long-term value created

Risk management• Medium strategic & operational impact• Mitigates operational risk• Supports external relationships

Philanthropic• Low Hanging Fruit• Minimal Impact• Above Legal Duty

03

Philanthropic Corporate Social Responsibility

Corporate social responsibility as risk mitigation

Both shareholder interests & wider community interests transformed

02

01

Appendix 3 McKinsey Value Driver Tree

Financial Value Drivers

Short Term Value Drivers

Medium Term Value Drivers

Organizational Health

Long Term Value Drivers

Micr

osof

t’sVa

lue

Long Term Growth Sales Productivity Commercial Health

Return on Invested Capital

Operating Cost Productivity Cost Structure Health

Capital Productivity Asset Health

Cost of Capital

Strategic Health

Core business growth

Growth opportunities

Growth in Industries &

Talent & Labor Market

Supply

Appendix 4Strategic alignment

Sharedvalues

Style

StrategySystems

StructureSkills

Staff

LEAH adds diversity to Microsoft‘s values

+

Through strategic alignment of internal factors

Microsoft LEAHsustains their impact &competitive advantage

Appendix 5Considerations

Improved Algorithms

Digital Disruption

Negative stigma

surrounding AI Technology

Unleashing potential

ShareholdersDistribution Channels

Customers & End Markets

GeographicalPresence &

Scale

Comparative Position

Current CSR Applications

Developmental in all we do

Brand equity & Reputation

Microsoft CSRConsiderations

Increased Availability of Cloud

Data

Growing cloud

Computing Power

Legal & Regulatory

Environment

Growing broad-band

access

Growing skills & Wage gap

Diversity breakdown in

Computer Science professionals

Partnerships

External Factors

• Diversity challenges in tech related fields• Improvements in AI capabilities and

unleashed potential for the future• Changing labor-market needs with the

growth of AI• Negative stigma surrounding AI adoption• Possibility for communities to be left behind

in a changing world

Internal Factors

• Retain brand strength and positive reputation among communities

• Market leader in AI R&D• Improved employee morale• Maintain and grow a diverse and talented

workforce

Appendix 6Benefits to Microsoft (cont’d)

Value Creation Revenue Growth Improving Return on Invested

Capital (ROIC)

Growth Options Organic Revenue Growth Un-organic Revenue Growth

ROIC Levers

Capital Efficient Business Model

Economies of Scale Reputation enhancement Customer Lock-in Highly Scalable Product Innovation

Revenue Growth

Organic Growth Options

Grow Market Share Grow the Entire Market

We’re open to un-organic growth options× Transformational Merger Bolt-on pre-existing software/AI business Strategic Partnerships

Further Benefits to Microsoft

Partner with early leaders in AI market Provide brand recognition & business improvement

opportunities Provide market access and leverage Microsoft’s

scale Acquire pre-existing talent, patents and technology Leverages Microsoft’s position as leader in AI R&D Breakdowns negative stigma about AI Reduces the cost & complexity of starting from

scratch

Talent

Builds future resilient skills

Market share increased

Releases full potential of AI

Stronger brand reputation and goodwill Community

engagement

Positive media perception of

Microsoft and AI

Greater diversity drives innovation

Investing in the under-represented population grows the economy, Microsoft’s total addressable market and Microsoft’s bottom-line

Microsoft’s commitment to non-profits

Potential partners have been selected based on alignment with Microsoft’s goals and values

Appendix 7Non-profit support

PartnershipsWe believe technology can be a powerful force for social good, but we know technology alone won’t solve the world's challenges. That’s why we partner closely with governments, non-profits, and the private sector to foster collective action.

SupportWe work with non-profits such as TechSoup and their global network of worldwide partners to deliver services that help non-profits get the most out of technology.

SolutionsWe're committed to delivering technology solutions that are accessible and affordable for non-profits everywhere. Donations and discounts are available for cloud solutions including Microsoft Office 365, Power BI, Azure, and more.

Triage of problem solving methodologies• Internal – External• SWOT Analysis • Stakeholder Analysis • Pareto Analysis

Appendix 8Problem triage

Analysis of CurrentCSR Initiatives

Reconciliation of Stakeholder Interests

Consideration of Micro & Macro Factors

1

2

Appendix 9Stakeholder considerations

STAKEHOLDERS Impact Underlying Interests Long Term Outcomes (Post LEAH)In

tern

al

Management &Employees

Increased talent pool Increased employee morale A more diverse work-place

Shareholder value Stakeholder value & CSR Discharging fiduciary obligations Brand equity & reputation Meaningful work for employees Job-security

Resilient & flexible labor force Increased talent pool Reduced market share, as new players

enter market Undisputed leader in AI Labor force vulnerability

Shareholders Increased Shareholders Returns Increased free-cash flow Increased growth profile

Increased Return on Equity Ethical investment considerations Transparent Governance Sustainable returns

Sustainable returns Access to new growth opportunities

Customers Increased customer satisfaction Capitalize on first mover advantage Better quality AI experience

Using quality vendors Paying a reasonable price Using ethical vendors

Greater optionality in products and services

Exte

rnal

Under-represented Communities

Improved economic advantage Improved career decision making through

Microsoft LEAH

Economic progression Meaningful work Being informed & trusting AI

Increased participation in AI design & development

Greater economic welfare relative to GDP/capita

Government

Accelerate legal policy development throughproactive engagement with Microsoft

Reduced fiscal and social security burden Potential for anonymized data to inform

about future job markets

Economic welfare & anti-trust concerns Fiscal sustainability Reduced social welfare burden Improved resource allocation Advancement of AI law

Advancement of current labor, privacy, data, and cyber security laws

Decreased unemployment rate Increased economic welfare in rural, and

low-socio economic communities

Competitors

Likely to engage to regain market share First mover advantage Sustainable competitive advantage due to

patent and strategic alignment

Increasing Shareholder Value Market share Longevity & going concern

Increased talent pool A more diverse workplace Greater market position

Appendix 10 SWOT analysis

StrengthsLargest global user base of any computing platformHigh switching costsStrong financial performanceBrand reputation and loyaltyGlobal leader in the cloud sectorStrategic collaboration with numerous firms in the IT sectorVast distribution network

WeaknessesOverexposure to the PC market

Lack of exposure to the global smartphone marketLack of dominant hardware products

Counterfeit issues in developing countriesDependence on hardware manufacturers

Consumer and corporate shift to cloud-based servicesIndustry leader in AI technologyEnhancing security against cybercrime through Office365Engagement in mergers and acquisitionsShift to SaaS/subscription service model High demand in the budget smartphone market

Opportunities

Emergence of Chrome OS taking market shareOpen-source projects

Competing cloud services of Amazon, IBM and GoogleChanging consumer needs and habits

Shift to mobile devicesAnti-monopoly legal environment

Threats

SWOT

Appendix 11Porter’s 5 forces

Competitive rivalry

Low/Medium

Medium• High R&D intensity – expensive

for new players to enter• Technology protected by

patents • Requires specialized skills and

large resources• Existing innovators in AI have

resources to create similar products

Low• Microsoft is a market leader in

technology• Many suppliers and few buyers

of AI inputs• Value creation through R&D

and product development which is conducted internally

Low• No cost for personal use • Provides benefits to users

without obligation• Cost to enterprise users is low

when considered against potential benefits

• No strong full-functionality substitutes for customers to consider as an alternative

Low• Existing products with similar

concepts only provide single offerings – no competitor offers a suite of solutions

• Competitive offerings by companies with smaller market position

• AI solution more efficient and cost effective than human services alone

Drivers

Diversity of Ideas

Other Factors

Impact

Other Factors

Diversity

Encouraging diversity has positive spill-over effects

Examples of positive externalities• Diversity encourages more

diversity• Diversity encourages more

productive work forces• Diversity encourages more

harmonious and collegial teams• Diversity drives innovation and

new ideas• Diversity drives company and

economic growth• Concentrating on diversity

encourages more areas of CSR activism

Appendix 12 Pareto Analysis

Stakeholders

Internal

Employees

External

Sufficiently Represented Under-represented

Majority Minorities

Female Age Ethnicity Low Socio-economic Disability LGBITQ

Appendix 13Stakeholders cont’d

Appendix 18AI Expanded

Speech

Language

ArtificialIntelligence

Human Decision Making

“AI is the Microphone not

your voice”

Search

23k Views on YouTube Currently

Vision

Knowledge“AI will create jobs we cannot yet imagine”

“To develop AI in order to augment

human abilities, especially humankinds’

innate ingenuity. “

1bn Views Target 2023

Process identifcation and refinement

Identify processes, analyze problems and target groups, improve and document findings(estimated 3-5 months)

Pilot project LEAH refinement National rollout

Continual improvments

and enhancment

LEAH Pilot Projecct in low socio-economic schools in Techspark five focus states(estimated 6-8 months)

Refinement of LEAH after pilot project, debug, take in feedback from pilot project users(estimated 2-3 months)

Roll out of LEAH nation wide, buliding on strategic partnerships and marketing(estimated 8-10 months)

Enhancment of LEAH through user feedback, continual strengthening & creating new strategic partnerships(ongoing)

Appendix 15Implementation Timeline

Appendix 16Cost comparison

0.1 3.5 6 24

1900

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Cost of basic AI chatbot Cost of Nadia Cost of Aadrvark Cost of Siri Unemployment benefitspaid per month

USDm

Cost of AI Implementation vs Cost of Unemployment to the U.S. Government

Appendix 17Financial Analysis

0

200

400

600

800

1000

1200

USDm

AI Acquisition Pre-Deal Funding vs Deal Price

Raised before deal Deal size

Appendix 18Microsoft business analysis

Operating Segments General

Productivity & Business Processes Intelligent Cloud Personal Computing

• Revenue increased, primarily due to Office &

Dynamics Revenue;

• Office 365 Commercial Rev. increased by $135

• PC & Office Consumer Rev. Decreased down

$69m & 4% Rev growth in office subscribers

• Segment revenue increased $1.3b, 6%, due

to higher server products and cloud

services revenue.

• High Growth in R&D expenditure; 12%,

$567.

• Increased marketing exp. & strategic bolt-

on acquisitions.

• Personal computing revenue decreased

by $3.0b

• Slightly offset by search advertising $1.7b;

46%. Driven by growth in Bing.

• Reduction in Xbox, phone and Surface

Revenue.

Financial Profile

Size Profitability Capital Expenditure

• Productivity and Business Processes

operating income down by $856

• R&D 3rd party development &

programming costs, localization &

get to market costs and purchase of

software code.

• Increased expenditure on sales,

marketing and strategic

acquisitions forecasted.

• Prioritize investments that

capture expanding markets

Company Overview

Top Growth Drivers

1. Data & AI

2. Bing

3. Cortana

4. LinkedIn

5. Azure DB, best in class for

Bot framework and

cognitive services. 42

global regions

2.xGrowth in Azure Usage

from 2016

500m users on LinkedIn

500m Devices have office 365

• Potential access to High-School market via

increased growth in Gaming Mkt. Share;

$75m

• R&D as a percent of revenue; stable at 14%

• Sales & Marketing as a % of revenue, stable at

17%

• $90 in revenue in 2017, $22.3b in op income.

Appendix 19Strategic alignment with TechSpark

References

Bureau of Labour Statistics. (2017, October 24). Median age of the labor force, by sex, race and ethnicity. Retrieved from Bureau of Labour Statistics: https://www.bls.gov/emp/ep_table_306.htm

Campbell, K., & Mínguez-Vera, A. (2008). Gender Diversity in the Boardroom and Firm Financial Performance. Journal of Business Ethics, 435-451.

Data USA. (2016). Computer Science Stem Major. Retrieved from Data USA: https://datausa.io/profile/cip/110701/

Dwyre, S., Richard, O. C., & Chadwick, K. (2003). Gender diversity in management and firm performance: the influence of growth orientation and organizational culture. Journal of Business Research, 1009-1019.

Ferrero-Ferrero, I., Fernández-Izquierdo, M. Á., & Muñoz-Torres, M. J. (2012). Age Diversity in the Boardroom: Measures and Implications. International Conference (pp. 134-143). New Rochelle: Springer.

Google & Gallup. (2016). Diversity Gaps in Computer Science: Exploring the Underrepresentation of Girls, Blacks and Hispanics. Gallup.

Gordon, P. A. (2017). Age Diversity in the Workplace. In C. T. de Aquino, & R. W. Robertson, Diversity and Inclusion in the Global Workplace (pp. 31-47). Cham: Palgrave Macmillan.

Herring, C. (2009). Does Diversity Pay?: Race, Gender, and. American Sociological Review, 208-224.

Kochan, T., Kezrukova, K., Ely, R., Jackson, S., Joshi, A., Jehn, K., . . . Thomas, D. (2003). The effects of diversity on business performance: Report of the diversity research network. Human Resource Management, 3-21.

Microsoft. (2017, October 5). Microsoft TechSpark Initiative. Retrieved from Microsoft On The Issues: https://msblob.blob.core.windows.net/ncmedia/2017/10/Microsoft-TechSpark-Fact-Sheet-FINAL-10-05-17.pdf

Microsoft. (2018). The Future Computed. Redmond: Microsoft Corporation.

References

National Center for Education Statistics. (2012). Degrees in computer and information sciences conferred by degree-granting institutions, by level of degree and sex of student: 1970-71 through 2010-11. Retrieved from Digest of Education Statistics: https://nces.ed.gov/programs/digest/d12/tables/dt12_349.asp

National Center for Education Statistics. (2017). Bachelor's, master's, and doctor's degrees conferred by postsecondary institutions, by sex of student and discipline division: 2014-15. Retrieved from Digest of Education Statistics: https://nces.ed.gov/programs/digest/d16/tables/dt16_318.30.asp?current=yes

National Center for Women & Information Technology. (2014). NCWIT Scorecard. Retrieved from National Center for Women & Information Technology: https://www.ncwit.org/sites/default/files/resources/ncwitscorecard_05152015_lowres.pdf

Porter, M., & Kramer, M. (2006). Strategy and society: the link between competitive advantage and corporate social responsibility. Harvard Business Review, 78-92.

Richard, O. C. (2000). Racial Diversity, Business Strategy, and Firm Performance: A Resource-Based View. Academy of Management Journal, 164-177.

Roberson, Q. M., & Park, H. J. (2007). Examining the Link Between Diversity and Firm Performance: The Effects of Diversity Reputation and Leader Racial Diversity. Group & Organization Management, 164–177.