The cloud
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Capital allocation is the point where strategy becomes real. Many firms talk about transformation, but few are willing to fully commit their investment to the choices explicitly outlined in their strategic narrative. Those who do often change everything that follows: structure, talent, and, evenutally, results.
Microsoft’s move into the cloud shows this clearly. By 2014, everyone could see the same opportunity. Under Satya Nadella, the business stopped protecting its past and completely aligned its resources around that single theme.
Capital shifted from Windows to Azure. The financial model changed from one-off licences to recurring revenue. Data centre expansion became the main priority, and the accounting system, hiring plans, and internal metrics were rewritten to fit. Every signal, financial and operational, pointed in the same direction.
That alignment through allocation transformed Microsoft’s position into a $multi-trillion business. Every decision was connected to the structural shift towards cloud infrastructure. The company created coherence across its operations and built alignment that linked investment, capability, and performance. Within a few years, its growth engine was entirely rebuilt around the new model.
The lesson for me is that alignment begins when capital, competitive positioning, and internal capabilities move in tandem. When investment reflects belief, the organisation follows naturally.
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