Microsoft CEO Satya Nadella said that embracing diversity was the cloud giant’s “license” for it to be viewed as a multinational global corporation, a statement that followed up on a pledge he made last year to increase the racial mix of the company’s management structure by 2025.

Nadella made that statement this week as part of the Microsoft’s Include virtual event. It was part of a keynote discussion Nadella had with Darren Walker, president of the Ford Foundation, which is a $13 billion international social justice philanthropy.

Walker explained that diversity was especially important for “a global company working across cultures, geography, races, and markets.”

“In order to be successful in this century, in order to be effective, you're going to have to be,” Walker said. “Diversity is an imperative, it is not an option.”

Nadella picked up on that notion, stating that “I think our license to operate as a multinational global company around the world stems from how well we do here.”

“Why would anybody want to work for Microsoft if you're not world class, not just in our products and technologies … if we don't really represent the best there is, in being able to represent and [have] everyone [feel] included.”

Nadella said that when he started seven years ago as CEO of Microsoft, “I felt that we needed to make both mission and culture of this company really the most important pillars.”

“When we talk about running a company or how does one succeed as a company, you got to get a lot of technology, strategies, all of those right. But the source of getting that right, I felt, was that sense of purpose and culture,” Nadella said.

Both speakers cited events last year as a turning point toward this increased focus on diversity and inclusion by corporations.

“I have never in my career seen such energy and urgency around the issue of diversity and inclusion,” Walker said, adding that he was on the board of three public companies and a half-dozen global NGOs. “This issue is front and center. CEOs, boards [are] talking about this issue, prioritizing it … attaching to it measures, metrics for accountability. We're seeing it in the boardrooms where, for the first time, we are seeing genuine transformation or move from tokenism to real transformation.”

Nadella, for his part, last year offered up a blog post of an email he sent to all Microsoft employees in the wake of protests tied to police killings of Black people. That email included commitments to increase diversity within the computing giant and the doubling of the number of “Black and African American people managers, senior individual contributors, and senior leaders in the United States by 2025.”

Microsoft also pledged to invest $150 million over that time frame into its own diversity and inclusion programs, and Nadella noted this week that his own compensation remains tied to Microsoft meeting its diversity pledge.

Microsoft's diversity efforts did draw the ire of regulators. The U.S. Department of Labor last year started looking into the company’s pledge to increase the hiring of Black employees as being unlawful discrimination based on race and a violation of the Civil Rights Act. The contact is tied to Microsoft’s growing role as a federal contractor, which includes it potentially securing a U.S. Department of Defense contract.

Despite that cloud, the topic has been a main talking point for a number of events.

Walker said that to hit these goals means taking concrete steps to reach those objectives. This includes making sure the pipeline of applicants is sufficiently supplied toward reaching those goals.

“I’ve been through this, for example, on gender, where in order to reach gender parity at a company I was involved in, we understood what the pipeline looked like in order to be able to project forward to see if we would be able to reach standard parity, or when that might happen based on traditional normative recruiting practices, hiring, and promotion,” Walker explained.

Nadella noted that Microsoft’s attempt to fill that pipeline includes an inclusion framework targeted at leaders and managers within the company dubbed “coach, care.” He explained that this advances the notion that an effective leader is someone “who genuinely cares for the people that are leading, they know where the people are coming from, they understand how to act on the concerns and the needs, and it shows up in all forms of how they feel included in the company, and then the companies and the group’s results.”

Those inclusion efforts were applauded by Walker, who noted that such work speaks to his claim that words need to be backed up with real action, which so far has been in short supply.

“What we're going to see in the next year is the difference between the performative acts that occurred in 2020,” Walker said to Nadella. “There was a lot of performance, but very few actually made the kinds of commitments that you made and are in an ongoing way, engaging in the hard work because this is not easy work. If it were easy, it would have been done a long time ago. It's not easy because it requires intentionality, and intentionality to disrupt certain norms, practices, structures. And you have to as a leader be committed to doing that.”