Compatibility mode in Office

[Fiona Partington]

When I create a new doc in O365 Word, it creates it in compatibility mode which means if i want to use a basic feature like drag an image to increase its size or rotate it, I have to save the document first. How can I make all new docs be created in the newest version rather than in compatibility mode? This is a fairly new issue, I'm assuming related to an update.

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