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Summary:

Mission impossible? Getting Microsoft, famous for infighting, to behave like a grownup and get things done is the goal behind latest reorg.

Microsoft CEO Steve Ballmer

The long rumored Microsoft restructuring is here and, frankly, it’s both bigger and less flashy than I expected, because most of this stuff has leaked already (thanks, AllThingsD). The goal is to get Microsoft thinking and acting like a single company — a mighty tall order for an organization famous for infighting.

Here are the the public statement and memo to employees. The main takeaway is that the company is organizing around functions, which include:

Engineering (including supply chain and datacenters), Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal, and COO (including field, support, commercial operations and IT).

Engineering is broken out into four buckets: operating systems, application, cloud and devices.

Here are the big changes:

  • Terry Myerson, formerly the mobile guy, now owns ALL operating systems across console, mobile devices, PCs and back-end systems, and also core cloud services.
  • Julie Larson-Green, former VP of Windows, will head up hardware development and supply chain and Microsoft Studio aka Xbox — all the entertainment services.
  • Eric Rudder, who was CTO, has advanced strategy and research, trustworthy computing and Microsoft Research. Rick Rashid who ran MSR for CTO Craig Mundie (who is retiring), is now in Myerson’s OS group.
  • Qi Lu, who ran search, now is Mr. Office, heading up applications and services engineering. That’s a bit of a shocker. Former Office head Kurt Delbene has retired.
  • Tony Bates, who ran Skype, now has business development and evangelism, and could be viewed as Ballmer’s new right-hand guy, according to one Microsoft insider.
  • Amy Hood, who was just named CFO, stays in place but now runs a centralized finance organization. Before this, each of the business units had their own financial structures.

Many roles, despite all the hoopla, seem largely unchanged to me, but correct me if I’m wrong.

  • Satya Nadella continues to run cloud and enterprise engineering; Tami Reller consolidates her hold on a centralized marketing group assisted by former Clinton hand Mark PennKevin Turner remains COO; Lisa Brummel continues to head up human resources; Brad Smith retains legal.
  • Microsoft Dynamics — the business applications — will remain on its own and stay under Kirill Tatarinov as “it continues to need special focus and represents significant opportunity.”

I’m guessing these changes, while substantive, and which clearly take a swipe at erasing boundaries within the company, won’t put much of a dent into criticism of Microsoft’s tippy-top management (read “Steve Ballmer”).

But it is crucial that the changes take direct aim at a long-running Microsoft problem: Fierce political infighting (see org chart diagram below.) When I covered the company day to day, the best way to get dirt on Office was to ask the Windows guys and vice versa. Clearly, after decades of that, and faced with huge and capable (and well funded) competition — Google, Apple, Amazon et al., Microsoft can’t afford to let that behavior stand.

  1. You know the key term is ‘breakdown.’ I hate to say it but Microsoft’s time has come and gone and they are a second tier bloated corp at best that no longer has what it takes to innovate and bring products to market in a timely manner!

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  2. So, after all that, Microsoft came to the conclusion that it wasn’t that their products were boring, poorly thought-out crap, it was that their managers had the wrong titles!

    By their way of thinking: Customer walks into store to buy smartphone, and thinks to him/herself “Wow, the iPhone and Android phone are well designed, have lots of good software, and are easy and intuitive to use; BUT, Windows Phone 8 – look at the corporate those synergies! I bet they have a VP of business development and evangelism, I better go with them!”

    God help us from MBAnuses.

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  3. If Ballmer intends to change executive behavior, then he’ll need to also establish the rewards that are in line with these new goals. I’d guess that Microsoft was known as “an organization famous for infighting” because that’s likely where the prior incentives were focused.

    My point: the people that were allowed to pursue their own personal vested interests aren’t rebels — they’re merely reacting to the cultural norm that’s encouraged by their leader.

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  4. The Microsoft memo is a good illustration of what that company and its technological cousins have given the world: Erasable, cheap, pretentious, ill-considered, cut-n’pasted, hollow, shallow, forgettable, irresponsible communication. Did Balmer actually write that thing? Does he actually know what it all means, and does he believe all he has penned? Or does the memo just look like its got substance, like all the worthless, empty and misleading emails, word docs, and spreadsheets that Microsoft has enabled over the years?

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  5. Microsoft, here’s what Apple actually does (and I wonder if you actually get this since you’re trying to copy Apple):
    – recognize a product or service you see needs improving (Apple saw this in music players, phones, etc.);
    – come up with a product or service that solves those problems in a simple, easy-to-use, intuitive way;
    – have everybody in the company work together to implement that solution, putting aside anyone who gets in the way;
    – do this all in secret until the moment you’re ready to launch, then market the hell out of your solution.

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