It's leaner, it's meaner and, undoubtedly, Steve Ballmer is hoping that Microsoft will become a real killing machine. Not that we should expect blood on the production floors at Redmond -- at least not immediately. The killings Ballmer is looking for right now are in sales. Lots and lots of sales, and across all product lines.
Rumours that Microsoft was going to restructure again have been doing the rounds for a while so the memo that Ballmer circulated to employees this morning is not exactly a surprise.
What is perhaps a surprise is that it is not going to be cut in two along the fault line between services and devices. That said, this is a major shakeup and a lot more complicated than that simple division.
Needless to say, the axman never slices his own head off and neither has Steve Ballmer. Not that he has been wielding the axe this time as there doesn’t appear to be any lay-offs on the cards at the moment.
He stays on as Microsoft's CEO, while a many of the established names at the very top of the company take on new responsibilities.
Generally speaking the thinking behind the move as outlined in this morning’s memo was as follows:
Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most."
Microsoft is putting so much emphasis on this that it repeated it twice almost word for word in the opening paragraphs, and put it in bold the second time just in case the point hadn’t been made.
He said Microsoft will do this by “leveraging our strengths” -- by changing the way Microsoft does its business.
Improving our performance has three big dimensions: focusing the whole company on a single strategy, improving our capability in all disciplines and engineering/technology areas, and working together with more collaboration and agility around our common goals.
This is a big undertaking. It touches nearly every piece of what we do and how we work. It changes our org structure, the way we collaborate, how we allocate resources, how we best empower our engineers and how we market.”
In practical terms, the result is that the five business units it has been operating to date will no longer be separate. By this he means that the old idea of a business unit with its own, inherent corporate structure will change to one where the entire company acts as a cohesive unit.
We will plan across the company, so we can better deliver compelling integrated devices and services for the high-value experiences and core technologies around which we organize.
All the different units will be expected to contribute to a single, holistic vision, contributing to technologies and development across the entire product portfolio and not just to those products produced by a given unit.
… This means we will organize the company by function: 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). Each discipline will help drive our overall strategy. Each discipline will also be charged with improving our core capabilities in its area. We must improve in all aspects of the business.”
Microsoft’s New Divisions
As a result all Microsoft’s operating systems will be put under the same roof, all market and business operations for all the different units will also be put together, and all production will be in centralized units covering the entire company portfolio.
In the future there will be four engineering department areas that will cater for OS, apps, cloud and devices, with Dynamics kept separate as it needs a particular focus and offers “significant” opportunities in the future.
While Ballmer didn’t offer a check list of what and when, he did say that he wanted the transition to be completed by the end of the year even if some 100,000 employees will begin working in their new groups straight away.
Microsoft Corporate Movers
Technology-wise, the changes at the top of the company will look like this:
Operating Systems Engineering Group: This will be lead by Terry Myerson and will span all the OS work from consoles to mobiles to device, PC and back end systems. The core cloud service for the operating system will also be here.
Devices and Studios Engineering Group: This will be lead by Julie Larson-Green and will cover the development of all hardware and supply chain products. She will also be in charge of games, music, video and other entertainment products. She currently runs Surface and Windows engineering
Applications and Services Engineering Group: To be lead by Qi Lu, who currently runs the online services division and will be responsible for productivity, communication, search and other information categories.
Cloud and Enterprise Engineering Group: Satya Nadella, who runs the serve and tools business takes over here. He will lead the development of back-end technologies like datacenters, databases and specific technologies for enterprise IT.
Dynamics: Krill Tatarinov will stay where he is at Dynamics, but his product leaders will report to Qi Lu and his market leader will report to Tami Reller, who now heads a new cross company marketing group.
COO: Kevin Turner will stay on as COO but will no long be responsible for centralized marketing.
There are a few people that will shuffle off the Microsoft stage over the coming two years, the memo says.
Kurt Delbene, the current head of the Business Division, which includes the Office portfolio is to retire with Ballmer citing him as the driver behind the move to the cloud for Office.
Craig Mundie will be stepping off the senior leadership team to devote 100% of his time to a special project for Ballmer through the end of this calendar year and will continue as a consultant through to his previously agreed upon departure date at the end of 2014.
While the shake-up here is undoubtedly a significant one it will be hard to see the results until well into next year after the changes have been made and the streamlined Microsoft is operating as a new, agile, responsive technology giant, which, after all, is what this is about.
In the past, Microsoft has shown itself dreadfully slow when it comes to responding to market changes and where one division has moved forward, others have held it back.
With cloud computing, for example, its tardy and sluggish response to the move to the cloud by many of its customers could have put it out of the cloud race. Fortunately, Office 365 has come to the rescue here in the productivity space, but it could have been done much sooner.
Whether the re-structuring succeeds in overcoming a corporate culture that is often depicted as slow moving and unresponsive is a matter of speculation. Changing structures is not enough -- a change in mindset is also needed at many levels, and that will require more than re-organization.