Ballmer’s big bet will reshape Microsoft — with lots of risk

microsoftlogoHow can a company of more than 90,000 employees become more nimble and competitive? Microsoft CEO Steve Ballmer laid out the plan today — blowing up the company’s individual divisions and replacing them with broad-based engineering groups and centralized business functions in a bid to make Microsoft more cohesive.

It’s one of the biggest organizational changes in the history of the company. It took months to come to fruition and it will be even more complicated to actually implement. Its success or failure will go a long way toward determining Ballmer’s ultimate legacy as Microsoft’s chief executive.

One big risk is the potential to instead confuse matters as people adjust to the new structure and try to collaborate in across product groups, teams and former divisions. In one section of his memo to employees, Ballmer explains how Microsoft will try to avoid this fate using “champions” for major cross-company initiatives.

Here’s an excerpt from the memo that outlines the approach.

Process wise, each major initiative of the company (product or high-value scenario) will have a team that spans groups to ensure we succeed against our goals. Our strategy will drive what initiatives we agree and commit to at my staff meetings. Most disciplines and product groups will have a core that delivers key technology or services and then a piece that lines up with the initiatives. Each major initiative will have a champion who will be a direct report to me or one of my direct reports. The champion will organize to drive a cross-company team for success, but my whole staff will have commitment to the initiative’s success. We will also have outgrowths on those major initiatives that may involve only a single product group. Certainly, succeeding with mobile devices, Windows, Office 365 and Azure will be foundational. Xbox and Bing will also be key future contributors to financial success.

Ballmer didn’t publicly identify any of the “champions” or the primary initiatives they will focus on, but the plan reflects the overall attempt to make Microsoft executives and managers, in particular, think and work across the company as a whole.

As of late morning, Microsoft shares are up 2 percent on the news of the reorg plans.

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  • guest

    The risk to Xbox is huge, perhaps existential.

    • Don

      Totally agree. They put a NON-GAMER in charge of the business. PROMOTION!

      Xbox just died.

      • guest

        That is not as important as what they have done in terms of fragmenting the teams that make up xbox, mktg, 1st party, platform, etc. Part of (perhaps most of) why Xbox was successful was that they controlled their destiny end-to-end, now that is no longer going to be the case, every initiative will be a negotiation across multiple organizations. Something that MSFT has traditionally been EXCEPTIONALLY shitty at.

        • Gamer

          I’m going to cancel my Day One Xbox One edition…. DEAD to me…

      • Guest

        I’m going to bet you two tools were the same people who just weeks ago were criticizing Mattrick and writing about “Xbone”. His “gamer” cred was impeccable.

        • Guest

          And yet he got canned.

          • Guest

            Left on his own accord, actually.

        • Guest

          Doesn’t matter how good his “cred” was, he still totally screwed that product release.

          Of course, you have to wonder now if it was intentional since he was planning on leaving.

          The bigger point is that no “one” is in charge of XBox now. XBox, like everything, is now owned by committee. And XBox is no longer a self-contained, independent thing.

          The Microsoft takeover of XBox is now complete.

          • Guest

            So being a “gamer” didn’t ensure success? So remind me again why being a non-gamer ensures failure? The same people who were in charge of Xbox before, sans Mattrick, are still in charge. And Xbox was never an independent thing. It was part of the EDD division.

  • guest

    Ballmer’s ultimate legacy has already been written. He’s the guy who inherited the most dominant and valuable company in technology and, in just over a decade, lose all of that to Apple and Google, companies that were mere blips when he took over.

  • JustAnExMsftGuest

    Unless they change how they handle their internal employee reviews, it’s not going to make a difference. If they want cooperation and teamwork, they need to reward for teamwork…

    • Eric

      +1

    • JustanotherexMSguy

      You don’t reward for teamwork. You reward the accomplishment of goals that can’t be attained without it.

    • Notanotherdisgruntledexemp

      Conversely, the weakest individual performers in my experience were always the ones asking for more teamwork rewards.

  • AB

    I am personally familiar with several MS executives, as do many people in Puget Sound. And with that, it is clear that Ballmer needs to shake up a lot of people at the top, not just shuffle some. The people who mastered the MSFT political science course not only produce regression for the company, they lack the vision of design, the arts, culture, community and I would even argue that many of the GMs, CVPs and few SVPs even lack the basic passion for technology and innovation. A genuine passion for the company does not equate to a savvy passion for the industry. It’s a product of cultivating (over many years) people and culture focused on performance metrics that are predominately financial. It’s a Ballmer mini-me syndrome and heck we all make these mistakes by hiring people who are a lot like us. Rapid and “two-levels-above” innovation is still a crime at MSFT squashed by a data-junky culture. And all the words and PowerPoint in the world are not changing this condition for years now. Until that change comes, if ever, it’s M&A to refresh the people, technology, culture and perception. I mean lets face it: its been changing and reorging for so long now, and its always there, at the center of itself. We need MSFT to succeed for WA, America, our heritage.

    • Guest

      Ballmer is a failed CEO. This reorg is in fact an acknowledgement of the failure under his leadership. Replacing others while keeping him dooms any reorg. Look at his verbose email. What a bunch of meaningless buzzwords. Look at how customers are mentioned as an afterthought. All he had to say was “We’re reorganizing to increase internal coordination and agility in order to bring more useful innovation to our customers faster”. Not really that hard, right? And if it doesn’t result in that, then this is all just a meaningless exercise in rearranging chairs. I agree that many of their top leaders lack passion for technology and the majority have no vision whatsoever. They’re administrators. In some cases they’re not even that, they’re just exceptional at maneuvering MS’s political minefields. Look at the people who won out in this reorg. Several seem wholly unqualified for their positions. It’s like they’ve been given a learning exercise. Can MS really afford that right now? About the only solid choice is Satya, who has demonstrated some vision and ability to compete against market leaders while coming from behind.

      • Gues

        Maybe a failed CEO but he’s a brilliant survivor.

        He’s always made it impossible to answer the question “who else will run things”.

        This reorg will take years to fully execute. So, he’s given folks something to be hopeful around in terms of keeping the stock price up.

        This reorg eliminates real clear power bases for challengers, so again, reinforces “who else will run things”.

        And it makes it impossible for the board to solve that question by toppling him and splitting the company up (since it would be easier to find someone to run an independent XBox, say, than all of Microsoft).

        • Guest2

          And that is somehow a good thing? Fidel Castro was a brilliant survivor too.

  • Guest

    I’m astounded that this reorg didn’t come with major layoffs as well. Hard to see how management convinced themselves there wasn’t any fat left in the org, or that EPS growth can be maintained in the face of an imploding PC market w/o dramatic cuts to expenses.