Friday, July 12, 2013

Restructuring at Microsoft

Yesterday, Microsoft CEO Steve Ballmer announced a massive organizational restructuring of the company.   According to the Wall Street Journal, "Microsoft Corp.'s broad reorganization announced Thursday aims to break down internal fiefs that have slowed product development and caused friction among teams of employees... The company said it will shift from largely autonomous product groups to a more horizontal structure, under which managers who will oversee specific kinds of functions like engineering, marketing and finance."

Here are a few quick reactions:

1.  The Ballmer memo to the company consisted of more than 2,700 words.  Wow!   If you need that many words to describe what you are doing and why you are doing it.... do you really have a clear strategy?   Will employees really digest all of this material, understand it clearly, and align behind it?  First rule of thumb for leader communication:  keep it simple & concise.  The Ballmer approach falls down on this metric.

2.  No organizational structure is optimal.  Each structure has its strengths and weaknesses.  The key to high performance is driving the right culture, values, and processes in an organization.  Just moving lines and boxes around on an organizational chart won't enhance performance substantially.  Microsoft will succeed or fail based on how they redesign key processes and shift the culture and values.   Boxes and arrows won't  be the panacea.

3.  One still wonders if Microsoft should remain as an intact entity versus breaking up into several parts.  Many investors have wondered if the whole is truly worth more than the sum of the parts.  That question still remains after the Ballmer announcement. 

22 comments:

Mohammed Alsuwayed said...
This comment has been removed by the author.
Mohammed Alsuwayed said...

Point 3 is very important, I won't be surprised if the shareholders discussed it later this year. The restructuring can be taken as a sign of pressure from the shareholders.

Jagadeesh Venugopal said...

Sadly, I think Microsoft suffers from the same syndrome that afflicted the likes of Kodak and Polaroid.

When you're really good at one thing, (in Microsoft's case, PC operating systems), you try and extend your franchise for as long as possible, even if there are disruptive technologies on the horizon (e.g. android, ios, the web). For Microsoft, they could not come up with a decent tablet because they had to shoehorn their Windows software into it -- they could not afford to cannibalize their dominant OS and bring something light and easy to market.

Their obsession with Windows also means that Office will never be migrated to other platforms such as Linux and Android.

Jagadeesh Venugopal said...
This comment has been removed by the author.
Andy Rowell said...

Michael. Thanks. That's helpful. I have no idea of course whether it is the right move to reorganize but it is sad that they have had to put so much time toward the structure itself rather than making stuff that works and sells. "Mr. Ballmer, who has spearheaded several major restructurings during his 13-year tenure, called the latest a "far-reaching" effort that required senior leaders six months and hundreds of hours to devise."

I read something recently from a church leader who titled his post:
"Want your institution to do new or better work? Don’t reorganize" so this was timely. The other writer, David Odom, of Faith & Leadership at Duke, recommended "experimenting" rather than reorganizing. I am an Assistant professor of Ministry Leadership at Bethel Seminary at Bethel University in St. Paul, MN and enjoy your blog. Thanks.

Michael Roberto said...

All great comments. Thanks for reading and offering your thoughts!

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