Why Microsoft’s reorganization is a bad idea

Microsoft’s top-down restructuring effort last week was a big deal. It happens out of necessity, and as a long-term attempt by Ballmer to address inherent weaknesses in it’s previous management structure (silo’ing, stack ranking, bureaucracy  (Forbes had a good writeup last year – http://goo.gl/9gkuh). At least in theory.

However, will the new structure fix these issues? Is it suitable for a company of Microsoft’s makeup? An ex-marketing manager at Microsoft weighs in the link below, arguing that the functional layout they’ve adopted is ill-suited (putting it nicely), to the product-based divisional layout it had before. The cynical approach is to say that it now allows MS to hide the losses from underperforming divisions (ie. the $11B spill from Bing), whilst leading to little to no improvement on the day-to-day operations, from a worker/developer perspective. 

The fact remains, Microsoft is huge, it’s profitable, and it’s not going anywhere soon, but the field is changing, gradually but surely. The issue in large part is Ballmer himself, a mediocre leader at best, one from a sales not an engineering background. He’s stated on occasion that he plans to stick around for at least another 5 years. It’d be hard to argue that this isn’t to the company’s detriment, though nobody knows who the successor might be (Sinofsky was an insightful option before he was shown the door by Ballmer). 

On a side note – for a decade’s supply worth of corporate double-speak and worthless buzzwords, verging on the hilarious, read the official memo from Ballmer here: https://www.microsoft.com/en-us/news/Press/2013/Jul13/07-11OneMicrosoft.aspx

“In my (very-biased) opinion, I believe collaboration is fundamentally broken at Microsoft. It is all about politics, not great outcomes, and that is absolute death in a functional organization, which has nothing but collaboration to hold together cross-functional product teams. At least in a divisional model all of the relevant team members have a common product and a common boss, meaning everyone has no choice but to work together. Unless the employee review and compensation model is significantly changed, this, along with the lack of mission and clear accountability, will grind progress to a halt.”

stratēchery by Ben Thompson | Why Microsoft’s reorganization is a bad idea


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