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Nadella Outlines Microsoft Organizational Changes

Major engineering and organizational moves will be made by Microsoft over the next month, according to CEO Satya Nadella.

"Over the course of July, the Senior Leadership Team and I will share more on the engineering and organization changes we believe are needed," Nadella wrote today in a massive open company memo titled "Starting FY15 -- Bold Ambition & Our Core."

The memo focuses primarily on Nadella's new articulation of the company's core vision: "Microsoft is the productivity and platform company for the mobile-first and cloud-first world." (For more, see the related article, "Nadella Demotes 'Devices' in Microsoft Vision Statement.")

Nadella promised more detail on July 22 during Microsoft's next earnings call about what Microsoft will do in its fiscal year 2015 to focus on the core. That could be when senior Microsoft executives would discuss with financial analysts whether the organizational changes would or would not involve layoffs and would entail operating cost increases or decreases.

More detail would also emerge at upcoming company gatherings, he said. "At MGX and //oneweek, we'll come together to build on all of this, learn from each other and put our ideas into action," Nadella wrote.

Former CEO Steve Ballmer last set the top-level structure with a major "Devices and Services" reorganization in mid-July 2013 that put Nadella, Terry Myerson, Julie Larson-Green and Qi Lu in executive vice president roles atop four engineering groups, and made Tony Bates, Tami Reller and Eric Rudder executive vice presidents of other functions.

Events quickly outpaced that restructuring, with Ballmer announcing a month later that he'd retire. Nadella took over as CEO in February, bringing Scott Guthrie up to take his former post. Meanwhile, when Stephen Elop returned to Microsoft from Nokia, he stepped into Larson-Green's role and she moved over to a position reporting to Lu. Also, Reller and Bates both left the company, making room for Chris Capossela and Mark Penn.

Whether Nadella shuffles those positions or keeps the structure, he gave a stronger sense in the memo of his plans for middle management and for making the engineering organization more nimble. He talked about a flatter organization, leaner business processes, fewer people involved in decisions and increased emphasis on accountability. He signaled investments were coming both in using data for measuring effectiveness of products and predicting market trends, and for evolving software engineering to eliminate breakpoints in the development lifecycle.

He also promised more employee training and opportunities to test new ideas and incubate new projects.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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