Enter The Matrix: Microsoft’s Reorg



The new super-matrixed structure doubles down on “integrated innovation”, a model that has historically been tantalizingly just out of grasp from an execution standpoint. The new theory is shorter product cycles will mitigate failures of alignment across teams.

The pendulum swings to functional away from divisions that had clear customer focus and segmentation (ironically, Steven Sinofsky wins philosophically, even as he and most of his disciples lose personally).

The Microsoft org chart cartoon with guns pointed between organizations is getting a lot of airplay. It is worth pointing out it has always been the engineering organizations that had this kind of dynamic (sometimes even implicitly instigated by senior management – there was a a time when internal competition was in many ways more vigorous than external competition) and that there still are multiple engineering organizations. Windows and Office, for example, will always have different priorities, no matter what the organization.

This move elevates some of the strongest engineering managers in the company, but they will have to successfully step up to operate at a whole new level.

The marketing reorg will probably take a long time to sort out, with both new leadership and lots of people moving, which means Microsoft will likely be more internally focused than it should for 6-12 months.

I continue to believe the best, long-term strategy for the company is to proactively split itself up. This reorg of course makes that harder as everything gets mashed into one gigantic blob that will try to successfully span from your house to the warehouse, from the mom and pop shop to the Fortune 500’s top and from the wrist of your arm to the cloud server farm (Rap Genius here I come…).

One of the reasons I believe in splitting the company up is the succession issue. For the all the criticism SteveB gets (some very valid, some completely ridiculous), his are a very difficult set of shoes to fill. I can’t count the number of times I have asked people calling for Ballmer’s head who they would replace him with, only to hear crickets or worse, truly untenable alternatives offered up. This reorg doesn’t bring to light any internal potential candidates and with the elimination of the division presidents, also removes the “mini-CEO” presidential training grounds. Steve is still planning to run the company for a few more years (he has said many times he intends to stay until his youngest child goes to college and has been known to bellow “…and if the kid has to repeat a year, you get me for another year!”), so perhaps there is time to develop an internal candidate. But my guess is the next long-term CEO of Microsoft is not at the company today.

Meanwhile, some of the better posts on the reorg I have seen:

  • Hal Berenson dives deep into internal succession candidates.
  • Ben Thompson on the perils of functional organization in large companies, with the obligatory Apple comparison.
  • Xconomy doesn’t quite go line-by-line, but dissects some of the blather in Microsoft’s memo on the reorg (thereby saving me from having to do something similar). This memo is not an auspicious start for the new marketing leadership (though I suspect the writing team is not new).
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