On July 11, 2013, every Microsoft employee got an email from the chief executive, Steve Ballmer. The subject line was “One Microsoft.” It announced “a far-reaching realignment of the company,” and Ballmer did not play down its reach: “It touches nearly every piece of what we do and how we work.”
Microsoft was then organized into business groups. Ballmer wanted the company to rally behind “a single strategy as one company,” not “a collection of divisional strategies.” He wanted it to see its product line “holistically, not as a set of islands.”
Then he redrew the chart. “This means we will organize the company by function.” The list followed: Engineering (including supply chain and datacenters), Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, HR, Legal, and a COO group covering sales, support and IT. Engineering would have four areas: operating systems, apps, cloud and devices. The operating systems group would “span all our OS work for console, to mobile device, to PC, to back-end systems.” The business development efforts “formerly in the BGs” would move into a new central group, and Amy Hood would “centralize all product group finance organizations.”
The memo also made exceptions. Dynamics would stay separate, “as it continues to need special focus and represents significant opportunity.” Its head, Kirill Tatarinov, would keep running it “as is.” But his product leaders would have a dotted line to Qi Lu, who would lead applications and services; his marketing leader a dotted line to Tami Reller, who would lead all marketing; and his sales leader a dotted line to the COO group.
And the functions would not work alone. “Process wise,” Ballmer wrote, “each major initiative of the company (product or high-value scenario) will have a team that spans groups.” Each would have a champion who reported to him or to one of his direct reports. Most disciplines and product groups would keep “a core that delivers key technology or services and then a piece that lines up with the initiatives.”
So a memo announcing a functional company also kept one division and laid a grid of cross-group teams over the top.
Ballmer said plainly that the work wasn’t done. “We have resolved many details of this org, but we still will have more work to do.” Completing it would “take through the end of the calendar year.” On the new ways of working he wanted, he added: “In my own staff meetings, we are modeling these new characteristics yet also find ourselves occasionally slipping back.”
Six weeks later, on August 23, Microsoft announced that Ballmer would retire as chief executive within 12 months, once a successor had been chosen. “We have embarked on a new strategy with a new organization and we have an amazing Senior Leadership Team,” he said. “We need a CEO who will be here longer term for this new direction.”