Microsoft's Latest Reorganization Won't Work Without Culture Change

NEWS ANALYSIS: It's another year and another shake-up for Microsoft. This time it's the whole company. But the question remains whether this latest shake-up will really solve Microsoft's problem.

Microsoft has trumpeted its Great Reorg of 2013 with more than the usual hype. This time the shake-up included a press and analyst briefing, a company town hall and a speech from Microsoft CEO Steve Ballmer.

The good news is that Ballmer and other top Microsoft executives realize that the company has to change. The bad news is that Microsoft has a mixed history when it comes to solving the company's management problems through corporate restructuring.

The company certainly has had management problems, some of which could in fact be changed by reorganizing operations along a functional model. And much of what Ballmer said rings true. Until the July 11 announcements, internal feuds between divisions were legendary.

Organizational politics drove away a lot of Microsoft's best and brightest, while keeping the rest from innovating as they should. Worse, in some of Microsoft's unannounced purges the company dumped its best people and retained those who had mastered corporate infighting.

This time Ballmer personally installed specific new people into some of the positions the company has created. The result is what Ballmer calls "One Microsoft," and the stated goal is to rid the company of its highly unproductive fiefdoms that produced more internal friction than innovative products or profits.

Unlike the actions that Microsoft executives took during their unannounced reorgs in years past where employees were left to wonder if they had a job, this time there was some structure. But it's unclear whether the changes have filtered down to the rank and file now.

So what did Ballmer promise? In a very long and somewhat rambling memo, he laid out the new functional organization that Microsoft will follow. He also said that the changes were strategic and that current projects, such as Windows 8.1, Windows Phone and the Xbox, would be unaffected for now. Ballmer also talked about reforming the Windows Store and moving to a business model that could keep up with changes in technology.

But what Ballmer didn't really address is something much more important in the long run, and that's finding out what customers actually want in terms of products from Microsoft and how they want those products delivered. It's here that big technology companies are finding that opportunities are rife for missteps. How else can you explain the debacle that was Windows 8?

Microsoft was well aware that customers like Windows and Windows-like operating systems. Many of the user interfaces for Linux look like they came straight from Redmond, for example. Windows 8 probably tested very well with people using mobile devices where it makes sense.

But how could Microsoft's product managers release a touch-based operating system interface on a customer base that is equipped in large part with a keyboard and mouse hardware? Clearly Microsoft was trying to drive innovation by encouraging a touch interface.

Few people in the real world are going to drop a thousand or so dollars just so they can use a new OS.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...