Microsoft restructure - One Microsoft

In 2013 Steve Ballmer, Microsoft CEO at that time, announced that Microsoft is going through a reorganization and a fundamental shift in Microsoft’s business; moving from a divisional structure to a functional like structure.

It changed the organization from five business units to four engineering groups organized by function around operating systems, applications, cloud computing and devices, and by centralized groups for marketing, business development, strategy and research, finance, human resources, legal, and operations.

What was the reason for that shift?

Microsoft suffered from bureaucracy so it switched to the divisional structure back in 2005 to be able to more agile and innovative to respond to threads coming from Google and Yahoo at that time. It helped the tech giant to grow at the beginning then it reversed and put it in a lagging position in all other markets but the PCs.

As we have studied in the 2nd module, divisional structure may lead to a hostile and competitive culture; where competition here is unhealthy to the organization. Sadly, Microsoft fell into that pit, there were several internal battles and power struggles that led divisions to focus on their own success rather than the success of Microsoft as a whole organization which negatively affected collaboration. It caused Microsoft to miss on a lot of opportunities such as delayed products, failure of new projects, and the departure of high-value employees.

The division had to put down their guns and start to collaborate in order to survive.

What was the vision for the shift?

Steve Ballmer had a vision of One Microsoft. The plan sought to rally the whole company behind a single strategy instead of several divisions with several strategies. Thus, improving its capacity in all its business and technology areas and collaborating better around a common set of goals. The memo sent by Ballmer was “Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most.”

He wanted to unite all the divisions on one island and create a cross-platform software that integrated several Microsoft products and services.

 My opinion

Back in 2005, Microsoft needed the divisional structure to be able to grow and be more innovative and that paid off as we have seen especially with Windows Vista and 7, and with the Xbox console. However, in my opinion, the PC market reached the peak with its innovation. Do not confuse innovation with technological advancement. You can make Windows better and faster (technological advancement), but there aren’t many new features you can add now (innovation).

Subsequently, I believe that this was the right move, but Ballmer lacked the agility and the new era mentality to do it. Microsoft divisions were like fortresses and each one was on an island, creating a big picture version of the silo effect. It had been clear that getting these autonomous divisions to work together wasn’t working as Microsoft failed to grow in key markets and Apple, with its functional structure, managed to make several booms. Additionally, the PC market wasn’t growing fast enough and Microsoft lacked a proper position in the soaring tablets and smartphones' market.

Microsoft created Office 365 as the first step of the One Microsoft vision that later became Microsoft 365. Microsoft 365 is a subscription fee type bundle of Microsoft products and services that can be used on any device. In 2013, consumers who purchased Office 365 Home Premium or University subscriptions received a free one-year Xbox Live Gold subscription.

The vision that was achieved and enhanced by Microsoft current CEO Satya Nadella. Windows 10 release was a success, Microsoft released several apps for iPhone and Android that people liked. Microsoft also installed a version of Windows 10 on Xbox One.

Nadella also focused on external collaboration, knowing that you must have good computability with other systems to thrive in the market. He made Microsoft’s Azure support Linux, the free operating system that developers love, but Ballmer once referred to as "a cancer" and "communism."

Lastly, Microsoft might have not reached its maximum potential yet, but they are growing in the right direction, and most importantly they are growing together as One Microsoft