I don’t think people are taking the massive reorganisation at Microsoft seriously enough, in terms of the threat it poses to Microsoft’s efficient operations and ultimate recovery.

I say this because it reminds me of the reorganisation at Motorola in 1998, which led to its ultimate sale to Google almost 15 years later.  Before the restructuring, both companies were driven by an engineering culture which favored fragmentation along with individual and team inspiration/competition; both were large and truly international (ie, complex: around 100,000 employees or more); both had earlier been clear global leaders in their fields; both were struggling with new competitors with new products and business models (eg Nokia; Google).  Both came up with reorganising existing assets as a way to recover, rather than do fundamentally new things.  In my opinion, Motorola did not do this well.

I was there at Motorola when the various communications businesses were restructured into one large ‘Communications Enterprise’, comprising mobile devices, mobile infrastructure, and private radio systems.  Motorola's aim with the Communications Enterprise was 'a structure intended to enable integrated solutions and improved responsiveness to customers' needs'.  Now, Microsoft is saying: ‘We are rallying behind a single strategy as one company [..] the single core strategy will drive us to set shared goals for everything we do [..] all our customer interaction will be designed to reflect one company with integrated approaches’.  Sounds similar.

My main memories of the Motorola reorganisation are as follows.

1. The reorganisation largely involved the same people as before – the same people as had led Motorola into the situation where it was being overtaken by Nokia and was unable to sustain its operational costs.  (Microsoft: those who made it a Cloud follower and a small player in Phones and Tablets). The same people just made more noise, looked busier, and set higher targets.

2.  There was promotion and there was demotion.  Formerly junior managers were suddenly promoted to senior positions, causing issues of trust and hostility from those who weren’t promoted or whom they replaced or joined.  Examples are difficult to give here in case of libel actions.

3. Extra layers were added.  New teams were added to ‘unify’ old teams.  For example, a new ‘Communications Enterprise’ oversaw multiple businesses that were previously independent.   (Microsoft: functional management like Marketing is now centralized, reaching out to teams who previously had their own functionality.. and who presumably will retain some of that functionality in order to link with the central teams).

4. Many roles and teams were converged, so that more than one person seemed entitled to take a specific role under the new structure.  I found myself, as new head of intelligence in the Strategy team, interviewing an external candidate for the same role in another team.  Teams from ‘devices’ converged with teams from ‘mobile internet’, creating conflict and disputes.  (Microsoft: ‘We will see our product line holistically, not as a set of islands. [..] All parts of the company will share and contribute to the success of core offerings’).

These changes combined to create a new organisation that I would characterize as follows:

-          Employees were often unsure of who was meant to be doing what.  An HR manager advised me: set out your stall, convince people, then go and do it.  My manager flew from Europe to the USA for one hour meetings to lobby for ‘his view’.

-          Specific employees experienced conflict with others, up to and including reports of fights in the corridors over who was going to do a given job.

-          Unlikely individuals were promoted to positions of great power if they came up with appealing ideas or sold themselves well, taking the company down sometimes unsuccessful paths.

-          Internal politics became more important than the customers, as managers strove to demonstrate commitment to the new structure and culture in order to avoid being fired.

-          A feeling of chaos and despair seemed generally to grow across the Enterprise Sector.  A ‘Dilbert culture’ flourished.  See http://www.dilbert.com/

I don’t know whether Microsoft’s reorg will produce anything like this.  But having lived through the (in my view) disastrous 1998 Motorola reorganisation I’m watching and alert to the signs.  Worst case could see the same top managers at Microsoft managing the company into a retreat from the consumer market and from devices, to seek safety in Enterprise systems where the old business models (licenced sales) will remain attractive to large business customers for longest – just as Motorola is now reduced to Private Radio Systems, having sold off its semiconductor, handsets and networks businesses. 

Global Forces Program’s new Microsoft Dossier (http://sa-link.cc/rp) explains the strategies, the threats and opportunities of Microsoft in greater detail.  For the Microsoft announcement, see http://sa-link.cc/rq